Keystone Oaks School District Financial Statements
June 30, 2019

Keystone Oaks School District Table of Contents

Independent Auditor’s Report	1-3

Management’s Discussion & Analysis	4-13

Basic Financial Statements

Government-wide Financial Statements:

Statement of Net Position	14-15

Statement of Activities	16

Fund Financial Statements:

Balance Sheet- Governmental Funds	17

Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Position	18

Statement of Revenues, Expenditures, and Changes in Fund Balances –
Government Funds	19

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement
of Activities	20-21

Statement of Net Position – Proprietary Funds	22

Statement of Revenues, Expenses, and Changes in Fund Net Position –
Proprietary Funds	23

Statement of Cash Flows – Proprietary Funds	24-25

Statement of Net Position – Fiduciary Funds	26

Statement of Changes in Net Position – Fiduciary Funds	27

Notes to Financial Statements	28-62

Keystone Oaks School District Table of Contents
(Continued)

Required Supplementary Information

Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget
and Actual – General Fund – Budget and Actual	63-69

Schedule of the School District’s Proportionate Share of the Net Pension
Liability, Public School Employees’ Retirement System	70

Schedule of the School District’s Pension Contributions, Public School
Employees’ Retirement System	71

Schedule of the School District’s Proportionate Share of the Net OBEB
Liability, Public School Employees’ Retirement System	72

Schedule of the School District’s OPEB Contributions, Public School
Employees’ Retirement System	73

Schedule of the School District’s Total OPEB Liability for its School Plan	74

Notes to Required Supplementary Information	75-76

Single Audit

Schedule of Expenditures of Federal Awards	77

Notes to Schedule of Expenditures of Federal Awards	78

Independent Auditor’s Report of Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards	79-80

Independent Auditor’s Report on Compliance for Each Major Program and	81-82 on Internal Control over Compliance Required by the Uniform Guidance

Schedule Findings and Questioned Costs	83-86

Corrective Action Plan	87-88

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Keystone Oaks School District Pittsburgh, Pennsylvania

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Keystone Oaks School District, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Keystone Oaks School District’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Keystone Oaks School District Independent Auditor’s Report

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Keystone Oaks School District as of June 30, 2019, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Report on Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, pension information, and other post-employment benefit information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Keystone Oaks School District’s basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is not a required part of the basic financial statements.

The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

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Keystone Oaks School District Independent Auditor’s Report

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2019, on our consideration of Keystone Oaks School District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Keystone Oaks School District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Keystone Oaks School District’s internal control over financial reporting and compliance.

Carnegie, Pennsylvania December 18, 2019

3

Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

It is management’s privilege to present the financial status of Keystone Oaks School District (School District). The discussion and analysis of the School District’s financial performance provides an overall review of financial activities for the fiscal year ended June 30, 2017, and a comparison to the financial activities for the prior year. Readers should also review the notes to the basic financial statements and financial statements to develop a better understanding of the School District’s financial performance.

The Management Discussion and Analysis (MD&A) is an element of the reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements ‐and Management’sDiscussion and Analysis‐forStateand LocalGovernmentsissued June1999. Certain comparative information between the current year and the prior year is required to be presented in the MD&A.

Financial Highlights

The School District's general fund received 70% of its funding from local sources, 28% from state sources, and 2% from federal sources. Real estate tax receipts continue to be the primary source of revenue for the general fund. Earned income tax is the second most significant local revenue source funding general operations and it has increased modestly over the past few years.

Local revenue sources such as real estate tax, real estate transfer tax, earned income tax and delinquent real estate tax are very difficult taxes to predict. Real estate tax can fluctuate by assessment changes and in a reassessment year, as in this year, are extremely difficult to predict with constant changes from the appeal process. This process will take multiple years before the district assessments and appeals are finalized. The taxable collection rate was set at 96% which is historically collected by the district.

Other local tax revenues are subject to vary from year to year because these taxes are a result of properties changing hands, the fluctuation of earnings of taxpayers in the district and the uncertainty of delinquent real estate tax collection of which the School District has no control. The School District budgets for these local revenues on conservative basis.

Expenditures in the general fund increased by $951,281 compared to the 2017-2018 school year, while revenues in the general fund increased by $751,300 compared to the 2017-2018 school year. The School District completed the 2018-2019 fiscal year with a $6,004,290 general fund balance. This is a $3,039,276 increase over the previous year's ending balance.

Using the Annual Financial Report

The Annual Financial Report consists of a financial section and a single audit section which is issued to comply with federal guidelines as required in the U. S. Office of Management and Budget (OMB) Circular A‐133 Compliance Supplement. Within the financial section are the management’s discussion and analysis (this section) and a series of financial statements and notes to those statements. These statements

4

Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

are organized so that the reader can understand Keystone Oaks School District as an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial activities.

The first two statements are government‐wide financial statements ‐ the statement of net position and the statement of activities. These provide both long‐term and short‐term information about the School District’s overall financial status.

The remaining statements are fund financial statements that focus on individual parts of the School District’s operations in more detail than the government‐wide statements. The governmental funds statements tell how general School District services were financed in the short term as well as what remains for future spending. Proprietary fund statements offer short and long‐term financial information about the activities that the School District operates like a business. For this School District, this is our food service fund. Fiduciary fund statements provide information about financial relationships where the School District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong.

The financial statements also include notes to explain some of the information in the financial statements and provide more detailed data.

The figure below shows how the required parts of the financial section are arranged and relate to one another:

Managment's Discussion and Analysis

Basic Financial Statements

Required Supplementary Information

Government-Wide Financial Statements

Fund Financial Statements

Notes to the Financial Statements

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

The following table summarizes the major features of the School District’s financial statements, including the portion of the School District they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

Scope

Required financial statements

Accounting basis and measurement focus

Type of asset/liability information

Type of in‐ flow/outflow information

Government-Wide Statements

Entire School District (except fiduciary funds)

Statement of net position; statement of activities

Accrual accounting and economic resources Focus

All assets and liabilities, both financial and capital, and short‐term and long‐term

All revenues and expenses during the year, regardless of when cash is received or paid

Governmental

The activities of the School District that are not proprietary or fiduciary, such as education, administration and community services

Balance sheet; statement of revenues, expenditures, and changes in fund balance

Modified accrual accounting and current financial resources focus

Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter

Proprietary

Activities the School District operates similar to private business ‐ food services

Statement of net position; statement of revenues, expenses and changes in fund net position; statement of cash flows

Accrual accounting and economic resources focus

All assets and liabilities, both financial and capital, and short‐ term and long‐term

All revenues and expenses during the year, regardless of when cash is received or paid

Fund Statements

Fiduciary

Instances in which the School District is the trustee or agent to someone else’s resources

Statement of fiduciary net position; statement of changes in fiduciary net position

Accrual accounting and economic resources focus

All assets and liabilities, both short‐term and long‐term

All revenues and expenses during the year, regardless of when cash is received or paid

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

The government‐widestatements report information about theSchool District as awholeusing accounting methods similar to those used by private‐sector companies. The statement of net position includes all of the government’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

Thetwo government‐widestatements report theSchool District’s net position and howthey havechanged. Net position, the difference between the School District’s assets and liabilities, is one way to measure the financial health of the School District.

Over time, increases or decreases in the School District’s net position are an indication of whether its financial health is improving or deteriorating.

In order to assess the overall financial health of the School District, you need also consider non‐financial factors, such as changes in the School District’s property tax base and the performance of its students.

The government‐wide financial statements of the School District are divided into two categories:

Governmental Activities

All basic services (instruction, administration and community services) are included here. Property, occupation, earned income taxes, and state and federal subsidies finance most of these activities.

Business‐Type Activities

The food service operation is a contracted service and costs are covered through fees charged to staff, students, and visitors.

Fund Financial Statements

The School District’s fund financial statements provide detailed information about the most significant funds, not the School District as a whole.

Governmental funds

Most of the School District’s activities are reported in governmental funds, which focus on the determination of financial position and change in financial position, not on income determination. They are reported using the modified accrual accounting method that measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short‐term view of the School District’s general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or less financial resources that can be spent in the near future to finance the School District’s programs.

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

Proprietary funds

These funds are used to account for the School District activities that are similar to business operations in the private sector. The food service fund is the School District’s proprietary fund and is the same as the business‐type activities we report in the government‐wide statements.

Other funds reported by the School District include:

Agency fund

This fund represents the School District’s student activity funds.

Private purpose trust fund

This fund represents the School District’s scholarship fund.

Financial Analysis of the School District as a Whole

The statement of net position provides the perspective of the School District as a whole. Much of the change in this statement is a result of payment of debt, payment of tax refunds due to tax appeals, and completion of capital projects.

Governmental

Activities

2019

Business-Type

Activities	Totals

Governmental

Activities

2018 (Pro Forma1)

Business-Type

Activities	Totals

Current and other assets Capital assets
Total assets

$ 12,898,783 29,300,547
42,199,330

$      1,054,400 37,897
1,092,297

$ 13,953,183 29,338,444
43,291,627

$ 12,993,635	$ 30,699,533
43,693,168

143,924 66,039
209,963

$ 13,137,559 30,765,572
43,903,131

Deferred outflows of resources

Current and other liabilities Noncurrent liabilities
Due within one year

Due in more than one year Total Liabilities

Deferred inflows of resources

9,318,625

5,814,959

4,641,380 73,747,228 84,203,567

3,844,407

-

948,704

--
948,704

-

9,318,625

6,763,663

4,641,380 73,747,228 85,152,271

3,844,407

10,414,867

5,962,946

4,591,250 78,917,618 89,471,814

3,588,238

-	10,414,867

52,758	6,015,704

-              4,591,250 -            78,917,618
52,758	89,524,572

-	3,588,238

Net position

Net investment in capital assets Restricted
Unrestricted

Total Net Position

12,205,553 19,062
(48,754,634)

$ (36,530,019)	$

37,897 -105,696
143,593

12,243,450 19,062
(48,648,938)

$ (36,386,426)

9,073,321 799,158
(48,824,496)

$ (38,952,017)	$

66,039 -91,166
157,205

9,139,360 799,158
(48,733,330)

$ (38,794,812)

1The financial statements for the year ended June 30, 2018 reflect adjustments related to capital assets, debt and receivables. See Note 2 to the financial statements for additional information.

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

The School District’s total net position was a deficit of $(36,386,426) at June 30, 2019 and a deficit of $(38,794,812) at June 30, 2018.

The results of this year's operations as a whole are reported in the statement of activities as shown in the following table. All expenses are reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to specific expense categories are represented to determine the final amount of the School District's activities that are supported by other general revenues.

2019

Business-

2018 (Pro Forma1)

Business-

Revenues

Program revenues

Governmental

Activities

Type

Activities

Governmental

Totals	Activities

Type

Activities	Totals

Charges for services Operating grants & contrib. Capital grants & contrib.
General revenues

$       379,659 6,726,943
708,316

$ 441,106 629,771
-

$       820,765 7,356,714
708,316

$       314,820 7,187,038
638,663

$ 400,833 570,363
-

$       715,653 7,757,401
638,663

Property taxes Other taxes
Grants, subsidies & contrib. Investment earnings
Other Total revenues

Expenses Instruction
Instructional student suppt. Admin. & Finan'l services Operations & maintenance Pupil transportation Student activities Community services Interest on L-T debt Unallocated depreciation Food service
Total expenses

Increase(decrease) in net position

Net position - beginning

Net position - ending

25,722,892 3,602,339 5,941,746 325,750 170,905 43,578,550

23,760,622 2,765,515 4,065,614 4,932,400 2,379,054 1,150,826 19,326 443,587 1,639,608 -41,156,552

2,421,998

(38,952,017)

$ (36,530,019)

---
6,722 -
1,077,599

---------
1,091,211 1,091,211

(13,612)

157,205

$ 143,593

25,722,892 3,602,339 5,941,746 332,472 170,905 44,656,149

23,760,622 2,765,515 4,065,614 4,932,400 2,379,054 1,150,826 19,326 443,587 1,639,608 1,091,211 42,247,763

2,408,386

(38,794,812)

$ (36,386,426)

25,568,609 3,780,882 5,033,369 157,589 239,060 42,920,030

22,521,171 2,649,860 3,504,831 5,673,146 2,313,029 1,150,305 36,634 576,311 1,627,170 -40,052,457

2,867,573

(41,819,590)

$ (38,952,017)

---
5,441 -
976,637

---------
1,044,251 1,044,251

(67,614)

224,819

$ 157,205

25,568,609 3,780,882 5,033,369 163,030 239,060 43,896,667

22,521,171 2,649,860 3,504,831 5,673,146 2,313,029 1,150,305 36,634 576,311 1,627,170 1,044,251 41,096,708

2,799,959

(41,594,771)

$ (38,794,812)

1The financial statements for the year ended June 30, 2018 reflect adjustments related to capital assets, debt and receivables. See Note 2 to the financial statements for additional information.

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

The School District’s largest functions are instruction, instructional support, administration and financial support, operation and maintenance, pupil transportation, student activities, community services and interest on long‐term debt. Those amounts are shown in the next table at net cost for governmental activities only.

2019	2018 (Pro Forma1)

Functions/Programs Instruction
Instructional student support Admin. & fin'l suppt. services Op. & maint. of plant services Pupil transportation
Student activities Community services Interest on long-term debt Unallocated depreciation

Total governmental activities

Less: unrestricted grants, subsidies

Total Cost (Expense) of Services
$ 23,760,622 2,765,515 4,065,614 4,932,400 2,379,054 1,150,826 19,326 443,587 1,639,608

$ 41,156,552

Net Cost (Expense) of Services
$ (18,390,853) (2,287,516) (3,739,508) (4,674,649) (1,886,739) (969,018) (18,472)
264,729 (1,639,608)

(33,341,634)

(5,941,746)

Total Cost (Expense) of Services
$ 22,521,171 2,649,860 3,504,831 5,673,146 2,313,029 1,150,305 36,634 576,311 1,627,170

$ 40,052,457

Net Cost (Expense) of Services
$ (17,367,906) (1,426,260) (3,261,301) (5,410,867) (1,813,926) (1,033,522) (33,336)
62,352 (1,627,170)

(31,911,936)

(5,033,369)

Total needs from local taxes

and other revenues	$ (27,399,888)	$ (36,945,305)

1The financial statements for the year ended June 30, 2018 reflect adjustments related to capital assets, debt, and receivables. See note 2 to the financial statements for additional information.

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

The following table reflects the food service program, the School District’s only business type activity.

2019	2018 (Pro Forma1)

Total Cost (Expense) of
Functions/Programs	Services

Net Cost (Expense) of
Services

Total Cost (Expense) of
Services

Net Cost (Expense) of
Services

Food service	$	1,091,211 $

Less: unrestricted grants, subsidies

(20,334) $	1,044,251 $

(6,722)

(73,055)

(5,441)

Total needs from local taxes

and other revenues	$ (27,399,888)	$ (37,278,517)

1The financial statements for the year ended June 30, 2018 reflect adjustments related to capital assets, debt, and receivables. See note 2 to the financial statements for additional information.

School District Funds

General Fund Budget

Local State Federal

Instruction Support services Noninstructional Debt service

Budgeted Revenues 2018-2019

$ 30,014,864 12,065,343 849,422

Budgeted Expenditures 2018-2019

$ 23,469,023 12,812,287 1,107,538 5,151,426

Actual Revenues 2018-2019

$ 30,556,236 12,326,433 675,486

Actual Expenditures 2018-2019

$ 23,458,809 13,170,398 1,128,659 5,149,923

Local revenues were over budget due to the School District experiencing a higher collection of delinquent real estate taxes, earned income taxes, and earnings on investments. State revenues were over budget due to the School District receiving a Safe Schools grant not budgeted for, along with having an increase in state retirement revenue. Support services were over budget due to bond issuance costs on refunded bonds not planned for, higher transportation costs, and professional service costs for repairs to Myrtle Elementary due to a flood.

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

Capital Assets and Debt Administration

Capital Assets

Governmental activities Land
Land improvements Buildings and improvements Furniture and equipment Construction in progress

Capital assets, net of accumulated depreciation
June 30, 2019	June 30, 2018 (restated)

$           1,355,020 $              1,355,020 2,326,509                   2,668,352 24,748,159                 25,513,069 870,859                      715,342
-	447,750

$	30,295,547 $	30,699,533

Business-type activities
Furniture and equipment	$	10,617 $	375,783

During the 2018-2019 school year, the School District completed a roof coating, along with upgrading the clock and intercom systems at the high school and middle school.

Debt Administration

The School District’s face amount of outstanding bonds and notes at June 30, 2019 and 2018 is shown in

the table below.

General obligation bonds Series of 2013
Series of 2013A Series of 2014C Series of 2015 Series of 2019A Series of 2019B
General obligation note

June 30, 2019

$	2,635,000 --
4,750,000 2,725,000 6,405,000 96,250
$ 16,611,250

June 30, 2018

$	6,290,000 2,820,000 7,280,000 4,815,000
--
192,500 $ 21,397,500

During the 2018-2019 school year, the School District refunded its Series of 2013A and Series of 2014C general obligation bonds. The School District received bond proceeds of $93,853 from the refunded general obligation bonds, which was used for capital projects across the district.

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Keystone Oaks School District Management’s Discussion & Analysis June 30, 2019

Economic Factors and Next Year’s Budgets and Rates

The School District does not expect significant growth given the lack of real estate available for development, but there is currently a development plan in the process of being built in Castle Shannon Borough. This development plan could bring in additional tax revenue, however, the School District is not expecting a significant increase.

Future economic factors that will impact the district are Pennsylvania Public School Employees Retirement System (PSERS) as all Pennsylvania district’s employer rates are at very high rates. The employer rates for the last five years were 21.40% in 2014‐2015, 25.84% in 2015‐2016, 30.03% in 2016‐ 2017, 32.57% in 2017-2018, and 33.43% in 2018-2019; and future annual rates will be 34.29% in 2019‐ 2020, 34.51% in 2020‐2021, 34.95% in 2021-2022, 35.62% in 2022-2023, and 36.12% in 2023‐2024. These increases will strain all Pennsylvania school districts.

Medical insuranceis potentially increasing 5.0% in the coming year but could be much worse if the district was not a member of the Allegheny County Health Insurance Consortium that is setup through Allegheny Intermediate Unit. Allegheny County implemented reassessment of all properties in calendar year beginning January 1, 2013. The School District currently experienced a tax appeal that decreased the School District’s assessed value by approximately $28,650,000 in the future years. This amount equates to a decrease in tax revenue of approximately $558,650 at the School District’s 2019 millage rate of 19.499. The Pennsylvania state law Act 1 of 2006 sets a cap on the amount a school district can raise property taxes without first getting voter approval.

The School District has adopted a Capital Reserve Plan for the next five (5) years on many needed improvements with facilities and grounds throughout the district. The major items are replacement ofroofs at the middle school and high school, replacement of roof top units across the district, VCT tile replacement throughout the district, painting of exterior panels, and deteriorating tennis courts.

Contacting the School District Financial Management

Keystone Oaks School District’s financial report is designed to provide our citizens, taxpayers, parents, students, investors and creditors with a general overview of the School District’s finances and to demonstrate the Board’s accountability for the money it received. If you have any questions about this report or wish to request additional financial information, please contact Joseph Kubiak, Business Manager, Keystone Oaks School District, 1000 Kelton Avenue, Pittsburgh, PA 15216, (412) 571‐6000.

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Keystone Oaks School District Statement of Net Position
June 30, 2019

Governmental Activities

ASSETS

Business-type

Activities	Total

Cash and cash equivalents Taxes receivable, net
Due from other governments Other receivables Inventories
Prepaid expenses

Capital assets not being depreciated

$ 9,696,175	$ 1,276,607 1,704,044
144,237 -
77,720

1,355,020

922,238 -
78,418 23,456 30,288 -
-

$ 10,618,413 1,276,607 1,782,462 167,693 30,288 77,720
1,355,020

Capital assets, net of accumulated depreciation

TOTAL ASSETS

DEFERRED OUTFLOWS OF RESOURCES Pension related items
OPEB related items Deferred loss on refunding

TOTAL DEFERRED OUTFLOWS OF RESOURCES

LIABILITIES Internal balances Accounts payable
Accrued salaries and benefits Payroll deductions and withholdings Accrued interest
Unearned revenues Other current liabilities Noncurrent liabilities:
Due within one year

Due in more than one year: Compensated absences Bonds payable, net
Net OPEB liability Net pension liability

TOTAL LIABILITIES

27,945,527

42,199,330

8,540,270 742,426 35,929

9,318,625

(918,577) 1,927,843 3,407,318 1,256,726
130,087 1,000 10,562

4,641,380

434,639 12,636,295 4,308,294 56,368,000

84,203,567

37,897

1,092,297

---

-

918,577 6,870
---
23,257

-

----

948,704

27,983,424

43,291,627

8,540,270 742,426 35,929

9,318,625

-1,934,713 3,407,318 1,256,726 130,087 24,257 10,562

4,641,380

434,639 12,636,295 4,308,294 56,368,000

85,152,271

(Continued)

14

Keystone Oaks School District Statement of Net Position
June 30, 2019

(Continued)

DEFERRED INFLOWS OF RESOURCES Pension related items
OPEB related items Deferred gain on refunding

TOTAL DEFERRED INFLOWS

OF RESOURCES

Governmental Activities

1,390,000 2,409,779 44,628

3,844,407

Business-type Activities

---

-

Total

1,390,000 2,409,779 44,628

3,844,407

NET POSITION

Net investment in capital assets Restricted
Unrestricted

TOTAL NET POSITION

12,205,553 19,062
(48,754,634)

$(36,530,019)	$

37,897 -105,696

143,593

12,243,450 19,062
(48,648,938)

$ (36,386,426)

The accompanying notes are an integral part of these financial statements.

15

Program Revenues

Operating	Capital

Keystone Oaks School District Statement of Activities
For the Year Ended June 30, 2019

Net (Expense) Revenue and Changes in Net Position

Functions/Programs Governmental activities:

Charges for Expenses	Services

Grants and Contributions

Grants and Contributions

Governmental Activities

Business-type
Activities	Total

Instruction

Instructional student support Admin. & financial support Operations & maintenance Pupil transportation
Student activities Community
Interest on long-term debt Unallocated depreciation Total governmental activities

Business-type activities: Food service
Total primary government

General revenues: Taxes:
Property taxes Earned income taxes
Real estate transfer taxes Other taxes

$ 23,760,622 2,765,515 4,065,614 4,932,400 2,379,054 1,150,826 19,326 443,587 1,639,608 41,156,552

1,091,211

1,091,211

$	269,386 ----
110,273 ---
379,659

441,106

441,106

$ 5,100,383 477,999 326,106 257,751 492,315 71,535
854 --
6,726,943

629,771

629,771

$	 -------
708,316 -708,316

-

$ (18,390,853) (2,287,516) (3,739,508) (4,674,649) (1,886,739) (969,018) (18,472)
264,729 (1,639,608)
(33,341,634)

(33,341,634)

25,722,892 3,184,687 327,138 90,514

$	 ----------

(20,334) (20,334)

----

$ (18,390,853) (2,287,516) (3,739,508) (4,674,649) (1,886,739) (969,018) (18,472)
264,729 (1,639,608)
(33,341,634)

(20,334) (33,361,968)

25,722,892 3,184,687 327,138 90,514

Grants, subsidies, & contributions not restricted Investment earnings
Miscellaneous income

Total general revenues, special items, extraordinary items and transfers

Change in Net Position

Net Position-beginning (restated)

Net Position-ending

5,941,746 325,750 170,905 35,763,632

2,421,998 (38,952,017)

$(36,530,019)

-6,722 -6,722

(13,612) 157,205

$	143,593

5,941,746 332,472 170,905 35,770,354

2,408,386 (38,794,812)

$ (36,386,426)

The accompanying notes are an integral part of these financial statements.

16

Keystone Oaks School District Balance Sheet
Governmental Funds June 30, 2019

General Fund
ASSETS

Capital

Projects Fund

Total Governmental
Funds

Cash & cash equivalents Taxes receivable, net Due from other funds
Due from other governments Other receivables
Prepaid items

$ 9,315,867 1,276,607 1,151,224 1,704,044 144,237
77,720

$	380,308 ----
-

$ 9,696,175 1,276,607 1,151,224 1,704,044 144,237
77,720

TOTAL ASSETS	$ 13,669,699	$	380,308	$ 14,050,007

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

Liabilities

Due to other funds Accounts payable
Accrued salaries and benefits Payroll deductions and withholdings Unearned revenues

Total liabilities

$         10,562 1,799,244 3,407,318 1,256,726 1,000

6,474,850

$       232,647 128,599
---

361,246

$       243,209 1,927,843 3,407,318 1,256,726 1,000

6,836,096

Deferred inflows of resources Unavailable revenues - property taxes

Fund balances

Nonspendable Committed Assigned Unassigned

Total fund balances

TOTAL LIABILITIES, DEFERRED INFLOWS

OF RESOURCES AND FUND BALANCES

1,190,559

77,720 -
3,780,089 2,146,481

6,004,290

$ 13,669,699

-

-19,062 -
-

19,062

$	380,308

1,190,559

77,720 19,062 3,780,089 2,146,481

6,023,352

$ 14,050,007

The accompanying notes are an integral part of these financial statements.

17

Keystone Oaks School District Reconciliation of the Governmental Funds Balance Sheet
To the Statement of Net Position June 30, 2019

TOTAL FUND BALANCES - GOVERNMENTAL FUNDS	$	6,023,352

Differences in amounts reported for governmental activities in the statement of net position:

Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. The cost of assets is $78,929,587, and the accumulated depreciation is $49,629,040.

Property taxes receivable will be collected next year, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the funds.

Deferred charges on bonds issued and refunded are capitalized and amortized over the life of the bonds in the statement of net
position.

29,300,547

1,190,559

(8,699)

Deferred outflows and inflows of resources for pension and other post-employment benefits are applicable to future periods and, therefore, are not reported in the funds:
Deferred outflows of resources related to pensions Deferred outflows of resources related to OPEB Deferred inflows of resources related to pensions
Deferred inflows of resources related to OPEB

$       8,540,270 742,426
(1,390,000)

(2,409,779)	5,482,917

Long-term liabilities, including bonds notes and capital leases payable, are not due and payable in the current period, and therefore are not reported as liabilities in the funds. Long-term liabilities at year end consist of:
Bonds payable Unamortized bond premium Notes payable
Accrued interest on bonds and notes Compensated absences
Net pension liability

Net OPEB liability

(16,515,000) (571,295) (96,250) (130,087) (529,769) (56,368,000)
(4,308,294)	(78,518,695)

TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES	$ (36,530,019) The accompanying notes are an integral part of these financial statements.

18

Keystone Oaks School District Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds Year Ended June 30, 2019

General Fund

REVENUES

Capital Projects Fund

Total Governmental
Funds

Local sources State sources Federal sources
TOTAL REVENUES

$ 30,556,236	$ 12,326,433
675,486

43,558,155

12,545	$ -
-

12,545

30,568,781 12,326,433 675,486
43,570,700

EXPENDITURES Instruction
Support services Noninstructional services Capital outlay
Debt service (principal & interest) Refunds of prior year receipts TOTAL EXPENDITURES

Excess (Deficiency) of revenues over expenditures

OTHER FINANCING SOURCES(USES) Issuance of refunding bonds (Discount)Premium on bonds issued Transfers in
Payment to refunded bond escrow agent Transfers out
TOTAL OTHER FINANCING SOURCES (USES)

Net change in fund balances

FUND BALANCE - JULY 1, 2018

23,458,809 13,170,398 1,128,659 -
5,149,923 631,671 43,539,460

18,695

9,130,000 455,672 2,873,945
(9,345,183) (93,853)

3,020,581

3,039,276

2,965,014

-836,690 -
49,804 --
886,494

(873,949)

--
93,853 --

93,853

(780,096)

799,158

23,458,809 14,007,088 1,128,659 49,804 5,149,923 631,671 44,425,954

(855,254)

9,130,000 455,672 2,967,798
(9,345,183) (93,853)

3,114,434

2,259,180

3,764,172

FUND BALANCE - JUNE 30, 2019          $     6,004,290      $          19,062      $     6,023,352 The accompanying notes are an integral part of these financial statements.

19

Keystone Oaks School District Reconciliation of the Governmental Funds Statement
of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities
Year Ended June 30, 2019

NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS	$	2,259,180

Amounts reported for governmental activities in the statement of activities are different because:

Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation exceeds capital outlays in the period.
Depreciation expense

Capital outlays

$	(1,774,299)
375,313	(1,398,986)

Repayment of bond and note principal is an expenditure

in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position

Proceeds from refunding bonds are reported as other financing sources in the fund statements. In the government-wide financial statements
issuing debt increases long-term liabilities.

4,591,250

(9,130,000)

Payment to the refunding bond escrow agent is an expenditure in the governmental funds, however the old debt is removed from the statement of net position
Face amount of refunded debt Unamortized premiums
Unamortized deferred losses

9,325,000 75,753
(7,884)	9,392,869

Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due.
Net change in accrued interest on bonds

28,379

(Continued)

20

Keystone Oaks School District Reconciliation of the Governmental Funds Statement
of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities
Year Ended June 30, 2019

(Continued)

In the statement of activities, compensated absences are

measured by the amounts earned during the year. In governmental funds, however, expenditures are measured by the amount of financial
resources used (essentially, the amounts actually paid).	(80,734)

Governmental funds report School District pension and OPEB contributions as expenditures. However, in the statement of activities, the cost of pension and OPEB benefits earned is reported as an expense.
School District pension contributions (PSERS) School District OPEB contributions (PSERS) School District OPEB contributions (School Plan) Cost of pension benefits earned
Cost of OPEB benefits earned (PSERS) Cost of OPEB benefits earned (School Plan)

Premiums on bonds issued and refunded are capitalized and amortized over the life of the bonds in the statement of net position.
Premiums on refunding bonds issued Amortization of bond premiums

Deferred charges on refunded bonds are amortized over the life of the bonds in the statement of net position.
Deferred gain on refunding for refunded bonds issued Amortization of deferred gain on refunding
Amortization of deferred loss on refunding

5,402,270 137,542 499,884
(6,635,704)

(26,606) 36,229

(455,672) 153,859

(47,686) 3,058
(72,710)

(586,385)

(301,813)

(117,338)

Because some property taxes will not be collected for several

months after the School District's fiscal year ends, they are not considered as "available" revenues in the governmental funds.

Internal service fund activity is reported as governmental activities in the statement of activities.

590,559

(2,824,983)

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES                          $       2,421,998 The accompanying notes are an integral part of these financial statements.

21

Keystone Oaks School District Statement of Net Position Proprietary Funds
June 30, 2019

Food Service Fund
ASSETS

Internal Service Funds

Cash and cash equivalents Due from other governments Other receivables Inventories
Machinery and equipment, net

$	922,238	$	-78,418                           -23,456                           -30,288                           -
37,897	-

TOTAL ASSETS

LIABILITIES Due to other funds Accounts payable Student accounts Unearned revenues

TOTAL LIABILITIES

1,092,297	-

918,577                           -6,870                           -9,438                           -13,819                           -

948,704	-

NET POSITION Invested in capital assets Unrestricted

TOTAL NET POSITION

37,897                           -105,696                           -

$	143,593	$	-

The accompanying notes are an integral part of these financial statements.

22

Keystone Oaks School District Statement of Revenues, Expenses and Changes in Fund Net Position
Proprietary Funds June 30, 2019

Food Service Fund
OPERATING REVENUES

Internal Service Funds

Food service revenue

TOTAL OPERATING REVENUES

OPERATING EXPENSES Salaries
Employee benefits
Purchased professional and technical service Other purchased service
Supplies Depreciation
Other operating expenditures

$	441,106	$	-

441,106	-

379,014                           -186,656                           -17,285                           -3,091                           -468,712                           -34,834                           -1,619                           -

TOTAL OPERATING EXPENSES

Operating loss

NONOPERATING REVENUES (EXPENSES) Earnings on investments
State sources Federal sources

TOTAL NONOPERATING REVENUE (EXPENSE)

Income (loss) before transfers

Transfer out

Changes in net position

TOTAL NET POSITION - JULY 1, 2018

1,091,211

(650,105)

6,722 101,732 528,039

636,493

(13,612)

-

(13,612)

157,205

-

-

48,962 --

48,962

48,962

(2,873,945)

(2,824,983)

2,824,983

TOTAL NET POSITION - JUNE 30, 2019                               $      143,593         $                 -The accompanying notes are an integral part of these financial statements.

23

Keystone Oaks School District Statement of Cash Flows Proprietary Funds
June 30, 2019

Food Service Fund
Cash flows from operating activities

Internal

Service Funds

Cash received from users

Cash payments to employees for services

Cash payments to suppliers for goods and services

Net cash provided used for operating activities

$	 423,846	$	-(565,670)                          -(436,503)                          -
(578,327)	-

Cash flows from non-capital financing activities State sources
Federal sources

Advances from other funds Transfers out
Net cash provided by (used for) non-capital financing activities

Cash flows from capital and related financing activities Facilities acquisition and construction
Net cash used for capital and related financing activities

Cash flows from investing activities Earnings on investments
Investment withdrawals

Net cash provided by investing activities

Net increase (decrease) in cash and cash equivalents

CASH AND CASH EQUIVALENTS - JULY 1, 2018

100,915 424,882 902,116 -

1,427,913

(6,692)

(6,692)

6,722 183 6,905

849,799

72,439

--

(2,873,945)

(2,873,945)

-

-

48,962 2,330,229 2,379,191

(494,754)

494,754

CASH AND CASH EQUIVALENTS - JUNE 30, 2019	$	922,238	$		-(Continued)

24

Keystone Oaks School District Statement of Cash Flows Proprietary Funds
June 30, 2019

(Continued)

Reconciliation of operating income to net cash

used for operating activities

Food Service

Fund

Internal

Service Funds

Operating loss

Adjustments to reconcile operating loss to net cash used for operating activities
Depreciation and net amortization Donated commodities
(Increase) decrease in inventories (Increase) decrease in other receivables Increase (decrease) in accounts payable Increase (decrease) in student accounts
Increase (decrease) in other current liabilities Total adjustments
Net cash used for operating activities

Noncash non-capital financing activities:

During the year ended June 30, 2019, the School District

received USDA donated commodities

$	(650,105)	$	-

34,834                            -70,042                            -3,181                            -(13,648)                          -(15,469)                          -(3,612)                          -(3,550)                          -71,778                            -
$	(578,327)	$	-

$	66,492	$	-

The accompanying notes are an integral part of these financial statements.

25

Keystone Oaks School District Statement of Net Position Fiduciary Funds
June 30, 2019

Private Purpose

Trust Fund	Agency Fund ASSETS

Cash and cash equivalents Due from other funds

TOTAL ASSETS

$                11,366        $                77,863 -                          10,562

11,366	88,425

LIABILITIES

Other current liabilities	-	88,425

NET POSITION

Held in trust for scholarships	$	11,366	$	-

The accompanying notes are an integral part of these financial statements.

26

Keystone Oaks School District Statement of Changes in Net Position Fiduciary Funds
Year Ended June 30, 2019

Private Purpose

ADDITIONS

Gifts and Contributions Interest

TOTAL ADDITIONS

DEDUCTIONS Scholarships Awarded

Change in net position

NET POSITION - JULY 1, 2018

NET POSITION - JUNE 30, 2019

Trust Fund

$                  3,500 226

3,726

4,800

(1,074)

12,440

$	11,366

The accompanying notes are an integral part of these financial statements.

27

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Note 1 – Summary of Significant Accounting Policies

The Keystone Oaks School District (School District) is located in Allegheny County, Pennsylvania, and provides public education to residents of the Boroughs of Castle Shannon, Dormont, and Green Tree.

Reporting Entity

A reporting entity is composed of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the School District consists of all funds, departments, boards and agencies that are not legally separate from the School District. For Keystone Oaks School District, this includes general operations, food service, and student related activities of the School District.

In evaluating the School District as a primary government in accordance with Governmental Accounting Standards Board (GASB) Statement No. 61, The Financial Reporting Entity, management has addressed all potential component units. Consistent with this statement, the criteria used by the School District to evaluate possible inclusion of related entities within its reporting entity are financial accountability and the nature and significance of the relationship. Upon review of this criteria, the School District determined that there were no potential component units that met the criteria for inclusion in the reporting entity.

The School District is however a participant in a jointly governed organization: Parkway West Career and Technology Center (Center). The Center is not considered part of the reporting entity, as the School District is not financially accountable for the school.

Basis of Presentation

The financial statements of the School District have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard‐setting body for establishing governmental accounting and financial reporting principles.

The School District’s basic financial statements consist of government‐wide statements, including a statement of net position and a statement of activities, and fund financial statements that provide a more detailed level of financial information.

Government‐wide Financial Statements

The statement of net position and the statement of activities display information about the School District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. Eliminations have been made to minimize the double‐counting of internal activities. The statements distinguish between those activities of the School District that are governmental in nature and those that are considered business‐type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business‐type activities are financed in whole or in part by fees charged to external parties.

The statement of net position presents the financial condition of the governmental and business‐ type activities of the School District at fiscal year-end. The statement of activities presents a

28

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

comparison between direct expenses and program revenues for each program or function of the School District’s governmental activities and business‐type activities. Direct expenses are those that are specifically associated with a service program or department and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues of the School District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function or business segment is self‐financing or draws from the general revenues of the School District.

In the process of aggregating data for the statement of net position and the statement of activities, some amounts reported as interfund activity and balances are eliminated.

Fund Financial Statements

The fund financial statements provide information about the School District’s funds, including fiduciary funds. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.

Fund Accounting

The School District uses funds to maintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self‐balancing set of accounts. There are three categories of funds: governmental, proprietary and fiduciary.

Governmental Funds

Governmental funds are those through which most governmental functions of the School District are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to thepurposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance.

The School District reports the following major governmental funds: General Fund
The general fund is the general operating fund of the School District. It is used to account for all financial resources except those required to be accounted for in another fund. Normal debt service payments for general long‐term debt are recorded in the general fund by the School District.

29

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Capital Projects Fund

The capital projects fund is the School District’s construction fund and accounts for funds which are typically borrowed or transferred from the general fund and used for major capital improvements.

Proprietary Funds

Proprietary fund reporting focuses on the determination of operating income, changes in net position, financial position, and cash flows. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary fund’s principal ongoing operations. The principal operating revenues of the School District’s enterprise fund are food service charges. Operating expenses for the School District’s enterprise fund includefood production costs, supplies, administrative costs, and depreciation on capital assets. All revenues or expenses not meeting this definition are reported as nonoperating revenues and expenses.

The following are the School District’s proprietary funds: Enterprise Fund
Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods or services.

Food Service Fund

The food service fund accounts for the financial transactions related to the food service operations of the School District. This fund is the School District’s only enterprise fund and it is reported as a major fund.

Internal Service Fund

Internal service funds may be used to account for any activity for which a fee is charged to internal users for goods or services. All internal service funds were closed during the fiscal year due to lack of activity in purpose.

Fiduciary Funds

Fiduciary fund reporting focuses on net position and changes in net position. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private purpose trust funds and agency funds, of which the School District reports the following:

Private Purpose Trust Fund

Trust funds are used to account for assets held by the School District under a trust agreement for individuals, private organizations, or other governments and are not available to support the School District’s own programs.

30

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Scholarship Fund

This is a non‐expendable trust fund established to provide income for a continuing scholarship. The basis of accounting for non‐expendable trust funds is full accrual.

Agency Funds

Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. These organizations exist with the explicit approval of and are subject to revocation by the Board.

Student Activity Fund

This fund is utilized to account for monies authorized by Section 511 of the Public School Code of 1949 for student activities, publications and organizations.

Measurement Focus, Basis of Accounting

Government‐wide, Proprietary, and Fiduciary Fund Financial Statements

The government‐wide, proprietary, and fiduciary fund financial statements are prepared using the economic resources measurement focus and accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have beensatisfied.

Governmental Fund Financial Statements

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The statement of revenues, expenditures and changes in fund balances reflects the sources (i.e. revenues and other financing sources) and uses (i.e. expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government‐wide financial statements are prepared. Governmental fund financial statements, therefore, include a reconciliation with brief explanations to better identify the relationship between the government‐wide statements and the fund financial statements for governmental funds.

Revenues ‐ Exchange and Nonexchange Transactions

Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On the modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the School District, available means expected to be received within sixty days of fiscal year end.

31

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Nonexchange transactions, in which the School District receives value without directly giving equal value in return, include property taxes, income taxes, grants, entitlements and donations. On the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from income taxes is recognized in the period in which the income is earned. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the fiscal year when use is first permitted; matching requirements, in which the School District must provide local resources to be used for a specified purpose; and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On the modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized.

Under the modified accrual basis, the following revenue sources are considered both measurable and available at fiscal year-end: property taxes available as an advance, income taxes, grants, interest, tuition and student fees.

Unearned Revenues

Unearned revenues arise when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before the eligibility requirements are met are recorded as unearned revenue.

Expenses/Expenditures

On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amortization, are not recognized in governmental funds.

Budgetary Process

Generally accepted accounting principles serve as the budgetary basis ofaccounting. In accordance with state law, an annual budget prepared by function and object is formally adopted for the General Fund. The School District does not formally adopt budgets for other funds. The measurement level of control over expenditures for all budgeted funds is the surplus or deficit of the fund as a whole.

The amounts reported as the original budgeted amounts on the budgetary statements reflect the amounts on the budget when the original appropriations were adopted. The appropriation resolution is subject to budget transfer amendments between functions, as allowed by the Public School Code, throughout the year with the restriction that appropriations cannot exceed estimated resources. The amounts reported as the original budgeted amounts in the budgetary financial statement reflect the first appropriation resolution for the general fund that covered the entire fiscal year. The amounts reported as the final budgeted amounts represent the final appropriation that includes budget transfer amendments as passed by the Board during the fiscal year. There were no supplemental budgetary appropriations made during the year ended June 30, 2019.

32

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Encumbrances

Encumbrances at year‐end are reported in the fund financial statements as reservations of fund balance since they do not constitute expenditures or liabilities but serve as authorization for expenditures in the subsequent year. As of June 30,2019, the School District has no encumbrances.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the proprietary fund considers all highly liquid investments with maturity of three months or less when purchased and pooled funds investments subject to daily withdrawal to be cash equivalents.

Fair Value Measurements

When applicable, the School District measures investments at fair value. The fair value measurement guidelines, set forth by generally accepted accounting principles, recognize a three‐ tiered fair value hierarchy as follows:

•	Level 1 inputs: Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price for an identical asset or liability in an active market (e.g., an equity security traded on a major exchange) provides the most reliable fair value measurement and, if available, should be used to measure the fair value in that particular market.

•	 Level 2 inputs: The categorization of an asset or liability as Level 1 requires that it is traded in an active market. If an instrument is not traded in an active market, it may fall to Level 2. Level 2 inputs are inputs that are observable, either directly or indirectly, but do not qualify as Level 1.

•	Level 3 inputs: Reporting entities may use unobservable inputs to measure fair value if relevant observable inputs are not available, thereby allowing for situations in which there is little, if any market activity for the asset or liability at the measurement date. These unobservable inputs are considered Level 3.

Investment Risks Custodial Credit Risk
Custodial credit risk is the risk of loss resulting from the failure of the custodian such that the custodian would not be able to recover the value of its investments or collateral securities in the possession of the custodian. The School District is permitted to invest funds consistent with sound business practices in the following types of investments, certain money market mutual funds, and deposit accounts:

Obligations of (a) the United States of America or any of its agencies or instrumentalities backed by the full faith and credit of the United States of America, (b) the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth of Pennsylvania, or (c) any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision.

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Act 20, a Pennsylvania law enacted in June of 1995, expands the allowable investment vehicles to include certain money market mutual funds rated as AAA whose investments are limited to those mentioned in the previous paragraph.

Deposits in savings accounts or time deposits or share accounts of institutions insured by the Federal Deposit Insurance Corporation to the extent that such accounts are so insured and, for any amounts above the insured maximum, provided that approved collateral as provided by law therefore shall be pledged by the depository.

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of a fixed income investment. The School District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

Concentration of Credit Risk

Credit risk concentration is the risk of loss attributed to investments (other than those issued or guaranteed by the U.S. Government) in anyone organization that represented 5 percent or more of the plan's net position. The School District places no limit on the amount it may invest in any one issue.

Foreign Currency Risk

Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment.

Taxes Receivable

Taxes receivable consist of delinquent real estate and other taxes due at June 30, 2019, less an allowance for the amount of these delinquencies not expected to be collected within the next fiscal year.

Interfund Receivables and Payables

During the course of operations, transactions sometimes occur between individual funds for goods provided or services rendered. These receivables and payables, to the extent they exist, are classified as due from other funds or due to other funds on the balance sheet.

Inventories

On government‐wide financial statements, inventories are presented at cost on a first‐in, first‐out basis, and are expensed when used.

Inventories in governmental funds are stated at cost by the first‐in, first‐out method. The purchase method is used to account for inventories. Under the purchase method, inventories are recorded as expenditures when purchased; however, an estimated value of inventories is reported as an asset in thegeneral fund. The inventories in thegeneral fund are equally offset by a fund balance reserve, which indicates they do not constitute “available spendable resources” even though they are a component of net current assets. The general fund did not have a material inventory balance as of June 30, 2019.

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

A physical inventory of the food service fund’s food and supplies was taken as of June 30, 2019. The inventory consisted of food, supplies, and government donated commodities (valued using USDA values) using the first‐in, first‐out (FIFO) method. Any unused commodities donated by the federal government at June 30, 2019, are reported as unearned revenue.

Capital Assets

Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, sidewalks and similar items) arereported in the applicable governmental orbusiness‐type activities columns in the government‐wide financial statements. Capital assets are defined by the School District as assets with an initial individual cost of more than $1,500 and an estimated useful life in excess of one year. Management has elected to include certain homogeneous asset categories with individual assets less than $1,500 as composite groups for financial reporting purposes. In addition, capital assets purchased with long‐term debt may be capitalized regardless of the thresholds established. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business‐type activities is included as part of the capitalized value of the assets constructed.

All capital assets, except land and construction in progress, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight‐line method over the following useful lives.

Description

Land Improvements

Buildings and Building Improvements Vehicles
Machinery and Equipment

Long‐Term Liabilities

Estimated Lives

10 ‐ 15 years 20 ‐ 50 years 6 ‐ 10 years 6 ‐ 10 years

In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or proprietary fund type statement of net position. Bond premium and discount are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premium and discount during the current period. The face amount of debt issued and premiums are reported as other financing sources while discount on debt issuances are reported as other financing uses.

Compensated Absences

The School District's policies regarding vacation and sick time are provided through various contracts. Employees can accumulate sick and/ or personal days which they are paid for upon

35

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

retirement or termination of service. The amount the employee is compensated and the number of days varies based on their contract and their years of service. The liability for these compensated absences is recorded as long-term debt in the government-wide statements. The current portion of this debt is estimated based on historical trends. In the fund financial statements, governmental funds report only the amount of reimbursable unused personal or sick leave to employees who have terminated their employment as of the end of the fiscal year, while the proprietary funds report the liability as it is incurred.

Equity Classifications Net Position
Equity in the government-wide financial statements and proprietary fund financial statements are classified as net position and displayed in three components:

Net investment in capital assets - consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowing that are attributable to the acquisition, construction, or improvement of those assets.

Restricted net position - consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or (2) law through constitutional provisions or enabling legislation.

Unrestricted net position - all other net position that does not meet the definition of "restricted" or "net investment in capital assets".

Fund Balance Classifications

In accordance with Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the School District classifies governmental fund balances as follows:

Nonspendable – includes amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact. All amounts reported as nonspendable at June 30, 2019, by the School District are nonspendable in form.

Restricted – includes amounts that are restricted by external sources (creditors, laws of other governments, etc.) or by constitutional provision or enabling legislation.

Committed – includes amounts that can only be used for specific purposes. Committed fund balance is reported pursuant to resolutions passed by the Board of School Directors, the School District’s highest level of decision-making authority. Commitments may be modified or rescinded only through resolutions approved by the Board of School Directors.

Assigned – includes amounts that the School District intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Under the School District’s established policy, amounts may be assigned by the Business Manager of the School District.

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Unassigned – includes amounts that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within the general fund.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the School District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the School District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Board of School Directors has provided otherwise in its commitment or assignment actions.

The School District’s policy is to maintain an unassigned general fund balance of not less than five percent (5%) and not more the eight percent (8%) of the budgeted expenditures for that fiscal year.

Operating Revenues and Expenses

The School District's proprietary funds distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses of the School District's food service fund consist of charges for meals and the costs of providing those services, including depreciation and excluding interest cost. All other revenues and expenses are reported as nonoperating.

Estimates

The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from thoseestimates.

New Accounting Standards

Effective July 1, 2018, the School District adopted the provisions of GASB Statement No. 83, Certain Asset Retirement Obligations and GASB Statement No 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.

GASB Statement No. 83 addresses accounting and financial reporting for certain asset retirement obligations (ARO). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in GASB Statement No. 83. The implementation of GASB Statement No. 83 had no impact on the financial statements of the School District for the year ended June 30, 2019.

The objective of GASB Statement No. 88 is to improve the information that is disclosed in the notes to financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. GASB Statement No. 88 defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established.

Pending Pronouncements

GASB Statement No. 84, Fiduciary Activities will be effective for the School District for the year ended June 30, 2020. The objective GASB Statement No. 84 is to improve guidance regarding the

37

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. GASB Statement No. 84 establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities.

GASB Statement No. 87, Leases will be effective for the School District for the year ended June 30, 2021. The objective of GASB Statement No. 87 is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. GASB Statement No. 87 increases the usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under GASB Statement No. 87, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing therelevance and consistencyofinformation about leasing activities.

GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, will be effective for the School District for the year ended June 30, 2021. GASB Statement No. 89 requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund.

Note 2 – Restatement of Beginning Net Position

Beginning net position of the government-wide financial statements was restated as follows:

Governmental

Activities

Business-Type

Activities

Net position at June 30, 2018, as previously stated Reclassification of internal service funds as
governmental activities

Remove unamortized bond discounts Restate unamortized bond premiums Restate long-term receivables Restate capital assets

Net position at July 1, 2018 - restated

$ (33,099,725)

2,824,983 (43,419)
(179,484) (2,422,238) (6,032,134)

$ (38,952,017)

$	2,982,188

(2,824,983) -
---

$	157,205

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

The government-wide financial statement presentation of internal service funds was restated to report the activities of the funds as governmental. Under GASB Statement No. 34, Basic Financial Statements—Management’s Discussion and Analysis—for State and Local Governments, governmental activities usually will bethe same as activities reported in governmental and internal service funds, and business-type activities usually will be the same as activities reported in enterprise funds’ functions, unless the activities of the internal service fund predominately relate to business-type activities. The School District’s internal service funds predominately serve its governmental activities.

The unamortized bond discounts, previously reported, were related to underwriter’s discounts that are more accurately characterized as bond issuance costs. These costs are to be expensed in the year of issue and the associated amounts were removed from the statement of net position.

Unamortized bond premiums were restated to agree to straight-line amortization over the life of the bonds based on months elapsed.

Previously, the School District reported long-term receivables related to the Pennsylvania Department of Education’s School Construction and Facilities program (PlanCon). It was determined that the associated receivables do not meet the revenue recognition requirements of GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions and beginning net position in the governmental activities was restated. The School District defines the PlanCon subsidy as a government-mandated nonexchange transaction, the revenue recognition requirement is met when all applicable eligibility requirements are met. The School District has concluded the reimbursement of qualified school construction costs under PlanCon has not been met until the allowable costs have been incurred. In this situation, allowable costs are the actual debt service payments.

Beginning net position was restated for the cost of capital assets and accumulated depreciation. The School District’s capital asset inventory excluded repair and maintenance contracts that were included in the capital asset schedule for financial reporting in error. In addition, reclassifications between construction in progress, site improvements, building and building improvements, and machinery and equipment were made in order to reflect the classifications made in the School District’s capital asset inventory.

Note 3 – Deposits and Investments

The deposit and investment policy of the School District adheres to state statutes and prudent business practice. There were no deposit or investment transactions during the year that were in violation of either the state statutes or the policy of the School District.

Custodial Credit Risk - Deposits

Custodial credit risk is the risk that in an event of a bank failure, the government's deposits may not be returned to it. The School District is required by state statute to deposit funds in depositories that are either banks, banking institutions or trust companies located in the Commonwealth of Pennsylvania. To the extent that such deposits exceed federal insurance, the depositories must pledge as collateral obligations of the United States, Commonwealth of Pennsylvania or any

39

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

political subdivision. Under Act 72 of 1971, as amended, the depositories may meet this collateralization requirement by pooling appropriate securities to cover all public funds on deposit. Deposits in excess of amounts covered by the Federal Deposit Insurance Corporation are collateralized in accordance with Act 72 of 1971 of the Pennsylvania State Legislature which requires the institution to pool collateral for all governments and have the collateral held by an approved custodian in the institution's name. Of the bank balance, $250,000 was covered by federal depository insurance and $4,531,684 was collateralized by the School District's depositories in accordance with Act 72.

As of June 30, 2019, the School District had the following investments:

Fair Value

Pennsylvania Local Government Investment Trust Pennsylvania School District Liquid Asset Fund Pennsylvania Treasurer's Investment Program
Total

Cost

$	5,935,978 160,357 178,221
$	6,274,556

(Level 1)

$	5,935,978 160,357 178,221
$	6,274,556

The Pennsylvania Local Government Investment Trust (PLGIT), the Pennsylvania School District Liquid Asset Fund (PSDLAF), and the Pennsylvania Treasurer’s Investment Program (INVEST) are investment pools. The fair value of the investment pool is the same as the value of the pool shares owned. Although the pools seek to maintain the net position value of $1 per share, there can be no guarantee that the net asset values will not vary from thisprice.

PLGIT’s regulatory oversight resides with the Board of Trustees and Trust Administration. The participants of the trust annually select an independent auditing firm to examine, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The Trust is not registered with the Securities and Exchange Commission. Contacts with prospective investors relating to the shares of the pool are conducted through the Investment Adviser's wholly owned subsidiary, PFMAM, Inc., member NASD.

PSDLAF’s internal oversight resides with a Board of Trustees consisting of local school board members, school business officials and the Executive Directors of PASBO and PSBA. For outside oversight, the Fund is monitored on a weekly basis by Standard & Poor’s, which has rated PSDLAF AAAm, the highest rating available for a money market fund.

The INVEST Program is administered by the Pennsylvania Treasury Department in strict accordance with investment criteria prescribed by state law, local ordinance and the Treasury Investment Policy. In addition, rated pools are further restricted to investments that also satisfy criteria established by Standard & Poor’s. The INVEST Daily pool is rated AAAm by Standard & Poor’s. The ComplianceDivision within Treasury’s Bureau of Cash Management and Investments has implemented investment-monitoring procedures for the INVEST Program to ensure strict adherence to Treasury’s Investment Policy. In addition, the financial statements of the INVEST Program are audited annually by an independent Certified Public Accounting firm and/or the Pennsylvania Department of the Auditor General. Furthermore, Treasury’s Investment Committee

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

meets regularly to review the objectives and performance of the INVEST Program, as well as all other programs administered by the Department. The Investment Committee shall consist of the Treasurer; the Chief Investment Officer, who shall Chair meetings of the Committee; the Chief Counsel; and other persons whom the Treasurer may wish to appoint.

Note 4 – Interfund Balances and Transfers

Interfund Receivables and Payables

Interfund receivable and payable balances at June 30, 2019, were:

Due from other funds General fund
Student activity fund

$ 1,151,224

10,562

Due to other funds General fund
Capital projects fund

Food service fund

$      10,562 232,647
918,577

Total	$ 1,161,786	Total	$ 1,161,786

Balances resulted from the time lag between the dates that (1) interfund goods and services are provide or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. All the balances above are expected to be collected in the subsequent year.

Interfund Transfers

During the fiscal year ended June 30, 2019, the following interfund transfers were made:

Transfers Out

General fund

Transfers In

$	93,853	General fund	$ 2,873,945

Internal service funds

Total

2,873,945

$ 2,967,798

Capital projects fund

Total

93,853

$ 2,967,798

The general fund transferred $93,853 of refunding bond proceeds to the capital projects fund for future capital improvements.

The internal service funds were closed and $2,873,945 was transferred to the general fund.

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Note 5 ‐ Real Estate Taxes

The School District bills and collects its own property taxes through locally elected tax collectors. Taxes are levied on July 1of the fiscal year. Property taxes attach as an enforceable lien on property as of July 1st of the year following levy. Collection of delinquent property taxes is contracted to a private collection agency. The 2018 tax levy was based on assessed values on July 1, 2018 of $1,409,599,095. The School District tax rate for the year ended June 30, 2019 was 19.306 mills as levied by the School Board.

Taxes may be paid in full at a 2% discount until August 31st, at face until October 31st, and at a 10% penalty until the lien date. Installments may be made at face where 50% is due by August 31st, 25% is due by October 31st and 25% due by December 31st.

The amounts shown as delinquent real estate taxes receivable have not been recorded as revenue on the fund statements. These taxes are, however, recorded as unavailable revenue on the balance sheet until they are received. The amounts reported for this receivable is net of the estimated uncollectible amount of $222,844 and are reported on the balance sheet in the amount of $1,190,559 along with other taxes receivable of $86,048.

Note 6 - Due from Other Governments

Amounts due from other governments represent receivables for revenues earned by the School District. At June 30, 2019, the following amounts are due from other governmental units:

Governmental

Funds	Enterprise Fund	Total

Federal (through State)

Federal (through Local sources) State
Local

Total

$	 139,521 $ 115,745
1,424,344 24,434
$	1,704,044 $

74,116 $ -
4,302 -
78,418 $

213,637 115,745 1,428,646 24,434
1,782,462

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Note 7 ‐ Capital Assets

Capital asset activity for the year ended June 30, 2019, was as follows:

Governmental activities

Non-depreciable assets:

Beginning Balance
(restated)

Ending

Additions	Retirements	Balance

Land

Construction in progress Depreciable assets:
Land improvements

$ 1,355,020 $ 447,750

8,160,581

-     $                  -49,750             497,500

-	-

$ 1,355,020 -

8,160,581

Buildings Equipment
Totals at historical cost

Less accumulated depreciation for: Land improvements
Buildings Equipment
Total accumulated depreciation

Governmental activities capital assets, net

59,088,635 9,502,288 78,554,274

5,492,229 33,575,566 8,786,946 47,854,741
$ 30,699,533 $

517,468 305,595 872,813

341,843 1,282,378 150,078 1,774,299
(901,486) $

--
497,500

----
497,500

59,606,103 9,807,883 78,929,587

5,834,072 34,857,944 8,937,024 49,629,040
$ 29,300,547

Business-type activities

Equipment	$ Less accumulated depreciation
Business-type activities capital assets, net	$

441,822 $ 375,783
66,039 $

6,692 $ 34,834
(28,142) $

-     $       448,514 -             410,617
-	$	37,897

Depreciation was charged to functions as follows:

Governmental activities Instruction
Instructional student support Admin. & financial support Operation & maintenance Pupil transportation
Student activities

$	58,625 7,000 7,977
37,678 3,422
19,989

Unallocated-governmental                                                   1,639,608 $ 1,774,299

Business-type activities

Food service	$	34,834

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Note 8 ‐ General Long‐Term Debt

Changes in the School District’s long‐term obligations during fiscal year 2019 were as follows:

Beginning

Balance	Additions	Reductions

Governmental activities

Ending

Balance

Due Within

One Year

Bonds payable Bond premiums, net
Bonds payable, net Notes payable Compensated absences Net pension liability
Net OPEB liability-PSERS

OPEB liability-School Plan

$     21,205,000 345,235 21,550,235 192,500 449,035 56,707,000 2,339,000
2,271,098

$ 9,130,000     $ 455,672
9,585,672 -
97,741 2,147,695 369,115
116,176

13,820,000     $ 229,612
14,049,612 96,250 17,007 2,486,695 260,115
526,980

16,515,000 571,295 17,086,295 96,250 529,769 56,368,000 2,448,000
1,860,294

$ 4,450,000 -
4,450,000 96,250 95,130
--
-

Total long-term liabilities	$     83,508,868     $ 12,316,399     $	17,436,659     $     78,388,608     $ 4,641,380

Note 9 - General Obligation Bonds and Notes

The School District had the following general obligation bonds and notes outstanding at June 30, 2019:

General Obligation Bonds, Series of 2013, issuance	$ 2,635,000 amount of $9,440,000, interest at 2.0% to 3.0%, due
October 15, 2019.

General Obligation Bonds, Series of 2015, issuance amount of $5,040,000, interest at 2.0% to 3.0%, due March 1, 2021.

General Obligation Notes, Series A of 2019, issuance amount of $2,725,000, interest at 3.0% to 4.0%, due February 15, 2022.

General Obligation Bonds, Series B of 2019, issuance amount of $6,405,000, interest at 4.0%, due April 15, 2023.

Total general obligation bonds

4,750,000

2,725,000

6,405,000

$ 16,515,000

General Obligation Notes, Series of 2016, issuance	$	96,250 amount $385,000, interest at 1.83%, due March 1, 2020.

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Keystone Oaks School District Notes to Financial Statements
June 30, 2019

The amounts necessary to amortize outstanding bonds and notes for the next four years and to maturity are:

Year

ended	General Obligation Bonds

Notes from Direct Borrowings

and Direct Placements

June 30, 2020 2021 2022
2023

Principal

$	4,450,000 4,500,000 3,925,000
3,640,000

Interest

$	488,204 419,500 276,450
145,600

Principal

$	96,250 --
-

Interest

$	1,321	$ -
-

-

Total 5,035,775 4,919,500 4,201,450
3,785,600

$ 16,515,000	$	1,329,754	$	96,250	$	1,321	$ 17,942,325

The general fund is used to liquidate the liability for long‐term debt. Advance Refunding of Debt
On April 23, 2019, the School District issued $2,725,000 of 2019 Series A and $6,405,000 of 2019 Series B bonds with interest rates from 3.0% to 4.0% to currently refund the outstanding Series A of 2013 ($2,715,000) and Series C of 2014 ($6,610,000) with interest rates ranging from 2.25% to 3.0%. The net proceeds of $9,439,036 (after payment of issuance costs) were used to currently refund the bonds and interest due through the refunding date in the amount of $9,345,183. The remaining proceeds of $93,853 were deposited and transferred to the Capital Projects fund. As a result, the refunded bonds are considered defeased and the liability for those items have been removed as a liability in thesefinancial statements. The School District'scurrentrefunding reduced its total debt service over the next four years by $6,457 and obtained an economic gain (the difference between the present value of the debt service payment of the old and new debt) of approximately $99,663.

Direct Borrowings and Direct Placements

The School District has outstanding general obligation notes from direct borrowings and direct placements related to governmental activities totaling $96,250. The School District’s outstanding notes from direct borrowings contain an event of default that the interest rate shall convert to a fully variable rate per annum equal to the Prime Rate as published from time to time in the Wall Street Journal or any successor publication plus 2% per annum, such rate to be adjusted automatically each time the Prime Rate changes (but subject to a maximum interest rate of 17%).

Note 10 ‐ Pension Plan

Summary of Significant Accounting Policies

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees’ Retirement System (PSERS) and addition to/deductions from PSERS’s fiduciary net position have been determined on the same basis as they are reported

45

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

by PSERS. For this purpose, benefit payments (including refunds of employee contributions) arerecognized when dueand payable in accordance with the benefit terms investments are reported at fair value.

General Information about the Pension Plan Plan Description
PSERS is a governmental cost-sharing multiple‐employer defined benefit pension plan that provides retirement benefits to public school employees of the Commonwealth of Pennsylvania. The members eligible to participate in the System include all full‐time public school employees, part‐time hourly public school employees who render at least 500 hours of service in the school year, and part‐time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at www.psers.state.pa.us.

Benefits Provided

PSERS provides retirement, disability, and death benefits. Members are eligible for monthly retirement benefits upon reaching (a) age 62 with at least 1 year of credited service: (b) age 60 with 30 or more years of credited service; or (c) 35 or more years of service regardless of age. Act 120 of 2010 (Act 120) preserves the benefits of existing members and introduced benefit reductions for individuals who become new members on or after July 1, 2011. Act 120 created two new membership classes, Membership Class T‐E (Class T‐E) and Membership Class T‐F (Class T‐F). To qualify for normal retirement, Class T‐E and Class T‐F members must work until age 65 with a minimum of 3 years of service or attain a total combination of age and service that is equal to or greater than 92 with a minimum of 35 years of service. Benefits are generally equal to 2% or 2.5%, depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by the number of years of credited service. For members whose membership started prior to July 1, 2011, after completion of five years of service, a member’s right to the defined benefits is vested and early retirement benefits may be elected. For Class T‐E and Class T‐F members, the right to benefits is vested after ten years of service.

Participants are eligible for disability retirement benefits after completion of five years of credited service. Such benefits are generally equal to 2% or 2.5%, depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by the number of years of credited service, but not less than one‐third of such salary nor greater than the benefit the member would have had at normal retirement age. Members over normal retirement age may apply for disability benefits.

Death benefits are payable upon the death of an active member who has reached age 62 with at least one year of credited service (age 65 with at least three years of credited service for Class T‐ E and Class T‐F members) or who has at least five years of credited service (ten years for Class T‐ E and Class T‐F members). Such benefits are actuarially equivalent to the benefit that would have been effective if the member had retired on the day before death.

46

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Contributions

Member Contributions:

Active members who joined the System prior to July 22, 1983, contribute at 5.25% (Membership Class T‐C) or at 6.50% (Membership Class T‐D) of the member’s qualifying compensation.

Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25% (Membership Class T‐C) or at 7.50% (Membership Class T‐D) of the member’s qualifying compensation.

Members who joined the System after June 30, 2001 and before July 1, 2011, contribute at 7.50% (automatic Membership Class T‐D). For all new hires and for members who elected Class T‐D membership, the higher contribution rates began with service rendered on or after January 1, 2002.

Members who joined the System after June 30, 2011, automatically contribute at the Membership Class T‐E rate of 7.50% (base rate) of the member’s qualifying compensation. All new hires after June 30, 2011, who elect Class T‐F membership contribute at 10.3% (base rate) of the member’s qualifying compensation. Membership Class T‐E and Class T‐ F are affected by a “shared risk” provision in Act 120 of 2010 that in future fiscal years could cause the Membership Class T‐E contribution rate to fluctuate between 7.5% and 9.5% and Membership Class T‐F contribution rate to fluctuate between 10.3% and 12.3%.

Employer Contributions:

The School District’s contractually required contribution rate for fiscal year ended June 30, 2019, was 32.60% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Contributions to the pension plan from the School District were $5,402,270 for the year ended June 30,2019.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources related to Pensions

At June 30, 2019, the School District reported a liability of $56,368,000 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by rolling forward the System’s total pension liability as of June 30, 2017 to June 30, 2018. The School District’s proportion of the net pension liability was calculated utilizing the employer’s one‐year reported covered payroll as it relates to the total one‐year reported covered payroll. At June 30, 2019, the School District’s proportion was 0.1174%, which was an increase of 0.0026% from its proportion measured as of June 30, 2018.

47

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

For the year ended June 30, 2019, the School District recognized pension expense of $6,533,000. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Deferred Outflows of Resources
Difference between expected

Deferred Inflows of
Resources

and actual experience	$	454,000	$	872,000

Changes in assumptions

Net difference between projected and actual investment earnings
Changes in proportions Contributions subsequent to
the measurement date

1,050,000

276,000 1,358,000

5,402,270

$ 8,540,270

-

-518,000

-

$ 1,390,000

$5,402,270 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30,

2020	$	2,204,210 2021                             1,155,245 2022                           (1,196,802) 2023                               (414,653)

$	1,748,000

Actuarial Assumptions

The total pension liability as of June 30, 2018 was determined by rolling forward the System’s total pension liability as of June 30, 2017 to June 30, 2018 using the following actuarial assumptions, applied to all periods included in the measurement:

•	Actuarial cost method – Entry Age Normal – level % of pay. •	Investment return – 7.25%, includes inflation at 2.75%.
•	Salary growth – Effective average of 5.00%, comprised of inflation of 2.75% and 2.25% for real wage growth and for merit or seniority increases.

48

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Mortality rates were based on the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale.

The actuarial assumptions used in the June 30, 2017, valuation were based on the results of an actuarial experience study that was performed for the five-year period ending June 30, 2015.

The long‐term expected rate of return on pension plan investments was determined using a building‐block method in which best‐estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce a long‐term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

The pension plan’s policy in regard to the allocation of invested plan assets is established and may be amended by the Board. Plan assets are managed with a long‐term objective of achieving and maintaining a fully funded status for the benefits provided through the pension.

Asset Class

Global public equity Fixed income Commodities Absolute return Risk parity Infrastructure/MLPs Real estate
Alternate investments Cash
Financing (LIBOR)

Target Allocation
20.0% 36.0% 8.0% 10.0% 10.0% 8.0% 10.0% 15.0% 3.0%
-20.0%

100.0%

Long-Term Expected Real Rate of Return
5.2% 2.2% 3.2% 3.5% 3.9% 5.2% 4.2% 6.7% 0.4%
0.9%

The above was the Board’s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30, 2018.

Discount Rate

The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long‐term expected rate of return on pension

49

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the School District’s proportionate share of the net pension liability to changes in the discount rate

The following presents the net pension liability, calculated using the discount rate of 7.25%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1‐ percentage point lower (6.25%) or 1‐percentage‐point higher (8.25%) than the current rate.

1% Decrease 6.25%
School District's proportionate

Current Discount Rate
7.25%

1% Increase

8.25%

share of the net pension liability $ 69,860,000 $ 56,368,000 $ 44,942,000

Pension plan fiduciary net position

Detailed information about PSERS’ fiduciary net position is available in PSERS Comprehensive Annual Financial Report which can be found on the System’s website atwww.psers.state.pa.us.

Note 11 – Other Post-Employment Benefits, PSERS Health Insurance Premium Share

Summary of Significant Accounting Policies

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of PSERS and addition to/deductions from PSERS’s fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms investments are reported at fair value.

General Information about the Pension Plan Health Insurance Premium Assistance Program
The System provides Premium Assistance which, is a governmental cost sharing, multiple-employer other postemployment benefit plan (OPEB) for all eligible retirees who qualify and elect to participate. Employer contribution rates for Premium Assistance are established to provide reserves in the HealthInsurance Account that are sufficient for the payment of Premium Assistance benefits for each succeeding year. Effective January 1, 2002 under the provisions of Act 9 of 2001, participating eligible retirees are entitled to receive premium assistance payments equal to the lesser of $100 per month or their out-of-pocket monthly health insurance premium. To receive premium assistance, eligible retirees must obtain their health insurance through either their school employer or the PSERS’ Health Options Program. As of June 30, 2018, there were no assumed future benefit increases to participating eligible retirees.

50

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Premium Assistance Eligibility Criteria

Retirees of the System can participate in the Premium Assistance program if they satisfy the following criteria:

•	Have 24 ½ or more years of service, or •	Are a disability retiree, or
•	Have 15 or more years of service and retired after reaching superannuation age, and •	Participate in the HOP or employer-sponsored health insurance program.
Pension Plan Description

PSERS is a governmental cost-sharing multiple-employer defined benefit pension plan that provides retirement benefits to public school employees of the Commonwealth of Pennsylvania. The members eligible to participate in the System include all full-time public school employees, part-time hourly public school employees who render at least 500 hours of service in the school year, and part-time per diem public school employees who render at least 80 days of service in the school year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be obtained at www.psers.pa.gov.

Benefits Provided

Participating eligible retirees are entitled to receive premium assistance payments equal to the lesser of $100 per month or their out-of-pocket monthly health insurance premium. To receive premium assistance, eligible retirees must obtain their health insurance through either their school employer or the PSERS’ Health Options Program. As of June 30, 2018, there were no assumed future benefit increases to participating eligible retirees.

Employer Contributions

The School Districts’ contractually required contribution rate for the fiscal year ended June 30, 2019 was 0.83% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with anadditional amount to finance any unfunded accrued liability. Contributions to the OPEB plan from the School District were $275,085 for the year ended June 30, 2019.

OEPB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2019, the School District reported a liability of $2,448,000 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018, and the total OPEB liability used to calculate the net OPEB liability was determined by rolling forward the System’s total OPEB liability as of June 30, 2017 to June 30, 2018. The School District’s proportion of the net OPEB liability was calculated utilizing the employer’s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At June 30, 2019, the School District’s proportion was 0.1174% percent, which was an increase of 0.0026% from its proportion measured as of June 30, 2018.

51

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

For the year ended June 30, 2019, the School District recognized OPEB expense of $115,000. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources
Difference between expected

Deferred Inflows of
Resources

and actual experience Changes in assumptions
Net difference between projected and actual investment earnings
Changes in proportions Contributions subsequent to
the measurement date

$       15,000 39,000

4,000 47,000

137,542

$	242,542

$                 -93,000

-29,000

-

$	122,000

$137,542 reported as deferred outflows of resources related to OPEB resulting from School District contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30,

2020 2021 2022 2023 2024
Thereafter

$	(4,097) (4,097) (4,097) (4,407) (4,679)
4,377

$	(17,000)

Actuarial Assumptions

The total OEPB liability as of June 30, 2018 was determined by rolling forward the System’s total OPEB liability as of June 30, 2017 to June 30, 2018 using the following actuarial assumptions, applied to all periods included in the measurement:

•	Actuarial cost method – Entry Age Normal – level % of pay.

•	Investment return – 2.98% - S&P 20 Year Municipal Bond Rate.

52

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

•	Salary growth – Effective average of 5.00%, comprised of inflation of 2.75% and 2.25% for real wage growth and for merit or seniority increases.

•	Premium Assistance reimbursement is capped at $1,200 per year.

•	 Assumed Healthcare cost trends were applied to retirees with less than $1,200 in premium assistance per year.

•	 Mortality rates were based on the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale.

•	Participation rate:

o Eligible retirees will elect to participate Pre age 65 at 50%. o Eligible retirees will elect to participate Post age 65 at 60%.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study that was performed for the five-year period ending June 30, 2015.

The following assumptions were used to determine the contribution rate:

•	The results of the actuarial valuation as of June 30, 2016, determined the employer contribution rate for fiscal year 2018.

•	Cost method: Amount necessary to assure solvency of Premium Assistance through the third fiscal year after the valuation date.

•	Asset valuation method: Market Value.

•	Participation rate: 63% of eligible retirees are assumed to elect premium assistance.

•	 Mortality rates and retirement ages were based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 for both males and females for healthy annuitants and for dependent beneficiaries. For disabled annuitants, the RP-2000 Combined Disabled Tables with age set back 7 years for males and 3 years for females for disabled annuitants. (A unisex table based on the RP-2000 Combined Healthy Annuitant Tables with age set back 3 years for both genders assuming the population consists of 25% males and 75% females is used to determine actuarial equivalent benefits.)

Investments consist primarily of short-term assets designed to protect the principal of the plan assets. The expected rate of return on OPEB plan investments was determined using the OPEB asset allocation policy and best estimates of geometric real rates of return for each asset class.

The OPEB plan’s policy in regard to the allocation of invested plan assets is established and may be amended by the Board. Under the program, as defined in the retirement code employer contribution rates for Premium Assistance are established to provide reserves in the Health Insurance Account that are sufficient for the payment of Premium Assistance benefits for each succeeding year.

53

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Target

OPEB-Asset Class	Allocation

Long-Term Expected Real
Rate of Return

Cash	5.9%	0.3% U.S. core fixed income                   92.8%	1.2% Non-U.S. developed fixed	1.3%	4.0%
100.0%

The above was the Board’s adopted asset allocation policy and best estimates of geometric real rates of return for each major asset class as of June 30, 2018.

Discount Rate

The discount rate used to measure the Total OPEB Liability was 2.98%. Under the plan’s funding policy, contributions are structured for short term funding of Premium Assistance. The funding policy setscontribution rates necessary to assure solvency of Premium Assistance through the third fiscal year afterthe actuarial valuation date. The Premium Assistance account is funded to establish reserves that are sufficient for the payment of Premium Assistance benefits for each succeeding year. Due to the short-term funding policy, the OPEB plan’s fiduciary net position was not projected to be sufficient to meet projected future benefit payments, therefore the plan is considered a “pay-as-you-go” plan. A discount rate of 2.98% which represents the S&P 20-year Municipal Bond Rate at June 30, 2018, was applied to all projected benefit payments to measure the total OPEB liability.

Sensitivity of the System Net OPEB Liability to Change in Healthcare Cost Trend Rates

Healthcare cost trends were applied to retirees receiving less than $1,200 in annual Premium Assistance. As of June 30, 2018, retirees Premium Assistance benefits are not subject to future healthcare cost increases. The annual Premium Assistance reimbursement for qualifying retirees is capped at a maximum of $1,200. As of June 30, 2017, 93,380 retirees were receiving the maximum amount allowed of $1,200 per year. As of June 30, 2017, 1,077 members were receiving less than the maximum amount allowed of $1,200 per year. The actual number of retirees receiving less than the $1,200 per year cap is a small percentage of the total population and has a minimal impact on Healthcare Cost Trends as depicted below.

The following presents the System net OPEB liability for June 30, 2018, calculated using current Healthcare cost trends as well as what the System net OPEB liability would be if it health cost trends were 1-percentage point lower or 1-percentage point higher than the current rate:

Current Healthcare
1% Decrease	Cost Trend	1% Increase System net OPEB liability	$ 2,447,000 $ 2,448,000 $ 2,448,000

54

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Sensitivity of the School District’s proportionate share of the net OPEB liability to changes in the discount rate

The following presents the net OPEB liability, calculated using the discount rate of 2.98%, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (1.98%) or 1-percentage-point higher (3.98%) than the current rate:

1% Decrease 1.98%
District's proportionate share of

Current Discount Rate
2.98%

1% Increase

3.98%

the net OPEB liability	$ 2,784,000 $ 2,448,000 $ 2,169,000

OPEB plan fiduciary net position

Detailed information about PSERS’ fiduciary net position is available in PSERS Comprehensive Annual Financial Report which can be found on the System’s website atwww.psers.state.pa.us.

Note 12 – Other Post-Employment Benefits, School Plan

Summary of Significant Accounting Policies

The School District maintains a single employer defined befit healthcare plan. The plan provides health insurance for eligible retirees and their spouses through the School District’s health insurance plan.

Categories of Employee/Retiree

The School District categorizes employees into six classifications as follows: Teachers, Administrators, Secretaries, Custodians, Aides, and Cafeteria Workers. Bus drivers are contracted out and are not eligible for postretirement medical, dental, and/or vision benefits.

Medical, Dental, and Vision Benefits

Below is a summary of the postretirement medical, dental, and vision programs for the various employee groups:

Note: There is no retirement incentive currently in place. There have been retirement incentives offered for the 2015-2016 and the 2016-2017 school years, but those incentives did not have any retirement medical provisions. A summary of past incentives with medical provisions is as follows:

Teachers and Administrators - who retired during the 2014-2015 school year

Eligible Teachers and Administrators are permitted to continue with retiree medical, dental, and vision coverage up to theage of 65. However, they arerequired to contributea specified percentage of the premium rate in order to maintain coverage. The percentage is the same amount that was paid as an active employee.

55

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Teachers and Administrators - who retired during the 2013-2014 school year

Eligible Teachers and Administrators are permitted to continue with retiree medical, dental, and vision coverage upto the age of 65. However, they are required to contribute 100% of the premium rate in order to maintain coverage.

Teachers and Administrators - who retired during the 2010-2011 or 2012-2013 school years:

Eligible Teachers and Administrators are provided with retiree medical, dental, and vision coverage up to the age of 65. Teachers and Administrators are required to contribute the difference between the current premium rate and the premium rate that was in effect at the time of retirement.

All other Teachers and Administrators

Eligible Teachers and Administrators who do not retire under a retirement incentive are required to contribute the full premium for medical, dental, and vision coverage.

Custodians, Aides, and Secretaries

Custodians, Aides, and Secretaries who retired during the 2012-2013 fiscal year are provided with retiree medical, dental, and vision coverage up to the age of 65. Retirees in this group are required to contribute the difference between the current premium rate and the premium rate that was in effect at the time of retirement.

All other Custodians, Aides, and Secretaries are not provided with postretirement medical. However, retired Custodians, Aides, and Secretaries are permitted to continue enrollment in the dental and/or vision programs by paying 100% of the premium rate.

Cafeteria Workers

Eligible Cafeteria Workers are permitted to continue with retiree medical, dental, and vision coverage up to the age of 65. However, they are required to contribute 100% of the premium rate in order to maintain coverage.

Medical Plan

For medical coverage, the only choice for a retiree is a PPO program called Community Blue Flex which is provided through the Allegheny County Schools Health InsuranceConsortium (ACSHIC) and is administered by Highmark.

Benefit Duration

Postretirement medical benefits are provided up to the age of 65 only.

Retirees with dental and/or vision coverage are eligible to continue coverage beyond age 65 but they are required to contribute 100% of the cost beyond age 65.

Surviving Spouses

For any retiree who retired during the 2012-2013 school year: If a retiree dies prior to attaining age 65, all benefits cease for any surviving dependents.

56

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

For all other retirees: surviving spouses are permitted to continue up to the point where the surviving spouse turns 65. Surviving dependents are required to contribute any applicable contributions.

Eligibility

Employees become eligible for postretirement medical upon attaining eligibility under PSERS and attaining 10 years with the School District.

Eligibility for PSERS is as follows:

•	For employees hired prior to July 1, 2011: 35 years of service with PSERS, or attainment of age 60 with at least 30 years of PSERS service, or attainment of age 62 with 1 year of PSERS service.

•	For employees hired on or after July 1, 2011: Attainment of age 65 with at least 3 years of service or a combination of age and service equal to at least 92 with at least 35 years of service.

Life Insurance

Postretirement life insurance coverage is available to retired Teachers provided they meet the eligibility criteria and they pay the required premiums. The coverage amount is a flat $50,000 prior to age 65. Upon turning age 65, the amount is reduced by 50%. At age 70, the amount is reduced another 50%. At 75, coverage ceases.

Postretirement life coverage is also available to retired Administrators. The amounts are based on a multiple of final salary. Life amounts for certain retired Administrators are reduced by 50% at age 65, another 50% at age 70, and then life insurance ceases at age 75. Life amounts for recent and future retired Administrators do not reduce.

Secretaries and Aides are eligible for postretirement life insurance in the amount of $25,000. Unlike the Teachers and Administrators, the amount does not reduce.

Custodians are eligible to continue their $25,000 policy that they have while active. However, the Custodian must retire after age 62 and the coverage ceases at age 65.

Participant Census

Census data foractives and retirees was developed from employee and retiree information supplied by the School District. Below is a summary of the census data for the current year. Following the summary are the age distribution tables for active and retired participants.

57

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Description

Active Participants Eligible groups
Inactive Participants Medical
Retirees Spouses
Life Insurance

Average Number	Age

159	40.94

23             61.61 17             61.24
97	68.22

Average Service

10.75

N/A N/A
N/A

Actuarial Assumptions

Cost Method: Mortality: Discount Rate: Inflation Rate: Investment Return: Salary Increases:
Healthcare Trend:

Entry Age Normal as a Level Percentage of Pay

RPH-2014 Total Dataset Mortality Table projected using Scale MP-2017 3.87% - Based on the Bond Buyers 20-Bond Index
3.00%

Investment return was not utilized in this valuation since there are no assets.

2.50%

Time Period 07/01/2019 – 06/30/2020 07/01/2020 – 06/30/2021 07/01/2021 – 06/30/2022 07/01/2022 – 06/30/2023 07/01/2023 – 06/30/2024 07/01/2024 – 06/30/2025 07/01/2025 – 06/30/2026
07/01/2026 – 06/30/2027 & later

Medical 7.00% 6.75% 6.50% 6.25% 6.00% 5.50% 5.00% 4.50%

Dental	Vision 4.00%       2.00% 4.00%       2.00% 4.00%       2.00% 4.00%       2.00% 4.00%       2.00% 4.00%       2.00% 4.00%       2.00% 4.00%       2.00%

Percent Married:	It is assumed that 25% of eligible employees will participate in the retiree medical program. It is assumed that 100% of eligible employees will participate in the retiree life insurance program.

58

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Aging Factors:	Aging factors used for developing costs are shown below:

Age	Rate 55              3.61% 56              4.07% 57              3.91% 58              4.30% 59              4.12%

Age	Rate 60              4.46% 61              4.74% 62              4.52% 63              4.76% 64              4.00%

The pre-65 per participant costs were spread over the various ages using the pre-65 morbidity rates that were developed from the unisex factors found in Chart 5 of "Health Care Costs—From Birth to Death" sponsored by the Society of Actuaries and prepared by Dale H. Yamamoto (June 2013).

Withdrawal Rates:	Rates vary by attained age. Rates for sample ages are shown below:

Age	Rate 25         20.0% 30         15.0% 35         10.0% 40          7.5% 45          5.0% 50          2.5% 55          0.0%

Retirement Rates:	Rates of retirement are shown below:

Age	Rate 55-57           5.0% 58-59          10.0% 60-62          30.0% 63-64          15.0%
65	100.0%

Disability:	None assumed

Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

For the year ended June 30, 2019, the School District recognized a negative OPEB expense of $36,229. At June 30, 2019 the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

59

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Deferred Ouflows of Resources
Differences between expected

Deferred Inflows of
Resources

and actual experience Changes of assumptions Benefit payments subsequent to
the measurement date

$                     --

499,884

$	499,884

$     1,242,824 1,044,955

-

$	2,287,779

The $499,884 amount reported as deferred outflows of resources resulting from the School District’s benefit payments subsequent to the measurement date will be recognized as a reduction in next year’s total OPEB liability. The other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ended June 30,

2020                     $     (152,405) 2021                           (152,405) 2022                           (152,405) 2023                           (152,405) 2024                           (152,405) Thereafter                       (1,525,754) $ (2,287,779)

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The following is the Total OPEB Liability to the School District, as well as the Total OPEB Liability using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate:

1% Decrease

2.87%

Discount Rate

3.87%

1% Increase

4.87%

Total OPEB liability	$ 1,959,805 $ 1,860,294 $ 1,764,698

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates

The following is the Total OPEB Liability to the School District, as well as the Total OPEB Liability using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates:

60

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Healthcare Cost Trend
1% Decrease	Rate	1% Increase Total OPEB liability	$ 1,830,346     $ 1,860,294 $ 1,894,645

Note 13 – Fund Balance

Fund balances in the School District’s general fund total $6,004,290 consisting of $529,773 assigned for compensated absences, $1,860,294 that is assigned for OPEB liability under the school plan, $1,374,650 assigned for future capital projects, $15,372 assigned for athletics, $77,720 that is nonspendable for prepaid expenditures, and $2,146,481 that is unassigned. In addition, $19,062 is a committed for capital projects in the capital projects fund.

Note 14 ‐ Jointly Governed Organizations

The School District is one of twelve member school districts of the Parkway West Career & Technology Center. The Center is controlled and governed by the Joint Board, which is composed of all the school board members of all the member districts. Direct oversight of the Center’s operations is the responsibility of the Joint Committee, which consists of one representative from each participating school district. No member of the Jointure exercises specific control over the fiscal policies or operations of The Center. The School District’s share of annual operating and capital costs for the Center fluctuates based on the percentage enrollment in the school and is reflected as intergovernmental expenditures of the General Fund. The audit report may be obtained by calling the business office of the School District.

The School District's share of annual operating and capital costs for Parkway West Career & Technology Center fluctuates, based on the percentage of enrollment of each member district in the school. The School District's financial obligation to Parkway West Career & Technology Center for the year ended June 30, 2019 was $476,985 which has been reported in the School District's general fund.

Note 15 ‐ Commitments and Contingencies

The Keystone Oaks School District participates in a number of state and federally assisted grant programs. The programs are subject to program compliance audits by the grantor agencies or their representatives. The audits of some of these programs for and including the year ended June 30, 2019 have not yet been conducted. Accordingly, the School District’s compliance with applicable grant requirements will be established at some future date. The amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time although the School District expects such amounts to be immaterial.

61

Keystone Oaks School District Notes to Financial Statements
June 30, 2019

Note 16 ‐ Risk Management

The School District is exposed to various risks of loss related to certain torts, thefts, damages, catastrophic loss of assets, errors and omissions, injury to employees and natural disasters. Keystone Oaks School District manages most of its risk through the general fund with the purchase of commercial insurance coverage.

Settled claims for these risks have not exceeded commercial insurance coverage for the past three years.

Note 17 – Health Insurance Consortium

The School District is one of fifty‐one members of the Allegheny County Schools Health Insurance Consortium (Consortium). The Consortium is a public entity risk pool, which provides health care coverage for members’ employees on a pooled basis. The School District pays premiums to the Consortium based upon rates established by the trustees of the Consortium. These rates are established with the objection of satisfying current costs and claims of covered health care services, as well as providing a residual sufficient to satisfy work capital requirements and promote premium stabilization for periods when actual costs of coverage exceed premiums collected from members. In addition, the Consortium maintains a percentage of its fund balance to cover potential future catastrophic losses. The Consortium or the School District does not maintain independent insurance coverage for catastrophic losses.

At June 30, 2019, such net residual net assets (deficit) were $62,172,279 for the Consortium as a whole, of which a share of the residual net assets of $934,368 was attributable to the School District. The agreement permits members to withdraw from the Consortium under specified terms. In such event, the withdrawing member is entitled to or responsible for a proportionate share of the Consortium’s net assets or deficit as determined on the date of withdrawal.

Audited financial statements for the Consortium through the fiscal year ended June 30, 2019, are available by calling the School District business office.

62

Required Supplementary Information

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

REVENUES Local sources Taxes
Current real estate tax Public utility realty tax Local services taxes Earned income taxes Real estate transfer taxes Delinquencies on taxes
Earnings on investments Other local revenues
Revenue from student activities Federal revenues from IU Other revenues from IU
Contributions & donations from Private sources
Rentals

Tuition from patrons Miscellaneous revenue
Refunds and other miscellaneous revenue

$ 25,317,624 30,000 58,000 3,025,000 325,000 750,000 61,000

10,000 315,740 -

-22,500 70,000 -
30,000

$ 25,317,624 30,000 58,000 3,025,000 325,000 750,000 61,000

10,000 315,740 -

-22,500 70,000 -
30,000

$ 24,548,342 29,715 60,799 3,182,759 327,138 1,217,590 264,243

110,273 321,086 54,176

11,500 50,786 269,386 41,212
67,231

$ (769,282) (285)
2,799 157,759 2,138 467,590 203,243

100,273 5,346 54,176

11,500 28,286 199,386 41,212
37,231

Total revenues from local sources

State sources

Basic instructional & oper. subsidies Basic instructional subsidy Tuition for orphans subsidy
Special education funds for school-aged pupils Subsidies for noneducational programs
Transportation subsidy Pupil
Nonpublic and charter school pupil Rentals & sinking fund payments Health services
State property tax reduction Safe schools
Ready to learn block grant

30,014,864

4,941,723 10,500 1,471,151

460,076 127,050 710,016 1,500 848,574 20,000
231,127

30,014,864

4,941,723 10,500 1,471,151

460,076 127,050 710,016 1,500 848,574 20,000
231,127

30,556,236

4,989,567 49,548 1,478,662

394,212 88,935 708,316 46,108 848,574 129,412
231,127

541,372

47,844 39,048 7,511

(65,864) (38,115) (1,700)
44,608 -109,412
-

63

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

Social security payments State retirement revenue

Total revenues from state sources

Federal sources

Restricted grants-in-aid from the fed. Gov't. through the commonwealth
Title I Title II Title III Title IV
Medical assistance- access Medical assistance- admin

Total revenues from federal sources

TOTAL REVENUES

OTHER FINANCING SOURCES Issuance of refunding bonds Premium on bonds
Fund transfers in

TOTAL OTHER FINANCING SOURCES

TOTAL REVENUE AND OTHER FINANCING SOURCES

EXPENDITURES Instruction
Regular programs Personal services
Salaries

Employee benefits

Purchased prof. & tech. services Purchased property services Other purchased services Supplies
Property

610,176 2,633,450

12,065,343

551,133 82,735 -
40,554 175,000 -

849,422

42,929,629

---

-

42,929,629

9,369,125 5,980,031 430,841 131,500 16,613 675,552
12,498

610,176 2,633,450

12,065,343

551,133 82,735 -
40,554 175,000 -

849,422

42,929,629

---

-

42,929,629

9,369,125 5,980,031 430,841 131,500 16,613 675,552
12,498

621,078 2,740,894

12,326,433

548,316 82,559 4,000 40,554 -
57

675,486

43,558,155

9,130,000 455,672 2,873,945

12,459,617

56,017,772

9,414,045 5,809,951 542,857 132,491 23,360 685,956
-

10,902 107,444

261,090

(2,817) (176)
4,000 -
(175,000) 57

(173,936)

628,526

9,130,000 455,672 2,873,945

12,459,617

13,088,143

(44,920) 170,080
(112,016) (991) (6,747) (10,404)
12,498

64

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

Other objects

Total regular programs

Special programs Personal services
Salaries Employee benefits
Purchased prof. & tech. services Other purchased services Supplies

Total special programs

Vocational education programs Other purchased services

Other instructional programs Personal services
Salaries Employee benefits
Other purchased services Supplies

Total other instructional programs

Total instruction

Support services Pupil personnel
Personal services Salaries Employee benefits
Other purchased services Supplies
Other objects

Total pupil personnel

-

16,616,160

2,324,495 1,539,463 340,000 792,800 48,800

5,045,558

505,000

51,250 21,055 1,230,000 -

1,302,305

23,469,023

807,771 524,549 12,650 46,879 500

1,392,349

-

16,616,160

2,324,495 1,539,463 340,000 792,800 48,800

5,045,558

505,000

51,250 21,055 1,230,000 -

1,302,305

23,469,023

807,771 524,549 12,650 46,879 500

1,392,349

171

16,608,831

2,214,563 1,404,609 400,542 1,287,891 20,504

5,328,109

476,985

195,713 66,681 781,053 1,437

1,044,884

23,458,809

843,538 540,162 3,938 46,826 170

1,434,634

(171)

7,329

109,932 134,854
(60,542) (495,091)
28,296

(282,551)

28,015

(144,463) (45,626)
448,947 (1,437)

257,421

10,214

(35,767) (15,613)
8,712 53 330

(42,285)

65

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

Instructional staff Personal services
Salaries Employee benefits
Purchased prof. & tech. services Purchased property services Other purchased services Property

Total instructional staff

Administration Personal services
Salaries Employee benefits
Purchased prof. & tech. services Other purchased services Supplies
Other objects

Total administration

Pupil health Personal services
Salaries Employee benefits
Purchased prof. & tech. services Other purchased services Supplies

Total pupil health

Business

Personal services Salaries Employee benefits
Purchased prof. & tech. services Purchased property services
Other purchased services

382,760 185,603 80,000 2,000 42,050 650

693,063

1,221,565 742,898 230,000 96,350 24,470 29,800

2,345,083

268,376 165,961 108,900 600 20,000

563,837

143,094 97,517 33,950 4,000
15,000

382,760 185,603 80,000 2,000 42,050 650

693,063

1,221,565 742,898 230,000 96,350 24,470 29,800

2,345,083

268,376 165,961 108,900 600 20,000

563,837

143,094 97,517 33,950 4,000
15,000

378,063 198,499 60,730 803 34,378 285

672,758

1,165,902 705,800 247,597 157,595 27,173 175,951

2,480,018

277,201 164,516 96,222 450 13,703

552,092

143,362 98,880 31,323 -
12,654

4,697 (12,896)
19,270 1,197 7,672 365

20,305

55,663 37,098 (17,597) (61,245)
(2,703) (146,151)

(134,935)

(8,825) 1,445
12,678 150 6,297

11,745

(268) (1,363)
2,627 4,000
2,346

66

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

Supplies Property Other objects

Total business

Operation & maintenance of plant svcs. Personal services
Salaries Employee benefits
Purchased prof. & tech. services Purchased property services Other purchased services Supplies
Property

Total oper. & maint. of plant svcs.

Student transportation services Personal services
Salaries Employee benefits
Other purchased services Supplies

Total student transportation svcs.

Central

Personal services Salaries Employee benefits
Purchased prof. & tech. services Other purchased services Supplies
Property

Total central

4,000 4,000 1,000

302,561

1,317,902 1,015,394 253,120 934,011 262,493 214,972 21,117

4,019,009

44,308 25,352 2,201,500 50,000

2,321,160

335,219 196,239 70,000 10,000 135,000 428,767

1,175,225

4,000 4,000 1,000

302,561

1,317,902 1,015,394 253,120 934,011 262,493 214,972 21,117

4,019,009

44,308 25,352 2,201,500 50,000

2,321,160

335,219 196,239 70,000 10,000 135,000 428,767

1,175,225

2,521 -1,459

290,199

1,293,919 948,292 261,088 909,845 409,278 300,185 26,346

4,148,953

46,472 24,969 2,290,434 71,616

2,433,491

331,230 180,111 52,256 3,490 129,458 422,346

1,118,891

1,479 4,000
(459)

12,362

23,983 67,102
(7,968) 24,166
(146,785) (85,213) (5,229)

(129,944)

(2,164) 383
(88,934) (21,616)

(112,331)

3,989 16,128 17,744 6,510 5,542 6,421

56,334

67

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

Other

Other purchased services

Total support services

Operation of noninstructional services Student activities
Personal services Salaries Employee benefits
Purchased prof. & tech. services Purchased property services Other purchased services Supplies
Property Other objects

Total student activities

Community services Personal services
Salaries Employee benefits
Supplies

Total community services

Total oper. of noninstructional svcs.

Debt service Interest
Redemption of principal Fiscal agent fees

Total debt service

TOTAL EXPENDITURES

-

12,812,287

499,797 200,994 28,000 10,000 80,200 155,800 63,900 44,000

1,082,691

17,500 7,347 -

24,847

1,107,538

556,176 4,591,250 4,000

5,151,426

42,540,274

-

12,812,287

499,797 200,994 28,000 10,000 80,200 155,800 63,900 44,000

1,082,691

17,500 7,347 -

24,847

1,107,538

556,176 4,591,250 4,000

5,151,426

42,540,274

39,362

13,170,398

513,169 156,307 21,000 -
97,505 286,412 2,536 32,450

1,109,379

17,286 1,713 281

19,280

1,128,659

556,173 4,591,250 2,500

5,149,923

42,907,789

(39,362)

(358,111)

(13,372) 44,687
7,000 10,000
(17,305) (130,612)
61,364 11,550

(26,688)

214 5,634
(281)

5,567

(21,121)

3 -
1,500

1,503

(367,515)

68

Keystone Oaks School District Schedule of Revenues, Expenditures and Changes in Fund Balance
General Fund - Budget and Actual For the Year Ended June 30, 2019

Actual

Budgeted Amounts	(Budgetary

Variance with Final Budget
Positive

Original	Final	Basis)	(Negative)

OTHER FINANCING USES Fund transfers
Capital projects fund Refunds of prior years receipts
Payment to refunding bond escrow agent

TOTAL OTHER FINANCING USES

TOTAL EXPENDITURES AND OTHER FINANCING USES

Net change in fund balance

FUND BALANCE - JULY 1, 2018

384,355 5,000
-

389,355

42,929,629

-

3,681,167

384,355 5,000
-

389,355

42,929,629

-

3,681,167

93,853 631,671 9,345,183

10,070,707

52,978,496

3,039,276

2,965,014

290,502 (626,671)
(9,345,183)

(9,681,352)

(10,048,867)

3,039,276

(716,153)

FUND BALANCE - JUNE 30, 2019	$	3,681,167	$	3,681,167	$	6,004,290	$ 2,323,123

69

Keystone Oaks School District Schedule of the School District's Proportionate Share of the Net Pension Liability
Pennsylvania Public School Employees' Retirement System Last 10 Fiscal Years1

6/30/2019	6/30/2018	6/30/2017	6/30/2016	6/30/2015	6/30/2014

School District's proportion of the

net pension liability	0.1174%	0.1148%	0.1167%	0.1167%	0.1121%	0.1121%

School District's proportionate share of the net pension liability

School District's covered payroll

$	56,368,000

$	15,809,203

$	56,698,000

$	15,286,052

$	57,833,000

$	15,118,352

$	50,549,000

$	15,011,475

$	44,370,000

$	14,301,373

$	43,924,000

$	13,765,141

School District's proportionate share of the net pension liability as a percentage of its covered payroll

PSERS' plan fiduciary net position as a percentage of PSERS' total pension liability

356.55%

54.00%

370.91%

51.84%

382.54%

50.14%

336.74%

54.36%

310.25%

57.24%

319.10%

54.49%

See notes to required supplementary information

1The amounts presented for each fiscal year were determined as of the measurement date, which is is June 30 of the immediately preceding fiscal year. This schedule is intended to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the School District is presenting information for those years only for which information is available.

70

Keystone Oaks School District Schedule of School District Pension Contributions
Pennsylvania Public School Employees' Retirement System Last 10 Fiscal Years1

6/30/2019	6/30/2018	6/30/2017	6/30/2016	6/30/2015

Contractually required contributions

School District contributions recognized by the pension plan

Difference between contractually required employer contribution and contributions recognized by PSERS

$	5,402,270

$	5,402,270

$	-

$	5,017,841

$	5,017,841

$	-

$	4,463,527

$	4,463,527

$	-

$	3,779,588

$	3,779,588

$	-

$	3,077,352

$	3,077,352

$	-

School District's covered payroll	$ 16,571,379	15,809,203	15,286,052	15,118,352	15,011,475

Contributions recognized by the pension plan as a percentage of
covered payroll	32.60%	31.74%	29.20%	25.00%	20.50%

See notes to required supplementary information

1This schedule is intended to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the School District is presenting information for those years only for which information is available.

71

Keystone Oaks School District Schedule of the School District's Proportionate Share of the Net OPEB Liability
Pennsylvania Public School Employees' Retirement System Last 10 Fiscal Years1

6/30/2019	6/30/2018	6/30/2017

School District's proportion of the net OPEB liability	0.1174%	0.1148%	0.1167%

School District's proportionate share of the net OPEB liability

School District's covered payroll

$	2,448,000

$ 15,809,203

$	2,339,000

$ 15,286,052

$	2,514,000

$ 15,118,352

School District's proportionate share of the net OPEB liability as a percentage of its covered payroll

PSERS' plan fiduciary net position as a percentage of PSERS' total OPEB liability

15.48%	15.30%	16.63%

5.56%	5.73%	5.47%

See notes to required supplementary information

1The amounts presented for each fiscal year were determined as of the measurement date, which is is June 30 of the immediately preceding fiscal year. This schedule is intended to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the School District is presenting information for those years only for which information is available.

72

Keystone Oaks School District Schedule of School District OPEB Contributions
Pennsylvania Public School Employees' Retirement System Last 10 Fiscal Years1

6/30/2019	6/30/2018

Contractually required contributions	$

School District contributions recognized by the OPEB plan	$

Difference between contractually required employer contribution
and contributions recognized by PSERS	$

137,542	$

137,542	$

-	$

131,216

131,216

-

School District's covered payroll	$	16,571,379	15,809,203

Contributions recognized by the OPEB plan as a percentage of

covered payroll	0.83%	0.83%

See notes to required supplementary information

1This schedule is intended to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the School District is presenting information for those years only for which information is available.

73

Keystone Oaks School District Schedule of Chages in the School District's Total OPEB Liabliity and Related Ratios
School Plan Last 10 Fiscal Years1

6/30/2019	6/30/2018 Total OPEB liability - beginning of year	$	2,271,098     $     5,431,723

Service Cost Interest
Differences between expected and actual experience Changes of assumptions
Benefit payments

Net change in total OPEB liability

34,871 81,305 -
(28,946) (498,034)
(410,804)

169,201 217,269
(1,408,534) (1,153,406) (985,155)
(3,160,625)

Total OPEB liability - end of year	$	1,860,294	$	2,271,098

Covered-employee payroll

Net OPEB laibility as a percentage of covered-employee payroll

$ 13,834,795

13.45%

$ 13,497,361

16.83%

1This schedule is intended to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the School District is presenting information for those years only for which information is available.

74

Keystone Oaks School District Notes to Required Supplementary Information
June 30, 2019

Note 1 – Budgetary Information

Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund. All annual appropriations lapse at year-end.

All budgets amounts presented in the accompanying required supplementary information reflect the original budget and the amended budget (which have been adjusted for legally authorized revisions to the annual budget during the year).

The School District expenditures may not legally exceed the budget amounts by amounts in total for the fund unless funds are received in excess of the budgeted State allocation levels. Accordingly, the legal level of budgetary control is at the object level within each subfunction and fund.

Note 2 – Pension Information: PSERS Plan

Changes of benefit terms

With the passage of Act 5, Class T-E and T-F members are now permitted to elect a lump sum payment of member contributions upon retirement.

Changes of assumptions

June 30, 2016

The investment rate of return was adjusted from 7.50% to 7.25%. The inflation assumption was decreased from 3.00% to 2.75%.

Salary growth changed from an effective average of 5.50% (including inflation at 3.00%) to an effective average of 5.00% (including inflation at 2.75%).

Mortality rates were modified from the RP-2000 Combined Healthy Annuitant Tables (male and female) to the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale.

Note 3 – OPEB Information: PSERS Plan

Changes of benefit terms

None.

Changes of assumptions

June 30, 2018

The discount rate decreased from 3.13% to 2.98%.

75

Keystone Oaks School District Notes to Required Supplementary Information
June 30, 2019

June 30, 2017

The discount rate increased from 2.71% to 3.13%. June 30, 2016
Salary growth changed from an effective average of 5.50% (including inflation at 3.00%) to an effective average of 5.00% (including inflation at 2.75%).

Mortality rates were modified from the RP-2000 Combined Healthy Annuitant Tables (male and female) to the RP-2014 Mortality Tables for Males and Females, adjusted to reflect PSERS’ experience and projected using a modified version of the MP-2015 Mortality Improvement Scale.

Note 4 – OPEB Information: School Plan

Changes in benefit terms

None.

Changes of assumptions

June 30, 2019

The discount rates used for fiscal year ending June 30, 2019 was increased to 3.87% from 3.58%. June 30, 2018
GASBS No. 75 was implemented with the fiscal year ended June 30, 2018. Changes were made to the aging factors, the mortality table, the cost method, the percent married assumption, the medical participation assumption, the retirement rates, and the assumed salary increases.

76

Single Audit

Keystone Oaks School District Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2019

Federal Grantor

Pass Through Grantor Project Title

U.S. Department of Agriculture Child Nutrition Cluster
Passed through the Pennsylvania

Department of Education

Federal Source	CFDA
Code	Number

Pass Through Grantor
Number

Grant Period Beginning/
Ending Date

Program or Award
Amount

Total Received

for the Year

Accrued or (Deferred) Revenue
07/01/18

Revenue

Recognized

Accrued or (Deferred) Revenue
Expenditures	06/30/19

Pass Through to Sub-
recipients

School Breakfast Program                      I National School Lunch Program            I
Passed through the Pennsylvania Department of Agriculture
National School Lunch Program	I Total CFDA #10.555
Passed through the Pennsylvania Department of Education
Summer Food Service Program	I Passed through the Pennsylvania
Department of Agriculture

Summer Food Service Program	I Total CFDA #10.559
Total Child Nutrition Cluster

U.S. Department of Education Passed through the Pennsylvania
Department of Education

Title I                                                            I Title I                                                            I
Total CFDA #84.010

Supporting Effective Instruction	I Student Support and Academic
Achievement	I Student Support and Academic
Achievement	I

Total CFDA #84.424

10.553                  N/A 10.555                  N/A

10.555	2-04-02-500

10.559	N/A

10.559	6-04-02-500

84.010           013-180213 84.010           013-190213

84.367	020-190213

84.424	144-180213

84.424	144-190213

07/01/18-06/30/19 07/01/18-06/30/19

07/01/18-06/30/19

07/01/18-06/30/19

07/01/18-06/30/19

07/29/17-09/30/18 08/21/18-09/30/19

08/21/18-09/30/19

07/29/17-09/30/18

08/21/18-09/30/19

N/A N/A

66,492

N/A

4,453

560,947 548,316

82,559

12,712

40,554

$          67,539 308,975

66,492 375,467

48,368

4,453 52,821 495,827

148,345 431,793 580,138 82,735

1,695

17,380

19,075

$          8,102         $ 32,899

(17,369) 15,530

17,472

-17,472 41,104

148,345 -148,345 -

1,695

-

1,695

69,462 319,815

70,042 389,857

51,248

4,453 55,701 515,020

-548,316 548,316 82,559

-

40,554

40,554

$          69,462 319,815

70,042 389,857

51,248

4,453 55,701 515,020

-548,316 548,316 82,559

-

40,554

40,554

$        10,025         $               -43,739                         -

(13,819)                        -29,920                         -

20,352	-

-	-20,352	-60,297	-

-                         -116,523                         -116,523                         -(176)                        -

-	-

23,174	-

23,174	-

Passed through Allegheny Intermediate Unit

English Language Acquisition Special Education Cluster
Special Education-Preschool Special Education
Special Education Total CFDA #84.027
Total Special Education Cluster

Total U.S. Department of Education

I	84.365

I              84.173 I              84.027
I	84.027

010-19-0603

131-18-0-003 062-18-0-003
062-19-0-003

07/10/18-09/30/19

07/01/18-06/30/19 07/01/17-09/30/18
07/01/18-09/30/19

4,000

1,976 308,668
319,110

4,000

1,976 114,245 203,365 317,610 319,586
1,005,534

-

-114,245 -114,245 114,245
264,285

4,000

1,976 -
319,110 319,110 321,086
996,515

4,000

1,976 -
319,110 319,110 321,086
996,515

-	-

-                         --                         -
115,745	-115,745	-115,745	-
255,266	-

U.S. Department of Health and Human Services

Passed through the Pennsylvania Department of Public Welfare
Medical Assistance Program

Total Federal Financial Assistance

I	93.778	N/A	07/01/18-06/30/19	N/A

$

57

1,501,418

-

$      305,389

57

$     1,511,592

57

$     1,511,592

-	-

$      315,563	$	-

See accompanying notes to the Schedule of Expenditures of Federal Awards.

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Keystone Oaks School District Notes to Schedule of Expenditures of Federal Awards
June 30, 2019

Note 1 – Basis of Presentation

The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of School District under programs of the federal government for the year ended June 30, 2018. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of School District, it is not intended to and does not present the financial position, changes in net position, or cash flows of the School District.

Note 2 – Summary of Significant Accounting Policies

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

The School District has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance.

Note 3 – Source Code

The source code “I” indicates funds received indirectly.

Note 4 – Reconciliation with Subsidy Confirmation

Amount Received Per Schedule Add: State Funding on Confirmation Less: Pass Through AIU
Less: Donated Commodities Less: Title XIX
Rounding
Per Subsidy Confirmation

$1,501,418 29,797 (323,586) (70,945) (57)
2 $1,136,629

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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Members of the Board Keystone Oaks School District Pittsburgh, Pennsylvania

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Keystone Oaks School District, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Keystone Oaks School District’s basic financial statements and have issued our report thereon dated December 18, 2019.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Keystone Oaks School District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Keystone Oaks School District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Keystone Oaks School District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as items 2019-001 and 2019-002 that we consider to be material weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Keystone Oaks School District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have

79

Members of the Board Keystone Oaks School District
Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters

a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Keystone Oaks School District’s Response to Findings

Keystone Oaks School District’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Keystone Oaks School District’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Carnegie, Pennsylvania December 18, 2019

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INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Members of the board Keystone Oaks School District Pittsburgh, Pennsylvania

Report on Compliance for Each Major Federal Program

We have audited the Keystone Oaks School District’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Keystone Oaks School District’s major federal programs for the year ended June 30, 2019. Keystone Oaks School District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the Keystone Oaks School District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Keystone Oaks School District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Keystone Oaks School District’s compliance.

Opinion on Each Major Federal Program

In our opinion, the Keystone Oaks School District, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.

Report on Internal Control over Compliance

Management of the Keystone Oaks School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Keystone Oaks School District’s 81

Members of the Board Keystone Oaks School District
Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by Uniform Guidance

internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Keystone Oaks School District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Carnegie, Pennsylvania December 18, 2019

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Keystone Oaks School District Schedule of Findings and Questioned Costs June 30, 2019

Section 1 – Summary of Auditor’s Results Financial Statements

Type of auditor’s report issued

Internal control over financial reporting:

Material weakness(es) identified?

Significant deficiencies identified that are not considered to be material weakness(es)?

Noncompliance material to financial statements noted?

Unmodified, prepared in accordance with generally accepted accounting principles

Yes

None reported

No

Federal Awards

Internal control over major programs:

Material weakness(es) identified?

Significant deficiencies identified that are not considered to be material weakness(es)?

Type of auditor’s report issued on compliance for major programs

Any audit findings disclosed that are required to be reported in accordance with 2 CFR Section 200.516(a)?

Major Programs:

Name of Federal Program or Cluster

Special Education Cluster (IDEA)

No

None reported

Unmodified

No

CFDA Number(s)

84.027, 84.173

Dollar threshold used to distinguish between	$750,000 Type A and Type B programs:

Auditee qualified as low-risk auditee?	Yes

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Keystone Oaks School District Schedule of Findings and Questioned Costs June 30, 2019

Section 2 – Findings Related to Financial Statements Required to be Reported Under GAGAS

Finding 2019-001: Material Weakness in Internal Controls over Financial Reporting

Condition

During the audit process, several restatements were necessary to correct beginning net position for the government-wide financial statements. Adjustments were required to: restate capital assets and related depreciation; restate unamortized premiums and discounts on bonds payable; restate long-term receivables; and restate internal service funds as governmental activities from business-type activities. In addition, prior year reporting excluded specific required supplementary information and the presentation of proprietary fund information was not in accordance with the prescribed format under GASB Statement No. 34.

Criteria

An entity must design, implement and maintain internal controls over financial reporting relevant to ensure the financial statements are fairly presented in conformity with U.S. GAAP and include all properly classified funds and other financial information of the primary government and all component units required by generally accepted accounting principles to be included in the financial reporting entity.

Effect

Beginning net position of the governmental activities and business-type activities were restated. Net position was reduced in the governmental activities by $5,852,292. Net position was reduced in the business-type activities by $2,824,983.

Cause

The School District’s prior year financial statements are drafted by their auditor and reviewed before issuance. The business office is understaffed which creates time constraints for reviewing the draft before issuance. Time constraints also impede staff from maintaining the necessary skills and knowledge to prepare financial statements in accordance with GAAP through attendance and participation in continuing education on topics critical to financial reporting for the School District.

Recommendation

We recommend the School District require annual training for individuals responsible for oversight of financial reporting and increase staffing in the business office so that all functions can be completed accurately and in a timely manner. We further recommend the School District prepare and monitor an annual timeline for the financial reporting process with due dates.

Views of responsible officials and planned corrective action Management agrees with the finding. See attached corrective action plan.

84

Keystone Oaks School District Schedule of Findings and Questioned Costs June 30, 2019

Finding 2019-002: Material Weakness in Internal Controls over Financial Reporting

Condition

We selected a random sample of forty (40) employees and requested personnel files in order to test compliance with related laws and regulations for employment with the School District. Of the 40 employees selected the following exceptions were noted:

No personnel file found                                                                      6 Personnel file was incomplete or missing information                       2
All exceptions noted were for part-time or seasonal staff. No exceptions were noted for regular full-time personnel.

Criteria

An entity must design, implement and maintain internal controls over employment records to ensure compliance with laws and regulations. The School District should maintain employee records that include the following documents:

•	Clearances and background checks •	Immigration (I-9) forms
•	W-4
•	Benefit elections •	Hiring records

Effect

The School District’s personnel documentation is incomplete. Cause
A centralized process for onboarding auxiliary part-time staff for the Athletic Department, Food Service Department, Operations and Maintenance and a tax collector was not consistently applied and/or enforced.

Recommendation

We recommend the School District complete a 100% internal audit of its personnel files for all currently active employees. We further recommend that onboarding procedures for temporary and part-time staff be reviewed and revised so that all critical processes are conducted through the central office.

Views of responsible officials and planned corrective action Management agrees with the finding. See attached corrective action plan.

85

Keystone Oaks School District Schedule of Findings and Questioned Costs June 30, 2019

Section 3 – Findings and Questioned Costs for Federal Awards None.

Section 4 – Status of Prior Audit Findings

None.

86

KEYSTONE OAKS SCHOOL DISTRICT 1000 KELTON AVENUE · PITTSBURGH, PA 15216

PHONE 412.571.6028 · FAX 412.571.6006

JOSEPH A. KUBIAK BUSINESS MANAGER

KUBIAK@KOSDORG

CORRECTIVE ACTION PLAN

Department of Education:

The Keystone Oaks School District respectfully submits the following corrective action plan for the year ended June 30, 2019.

Name and address of the independent public accounting firm:

Myers, Patsy & Associates, LLC 150 East Main Street
Suite 201

Carnegie, PA 15106

Audit period: July 1, 2018 through June 30, 2019

The findings for the year ended June 30, 2019 schedule of findings are discussed below. The findings are numbered consistently with the numbers assigned in the schedule.

SECTION B - FINANCIAL STATEMENT FINDINGS

Finding 2019-001: Material Weakness in Internal Controls over Financial Reporting

Recommendation: We recommend the School District require annual training for individuals responsible for oversight of financial reporting and increase staffing in the business office so that all functions can be completed accurately and in a timely manner. We further recommend the School District prepare and monitor an annual timeline for the financial reporting process with due dates.

WWW.KOSD.ORG	87 KEYSTONE OAKS IS AN E11AL OPPORTUNITY SCHOOL DISTRICT

Management's Response: The District will look for annual trainings to send individuals responsible for oversight of financial reporting to. The District will also look at staffing and all other means possible to address the staffing issue in the business office to ensure that there are enough staff to help complete all tasks accurately and timely. The District will also look at creating an annual timeline in regards to the financial reporting process, which will include due dates and any other date of importance.

Finding 2019-002: Material Weakness in Internal Controls over Financial Reporting

Recommendation: We recommend the School District complete a 100% internal audit of its personnel files for all currently active employees. We further recommend that onboarding procedures for temporary and part-time staff be reviewed and revised so that all critical processes are conducted through the central office.

Management's Response: The District agrees with the auditor's recommendation of completing a 100% internal audit of its personnel files for all currently active ,employees. The District has currently began working on this internal audit to ensure that all currently active employees have a personnel file with the appropriate documents in them. The District is also currently working on reviewing and revising onboarding procedures for all staff, including temporary and part-time, to ensure that central office receives all proper documentation needed for every employee.

If you have any questions about this report or need additional financial information, please contact Joseph Kubiak, Business Manager at:

1000 Kelton A venue Pittsburgh, PA 15216 (412) 571-6028

88