,.....-
('
C
('
C C C

(	KEYSTONE OAKS SCHOOL DISTRICT

PITTSBURGH,   PENNSYLVANIA

ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2016

C
C

(..
(,
{
(.,

Cypher	&	Cypher
Accountants I Auditors I Advisors

(	KEYSTONE OAKS SCHOOL DISTRICT
(	TABLE OF CONTENTS
(
(
C C C C
(	INDEPENDENT AUDITOR'S REPORT

PAGE NO.

C	MANAGEMENT'S  DISCUSSION AND ANALYSIS	i-xi
C
C	FINANCIAL STATEMENTS
C
(	STATEMENT OF NET POSITION	1
C	STATEMENT OF ACTIVITIES	2
C
C	FUND FINANCIAL STATEMENTS
C
C	BALANCE SHEET-GOVERNMENTAL FUNDS	3
C	RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
C	STATEMENT OF NET POSITION	4
C
(	STATEMENT  OF  REVENUES,  EXPENDITURES  AND  CHANGES  IN  FUND BALANCES- GOVERNMENTAL FUNDS	5
(
C	RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
C	CHANGES   IN   FUND   BALANCES   OF  GOVERNMENTAL   FUNDS  TO  THE
(_	STATEMENT OF ACTIVITIES	6
(	STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
C	BALANCE BUDGET VS ACTUAL- GENERAL FUND	7
(

STATEMENT OF NET POSITION - PROPRIETARY FUNDS				8	
STATEMENT OF REVENUES, EXPENSES AND CHANGES POSITION - PROPRIETARY FUNDS	IN	FUND	NET	

9	
STATEMENT OF CASH FLOWS- PROPRIETARY FUNDS				10	

(
(
(_

(_
STATEMENT OF FIDUCIARY  NET POSITION - FIDUCIARY FUNDS	11
(_	STATEMENT   OF  CHANGES  IN   FIDUCIARY   NET POSITION  -	FIDUCIARY
(_	FUNDS	12
(_
(

(	NOTES TO THE FINANCIAL STATEMENTS
(	SUPPLEMENTARY INFORMATION
C
(
(	STATEMENT OF CHANGES IN ASSETS AND LIABILITIES­
(	AGENCY FUNDS
(	INDEPENDENT  AUDITOR'S  REPORT  ON  INTERNAL  CONTROL  OVER C	FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER  MATTERS C	BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
C	ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
C	INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR (	PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY C	THE UNIFORM GUIDANCE
C

C

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

C	SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

C	NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

C C C C C (
C C C C C
(
(
C C (
C
(

C C C

13-3S

36

37-38

39-40

41-46

47

48

_l
Cypher	& Cypher
Accountants I Auditors I Advisors

Independent Auditor's Report

Keystone Oaks School District Pittsburgh, Pennsylvania

Ladies and Gentlemen:

www.cyphercpa.com

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, 2016, and the related notes to the financial statements, which collectively comprise the 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 the 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.

Canonsburg Office	Tel 724.745.3543 179 East Pike Street	Fax 724.745.3590
Canonsburg, PA 15317

Waynesburg Office	Tel 724.852.1500 101 N. Woodland Ave.	Fax 724.852.1502
Waynesburg, PA 15370

Wexford Office	Tel 412.369.9992 8980 Perry Highway Fax  412.369.8225 Pitt sburgh, PA 15237

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  School  District's  preparation  and  fair  presentation  of  the  financial statements in
(	order to design the audit procedures that are appropriate in the circumstances, but not  for  the purpose of  expressing  an  opinion  on  the  effectiveness  of  the  School  District'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.
(
(	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, (	2016 and the respective changes in financial  position, and, where applicable, cash flows thereof  and (	the respective budgetary comparison for the General Fund for the year then ended in accordance
(	with accounting principles generally accepted in the United States of America.
(	Other Matters
C	Required Supplementary Information
Accounting   principles   generally   accepted    in   the    United   States   of   America    require   that   the (	management's discussion  and  analysis on  Pages  i through  xi  be  presented  to  supplement  the  basic (	financial statements. Such information, although not a part of the basic financial statements, is

C

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.
C
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 statement of changes in assets and liabilities - agency funds is presented  for  purposes of additional  analysis and is not a required part of the 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,	Costs	Principles,	and	Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.
(
(	The statement of changes in assets and liabilities - agency funds and the schedule of expenditures
(	of federal  awards are  the  responsibility of management  and  were derived from  and  relate 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
C		procedures in accordance with auditing  standards  generally  accepted  in  the  United  States  of America. In our opinion, the statement of changes in assets and liabilities - agency funds and the
(	schedule of expenditures  of federal  awards  are  fairly stated  in  all material  respects  in  relation  to the
(	basic financial statements as a whole.
(
(	Other Reporting Required by Government Auditing Standards
(	In accordance with Government Auditing Standards, we have also issued our report dated January 9,
C	2017,  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 to describe the scope of our
testing  of  internal  control  over  financial  reporting  and  compliance  and  the  results  of  that  testing, C       and  not  to   provide  an  opinion  on  internal  control  over  financial  reporting  or  on  compliance.  That   ( report is an integral part of an audit performed in accordance with Government Auditing Standards
C	in considering Keystone Oaks School District's internal control over financial reporting and
C	compliance.

C
(	CYPHER & CYPHER

(

C ( C
C

C

Canonsburg, Pennsylvania
(	January 9, 2017

CERTIFIED PUBLIC ACCOUNTANTS

(
C

C
(
(
(
(
(

(
(
r
'-
(
(
C C C

C	Management's Discussion
C	and Analysis
C C C
(
C
C
(
(

(

C
(
Keystone Oaks School District
Management's Discussion and Analysis June 30, 2016
(
It is management's  privilege to  present the  financial status of  Keystone Oaks 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, 2016 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's
(		Discussion  and  Analysis - for  State and  Local Governments  issued June 1999.	Certain comparative information between the current year and the prior year is required to be presented in the MD&A.

Financial Highlights
(
(	During the 2013/2014 budget preparation process, the decision was made by the Board  to  balance its operating budget by using $471,229 of the fund balance along with increasing tax millage .58 mills. The biggest change occurred
(	with Allegheny County as year 2013 was a reassessment year and all property assessed values changed. With property
(	values  having a substantial  increase  in  assessment,  school  districts  must follow  the   Pennsylvania  law ACT 1  of 2006

(

C	that states school districts are prohibited from a real estate tax revenue windfall. The millage was reduced from 22.03 mills to 18.05 mills to offset the increased assessment and reducing the millage under the Pa. Act 1 of 2006 windfall
provision.
(
C	After lowering the millage per the windfall provision to 18.05 mills, the School Board approved to raise millage to
18.63 mills (.58 mill increase) for the 2013/2014 school year. This .58 millage increase was accomplished by the going
to the  allowable INDEX (.36 mills) and a Retirement  Exception  (.22 mills) that must  be approved  by Pa. Department of C     Education.  Both  are  provisions  of Act 1  of  2006. The School  District decreased  its fund  balance during the  2014/2015 ( operational year by $1,649,894, bringing the new fund balance to $4,734,940.

(	A number of factors contributed to a successful operating year.
(	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.
C

(

The other local revenues as stated vary widely 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  incomes are  ( calculated on conservative basis.

(

I

(
(
(
(	Using the Annual Financial Report
(

Keystone Oaks School District Management's Discussion and Analysis June 30, 2016

(		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  (0MB)  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 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.
C C C C

(
(
(
(
C

(
(

11

(
(
'	Keystone Oaks School District
C	Management's Discussion and Analysis
(	June 30, 2016
(
(
(	Using the Annual Financial Report (Cont'd)

The financial statements also include notes to explain some of the information in the financial statements and
(	provide more detailed data.
(
(	Figure A-1 shows how the required parts of the financial section are arranged and relate to one another:
(	Figure A-1
(	Required Components of
(	Keystone Oaks School District's
(	Financial Report

Management's Discussion and Analysis

(

 	l	
•	
Required Supplementary Information

Basic Financial Statements

I

(_

(

 	I	

Notes to the Financial Statements

Fund Financial Statements

Government-Wide Financial Statements

I	I	•

(
(
(		Figure A-2 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
l	management's discussion and analysis explains the structure and contents of each of the statements.
(
(_
(
t
(_
(_

(_
l
iii

(	Keystone Oaks School District
(	Management's Discussion and Analysis
(	June 30, 2016
(	Overview of Financial Statements (Cont'd)
(

Figure A-2
Major Features of Keystone Oaks School District's
(	Government-Wide and Fund Financial Statements
(

Government-Wide

Scope	
Entire School District
(except fiduciary funds)	
The activities of the School District that are not proprietary or fiduciary, such as education, administration and community services	
Activities the School District operates similar to private business - food services	
Instances in which
the School District is the trustee or agent to someone else's resources	
Required financial
statements	Statement of net position; statement of activities	Balance sheet; statement of revenues, expenditures, and changes in fund balance	Statement of net position; statement of revenues, expenses and changes in fund net position; statement of
cash flows	Statement of fiduciary net position; statement of changes in fiduciary net position	

Accounting basis and measurement focus	Accrual accounting and economic resources Focus	
Modified accrual accounting and current
financial resources focus	
Accrual accounting and
economic resources focus	Accrual accounting and economic resources focus	

Type of asset/liability information	
All assets and liabilities, both financial and capital, and short-term and long-term	
Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital
assets included	
All assets and liabilities, both financial and capital, and short-term and tong-term	
All assets and liabilities, both short-term and long-term	
Type of in-flow/outflow information	All revenues and expenses during the year, regardless of when cash is received or paid	
Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and pay- ment is due during the year or soon thereafter	
All revenues and expenses during the year, regardless of when cash is received or paid	
All revenues and expenses during the year, regardless of when cash is received or paid	

(	Statements
(
(
(
(

 			Fund Statements		                Governmental Funds	Proprietary Funds	Fiduciary Funds

(

C

(
(
C

(
(
C
(
C C C (
C
C	IV

Keystone Oaks School District
Management's  Discussion and Analysis
(	June 30, 2016
(
(	Overview of Financial Statements (Cont'd)
(	Government-Wide Statements
(
The government-wide statements report information about the School District as a whole using 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.
(
(	The two government-wide statements report the School District's net position and how they have changed. Net position, the difference between the School District's assets and liabilities, is one way to measure the
C	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:

C

(	- 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.
(
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.

V
(
(_
C

Keystone Oaks School District Management's Discussion and Analysis
(	June 30, 2016
(
(	Overview of Financial Statements (Cont'd)
(
Fund Financial Statements (Cont'd)

[

(	Other funds reported by the School District include:
l.
(	Agency fund- This fund represents the School District's student activity funds.
(	Special revenue funds - This fund represents the capital reserve fund.	This fund is considered a nonmajor
(	governmental fund.

(		Debt service fund-Accounts for resources accumulated and payments made for principal and interest on long- term general obligation debt.

(	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 and completion of capital projects.

Table A-1
Years Ended June 30, 2016 and 2015
C	Net Position
C	Governmental Activities	Business-Type Activities	Total

Current and Other Assets	$ 16,780,870	$	12,626,003	$ 694,455	$ 430,098	$ 17,475,325	$ 13,056,101	
Non Current Assets	35,734,927	40,484,370	120,339	134,460	35,855,266	40,618,830	
Deferred Outflows	4,849,657	5,680,297			4,849,657	5,680,297	
Total Assets	57,365,454	58,790,670	814,794	564,558	58,180,248	59,355,228	

Current and Other Liabilities	
7,911,728	
8,948,998	
26,295	
7,792	
7,938,023	
8,956,790	
Non Current liabilities	76,620,345	78,698,238			76,620,345	78,698,238	
Deferred Inflows	3,211,597	337,880	7,953	18,763	3,219,550	356,643	
Total Liabilities	87,743,670	87,985,116	34,248	26,555	87,777,918	88,011,671	

Net Investment in Capital Assets	
5,289,754	
10,669,271	
120,339	
134,460	
5,410,093	
10,803,731	
Restricted	6,652,047	3,991,903	456,950	271,869	7,108,997	4,263,772	
Unrestricted	(42,320,017)	(43,855,620)	203,257	131,674	(42,116,760)	(43,723,946)	

2015	2016	2015	2016	2015	2016

C
(
(
(
(
(

(
(

(_
(	Total Net Position	${30,378,216)	$	(29,194,446)	$ 780,546	$ 538,003	$ (29,597,670)	$ (28,656,443) 

VI
C

(
(
Keystone Oaks School District
(	Management's Discussion and Analysis
(	June 30, 2016
(
Financial Analysis of the School District as a Whole (Cont'd)
(
Table A-2

(

Years Ended June 30, 2016 and 2015 Changes in Net Position

(	 	Governmental Activities	Business-Type Activities	 	Total	
(

Charges for Services	$	58,245	$	402,646	$ 450,778	$ 477,844	$	S09,023	$	880,490	
Operating Grants and Contributions	6,482,842	6,323,331	469,059	548,031	6,951,901	6,871,362	

(	Program Revenues:	2015	2016	2015	2016	2015	2016
(

Property Taxes	24,304,558	24,894,477			24,304,558	24,894,477	
Other Taxes	3,159,645	3,465,246			3,159,645	3,465,246	
Grants Subsidies and Contributions	4,630,240	4,782,796			4,630,240	4,782,796	
Other	157,532	68,700	462	2,878	157,994	71,578	
	38,793,062	39,937,196	920,299	1,028,753	39,713,361	40,965,949	

{	General Revenues:
'-
(
(

Depreciation	1,881,424	1,736,687			1,881,424	1,736,687	
Instruction	20,146,137	22,693,566			20,146,137	22,693,566	
Instructional Student Support	1,970,211	2,285,587			1,970,211	2,285,587	
Administrative and financial Support	3,301,240	3,863,949			3,301,240	3,863,949	
Operation and Maintenance of Plant	4,014,741	4,198,008			4,014,741	4,198,008	
Pupil Transportation	2,237,437	2,271,105			2,237,437	2,271,105	
Student Activities	901,759	1,066,076			901,759	1,066,076	
Community Services	21,206	23,492			21,206	23,492	
Debt Service	1,016,734	613,792			1,016,734	613,792	
Food Service			958,646	1,053,091	958,646	1,053,091	
Other		1,164	559,060	218,205	S59,060	219,369	
	35,490,889	38,753,426	1,517,706	1,271,296	37,008,595	40,024,722	

Expenditures:

C

(

(
(
(
(
( Change in Net Position
( C (

  $  3,302,173      $  1,183,770     $  (597,407)     $  (242,543)    $ 2,704,766     $	941,227 

C

l

C
Vil

(  

(	Keystone Oaks School District
Management's Discussion and Analysis
(	June 30, 2016
(
(
Financial Analysis of the School District as a Whole (Cont'd}
(
(	Table  A-3  shows  the   School   District's   largest  functions  -  instruction,   instructional   support,  administration and
(	financial  support,  operation  and  maintenance,  pupil transportation, student  activities,  community  services and
(	interest on long-term debt at net cost for governmental activities only.
(	Table A-3
(	Years Ended June 30, 2016 and 2015
(	Governmental Activities

	Percentage		Percentage	
Total Cost of Services	Change	Net Cost of Services	Change	

(
(
2015	2016	2015-2016	2015	2016	2015-2016

Depreciation - Unallocated	$	1,881,424	$	1,736,687	0.0%	$	1,881,424	$	1,736,687	0.0%	
Instruction	20,146,137	22,693,566	12.6%	15,827,570	18,296,477	15.6%	
Instructional Student Support	1,970,211	2,285,587	16.0%	883,106	1,194,748	35.3%	
Administrative and Financial Support	3,301,240	3,863,949	17.0%	3,081,961	3,639,5S6	18.1%	
Operation and Maintenance of Plant	4,014,741	4,198,008	4.6%	3,839,489	3,994,566	4.0%	
Pupil Transportation	2,237,437	2,271,105	1.5%	1,730,170	1,707,183	-1.3%	
Student Activities	901,759	1,066,076	18.2%	777,149	920,960	18.5%	
Scholarships and Awards	21,206	23,492	10.8%	18,448	23,492	27.3%	
Debt Service - Principal & Interest	1,016,734	613,792	-39.6%	910,485	512,616	-43.7%	

(	Function/Programs
C

C

(	Total Governmental Activities	$	35,490,889	$  38,752,262	 	9.2%	$    28,949,802      $    32,026,285 	10.6%

less: Unrestricted Grants, Subsidies and		
Unrestricted Contributions	(4,630,240)	(4,782,796)	
Total Needs from local Taxes and Other
Revenues	
$	24,319,562	
$	27,243,489	

(
(

C

(
C	The following table reflects the Food Service Program, the District's only business type activity.
(	Table A-4
Years Ended June 30, 2016 Business-Type Activities

Function/Programs

Total Cost of
 	Service	

Net Cost of
 	Service	

Food Service

$	1,053,091	$	58,254

Vlll

C

C

Keystone Oaks School District
Management's Discussion and Analysis
(	June 30, 2016
C
School District Funds
(
(	General Fund Budget
(
A schedule showing the School District's original and final budget amounts compared with amounts actually
(	paid and received is included in the financial statements.
(
(	An overview of variances is included in this Management's Discussion and Analysis.
C	Capital Assets and Debt Administration
C
(	Capital Assets
(
Table A-5 compares capital assets for the fiscal years June 30, 2016 and 2015, respectively.

(

C

Table A-5 Governmental Activities
Capital Assets - Net  of Depreciation

Governmental Activities	2016	2015	
Land	
$1,355,020	
$1,355,020	
Land Improvements	5,339,182	3,018,785	
Buildings and Improvements	29,951,895	27,283,293	
Furniture and Equipment	198,960	19,806	

(
C
(
(	Construction in Progress	 	

 	-0-

(
C	Business-Type Activities
(
(	Furniture and Equipment
C
(
C

$36.845.057	$31.676.904

$	134 460	$	120.339

(
l

IX
C

(
C	Keystone Oaks School District
(	Management's Discussion and Analysis
(	June 30, 2016

(
(
(
(
(
(
(
(
(
(
(
(
C C C
(
C
r
'--
(
C
(
(

(

(
(

(_
(_

Debt Administration

Table A-6 demonstrates the reduction/addition in outstanding debt for the fiscal year.

Table A-6 Outstanding Debt

Series of 2010A		-0-	-0-	
Series of 2013	9,430,000		9,435,000	
Series of 2013A	3,280,000		3,600,000	
Series of 2014A	655,000		830,000	
Series of 2014B	3,025,000		6,095,000	
Series of 2014C	8,160,000		8,365,000	
Series of 2015	4,960,000		5,040,000	

General Obligation Bonds	As of 06/30/16	As of 06/30/15 Series of 2010		$	-0-		$	10,000

$29.510.000	 	$33.375.000 

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 are a few major projects in development stages. There is development planned by all three boroughs that would impact future growth and development. The City Vista Apartment Project in Greentree Borough is already completed. Dormont Borough has a potential project to revitalize an area between Potomac Avenue and West Liberty Avenue. Castle Shannon Borough is proceeding with Shannon Transit Village a $35 million project and Ellison Place Townhouses is another possible project.

Future economic factors that will impact the district are Pennsylvania Public School Employees Retirement System (PSERS) as all Pennsylvania district's employer rates are increasing at an alarming r1te. The employer rates were 8.64% in 2011-2012, 12.36% 2012-2013, 16.93% in 2013-2014, 21.40% in 2014-2015, 25.84% in 2015-2016 and
future annual rates will be30.03% 2016-2017, 32.04% 2017-2018, 33.27% 2018-2019, 34.20% 2019-2020 and are expected to  level out at that point. These increases will strain all Pennsylvania school districts. Medical Insurance is increasing 1.9% 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. There is an ongoing situation between Highmark and UPMC that could have an impact on rates for health insurance. Allegheny County implemented reassessment of all properties in calendar year beginning January 1, 2013. This is a major undertaking for Allegheny County School Districts and will have assessment appeals and values changing for the next few years. The values continue to change as there is approximately $180,000,000 in assessed value still in assessment cases. The assessment directly impacts real estate

X

Keystone Oaks School District
C	Management's Discussion and Analysis
June 30, 2016
(	taxes and school districts adjusted the millage rate down with assessment increases. Keystone Oaks adjusted the (	rates from 22.03 to 18.05 based on increased reassessments from the county. The Pennsylvania state law Act 1 of (	2006 does not allow school districts a windfall on real estate tax income and the tax dollar amount in the
(	subsequent year must be the same as the current fiscal year.
(	In June 2012, The School Board 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 deteriorating parking lots
(	at all schools in the district, HVAC systems, lighting and fixtures throughout the district, Dormont Stadium turf will need  replaced and all roofs nearing  useful  life expectancy. These  parking lots will be costly as  most need totally
(	replaced.
(

(

Lastly, the district will have three more bond issues that can be refinanced in the near future and with the current
economic market's favorable  borrowing interest rates can save the  district a substantial  amount of  money. Bond (	refinancing savings are approximately $1,000,000 that will be saved over the  next nine year period. At this time, (	debt service payments will be paid through fiscal year 2022.
(	The comparison of revenue and expenditure categories is as follows:

(	Table A-7
(
Budgeted Revenues
C	2015/2016

Actual Revenues 2015/2016

Local	71.0%	72.0%	
State	28.0%	26.8%	
Federal	1.0%	1.2%	

(	Budgeted Expenditures
2015/2016

Actual Expenditures 2015/2016

Instruction	54.0%	54.0%	
Support Services	31.1%	31.3%	
Noninstructional	2.7%	2.7%	
Fund Transfers/Debt/Other	12.2%	12.0%	

(
C

(
Contacting the School District Financial Management

C	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 Keystone Oaks School District, 1000 Kelton Avenue, Pittsburgh, PA 15216,- 412-571-6000.
(

Xl

(

(
(
(
(
(
(
(
(
(

(

(
(	Basic Financial Statements
(

C
(

C
(

(
(
(
C
(
C
(
( C C

(
(

(

KtDIUNt UAK:::, ::>LHUUL Ul::>IKILI
STATEMENT OF NET POSITION
(	JUNE 30, 2016
(

Governmental	Business-Type	
	Activities	Activities	Total	
ASSETS				
Cash and Cash Equivalents	$	2,337,843	$	359,196	$	2,697,039	
Investments	7,242,233	441,952	7,684,185	
Taxes Receivable (net)	738,241		738,241	
Internal Balances	531,356	(531,356)		
Due from Other Governments	1,622,507	116,918	1,739,425	
Other Receivables	144,015	11,443	155,458	
Inventories		31,945	31,945	
Prepaid Expenses/Expenditures	9,808		9,808	
Long Term Receivables	3,639,313		3,639,313	
Capital Assets (net)	36,845,057	134,460	36,979,517	
TOTAL ASSETS	
53,110,373	
564,558	
53,674,931	

DEFERRED OUTFLOWS OF RESOURCES				
Pension Related	S,463,988		$	5,463,988	
Deferred Refunding Loss	 	216,309	216,309	
Total Deferred Outflows of Resources	 	5,680,297	5,680,297	
TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES	$     58,790,670	$	564,558	$	59,355,228	
LIABILITIES		
Accounts Payable	$	240,969	$	7,792	$	248,761	
Accrued Salaries and Benefits	2,426,740		2,426,740	
Payroll Deductions and Withholdings	2,133,975		2,133,975	
Interest Payable	212,314		212,314	
long-Term Liabilities:				
Portions Due or Payable Within One Year:				
Bonds Payable - Net of Related Premiums/Discounts	3,935,000		3,935,000	
Portions Due or Payable After One Year:				
Bonds Payable - Net of Related Premiums/Discounts.	26,096,408		26,096,408	
Net Pension liability	50,566,000		50,566,000	
long-term Portion of Compensated Absences	418,189		418,189	
OPEB Obligation	1,617,641		1,617,641	
Total liabilities	87,647,236	7,792	87,655,028	
DEFERRED INFLOWS OF RESOURCES				

(
(
(
(

(
(
(

(
(
(
(
(

C

C

(	Pension Related	311,000	311,000
Unearned Revenue	 	26,880	18,763	45,643
(	Total Deferred Inflows of Resources	337,880	18,763	356,643
(
NET POSITION
(	Net Investment in Capital Assets	10,669,271	134,460	10,803,731	
C	Restricted for:
Capital Projects	
1,390,775		
1,390,775	
	Designated Purposes	2,601,128		2,601,128	
	Risk Management		271,869	271,869	
Unrestricted	(43,855:620)	131,674	(43,723,946)
TOTAL NET POSITION	(29,194,446)	538,003	(28,6S6,443)
TOTAL LIABILITIES, DEFERRED INFLOWS OF
(	RESOURCES, AND NET POSITION	$ 	58,790,670	$	564,558	$	59,355,228

(
(	THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
1

('	('	('	('	f'"'. 0	('\ ('. I'"'.	00	.,-, ('\	('\	('\	('\	'i	0	0	0	,-,	'1	'1   r"'\ .r"'\	'1
KEYSTONE OAKS SCHOOL DISTRICT
STATEMENT OF ACTIVITIES
FOR THE VEAR  ENDED JUNE 30, 2016

Program Revenues	Net (Expense) Revenue

Operating	and Changes in Net Position

Charges	Grants and	Governmental	Business-type
Expenses	for Services	Contributions	Activities	Activities	Total

Governmental Activities		
Depreciation - Unallocated	$	1,736,687	$	$	$	(1,736,687)	$	$	(1,736,687)	
Instruction	22,693,566	337,361	4,059,728	(18,296,477)	(18,296,477)	
Instructional Student Support	2,285,587		1,090,839	(1,194,748)	(1,194,748)	
Administrative and Financial Support	3,863,949		224,393	(3,639,556)	(3,639,556)	
Operation and Maintenance of Plant	4,198,008		203,442	(3,994,566)	(3,994,566)	
Pupil Transportation	2,271,105		563,922	(1,707,183)	(1,707,183)	
Student Activities	1,066,076	65,285	79,831	(920,960)	(920,960)	
Community Services	23,492			(23,492)	(23,492)	
Interest on Long-Term Debt	613,792		101,176	(512,616)	(512,616)	
Total Governmental Activities	38,752,262	402,646	6,323,331	(32,026,285)	(32,026,285)	

Business Type Activities						
Food Service	1,0S3,091	446,806	548,031		(58,254)	(58,254)	
Risk Management	45	    31,038			30,993	         30,993	
Total Business Type Activities	1,053,136	477,844	548,031		(27,261)	(27,261)	

Total Government	$	39,805,398	$	880,490	$	6,871,362	$	(32,026,285)	$	(27,261)	$	(32,053,546)	
General Revenues, Special and Extraordinary Items and Transfers							
Taxes
Property Taxes				
24,894,477		
24,894,477	
Other Taxes				3,465,246		3,465,246	
Grants, Subsidies and Contributions, Unrestricted				4,782,796		4,782,796	
Investment Earnings				65,800	1,714	67,514	
Miscellaneous Income				2,900		2,900	
Miscellaneous Expense					(218,160)	(218,160)	
Transfers Between Governmental and Business Type Activities				(1,164)	1,164		

Total General Revenues, Special and Extraordinary Items and Transfers				
33,210,055	
(215,282)	
32,994,773	

Change in Net Position				1,183,770	(242,543)	941,227	

Net Position - Beginning				(30,378,216)	780,546	(29,597,670)	
Net Position - Ending	$	(29,194,446)	$	538,003	$	(28,656,443)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2

('	('	("'    ('	n	r-- n	nnr'	n.  n	nn	nn	nnn./""\  n	n  ,-, n	r'\    .,-,,  .,-,  .r, ,-,,  ,-.,
KEYSTONE OAKS SCHOOL DISTRICT BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2016

 	Governmental Funds	
Capital Projects	Debt Service
  General Fund	Fund	Fund	Totals	
ASSETS
Cash and Cash Equivalents	$	2,009,768	$	326,774	$	1,301	$	2,337,843	
Investments (At Fair Value)	7,242,233			7,242,233	
Taxes Receivable (Net)	138,241			138,241	
Due From Other Funds	S31,3S6	1,100,000		1,631,356	
Intergovernmental Receivables	1,622,507			1,622,507	
Other Receivables (Net)	144,0lS			144,015	
Prepaid Expenditures	 	9,808		9,808	
Total Assets	$	11,697,928	$	1,426,774	$	1,301	$	13,126,003	

LIABILITIES, DEFERRED INFLOWS OF					
RESOURCES, ANO FUND BALANCES					
Liabilities:
Due to Other Funds	$	1,100,000	$	$	$	
1,100,000	
Accounts Payable	204,970	35,999		240,969	
Accrued Salaries and Benefits	2,426,740			2,426,740	
Payroll Deductions and Withholdings	 	2,133,975		2,133,975	
Total Liabilities	5,865,685	35,999	5,901,684	
Deferred Inflows of Resources:			
Unearned Revenue	 	26,880		26,880	
Total Deferred Inflows of Resources	26,880	26,880	

Fund Balances:							
Nonspendable:
Prepaid Expenditures	
9,808	
9,808	
Committed to:
Capital Projects	
1,390,775	
1,390,775	
Debt Service	1,301	1,301	
Employer Retirement Costs	901,128	901,128	
Health Insurance Costs	500,000	500,000	
Post-Retirement Benefits	1,200,000	1,200,000	
Assigned to:
Athletics	
40,136	
40,136	
Budget Deficit	422,075	422,075	
Unassigned:	 	2,732,216		2,732,216	
Total Fund Balances	5,805,363	1,390,775	1,3QL	7,197,439	
 	
TOTAL LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES	$ 	11,697, ?.?	$	1,426,774	$	1,301	$        13,126,003

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3

(
(	KEYSTONE OAKS SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
FOR THE YEAR ENDED JUNE 30, 2016
(
(
(
(

Total Fund Balances - Governmental Funds

Capital assets used in governmental activities are not financial resources and
are not  reported as assets in  governmental  funds.   The cost of the  assets  is	$	7,197,439	
$79,130,339 and the accumulated depreciation is $42,28S,282.	36,845,057	
Long-term liabilities, including bonds payable, are not due and payable in the current period and are not reported as liabilities in the funds.	

(30,031,408)	
Long-term state subsidies receivable on future principal debt payments on		

(
(
(
(
(
(
long-term bonds payable are not assets in the funds.

Accrued interest expense on long-term debt is not due and payable in the
(	current period and is not reported as a liability in the funds.
(		Delinquent property taxes receivable will be collected, but are not available soon enough to pay for the current period's expenditure, and therefore are deferred in the funds.

C

(		Deferred Gains and Losses on Refunding of Bonds are not reported in the governmental funds. They constitute deferred inflows and deferred outflows
of resources on the Statement of Net Position.

C

Net Pension Obligations are not due and payable in the current period and, therefore, are not reported in the funds.
C
(	Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds.
Deferred outflows of resources related to pension of $5,463,988 =
(	$2,763,000 deferred outflows of resources related to pension
(	expense+ $2,700,988 deferred outflow of 2015/2016 employer
(	contributions related to pensions.
Deferred inflows of resources related to pensions
(
(	Long-term portion of retirement obligations and compensated absences.

3,639,313

(212,314)

600,000

216,309

(50,566,000)

5,463,988
(311,000)

 	(2,035,830) 

C	Total Net Position - Governmental Activities	$	(29,194,446) 

(

THE ACCOMPANYING  NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.	4
C

(	r	r	r""""',	, ,	r	r	(1	r	0	,I""\  r	,,-, r	r	.,-,, r	r,	I"""\	I""\  I""\  .,-,	,-,
KEYSTONE OAKS SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE YEAR  ENDED JUNE 30, 2016

Revenues
Local Sources

    Governmental Funds	
Capital Projects	Debt Service
    General	Fund	Fund		Totals	

Taxes	$	28,414,723	$	$	$	28,414,723	
Other Local Revenues	670,710	6,056	676,766	
State Sources	10,825,942		10,82S,942	
Federal Sources	485,905		485,905	
Total Revenues	40,397,280	6,056	40,403,336	

Expenditures				
Instruction	21,230,969		21,230,969	
Support Services	12,322,174		212,122	12,534,296	
Operation Of Non-Instructional Services	1,049,651		1,049,651	
Capital Outlay			5,959,494	5,959,494	
Debt Servlce				
Principal and Interest	4,730,469		4,730,469	
Total Expenditures	39,333,263		6,171,616	45,504,879	
Excess (Deficiency) of Revenues				
Over Expenditures	1,064,017		(6,165,560)	(5,101,543)	
Other Financing Sources (Uses)				
Insurance Proceeds	7,570		7,570	
lnterfund Transfers In				
lnterfund Transfers {Out)	(1,164)		(1,164)	
Total Other Financing Sources & (Uses)	6,406		6,406	
Net Change in Fund Balances	1,070,423		(6,165,560)	(5,095,137)	
Fund Balances-July 1, 2015	4,734,940		7,556,335	1,301	12,292,576	
Fund Balances -June 30, 2016	$	5,805,363	$_	 	1,390,775	$	1,301	$	7,197,439 	

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5

(	KEYSTONE OAKS SCHOOL DISTRICT
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
C	TO THE STATEMENT OF ACTIVITIES
(	FOR THE YEAR ENDED JUNE 30, 2016
(

Net Change in Fund Balances - Governmental Funds		$	(5,095,137)	
Depreciation Expense		(1,736,687)	
Capital outlays are reported governmental funds	as expenditures. In the		
statement of activities, the cost of those assets is allocated over their estimated	
useful lives as depreciation expense.	6,904,840	
Long-term receivable adjustment for amounts received from the state in debt		
service subsidies that are applicable to principal payments made.	(418,710)	
	
Amortization of bond premiums, discounts, and deferred charges on bonds.	270,490	
Some delinquent property taxes will not be collected for several months after the		
District's  fiscal  year ends,  they are  not considered  11available "  revenues  and  are		
deferred in the governmental funds. Deferred tax revenues increased by this		
amount this year.	(55,000)	
Interest on long-term debt in the statement of activities differs from the amount		
reported in the governmental funds because interest recognized as the interest		
accrues regardless of when it is due. The additional interest reported in the		
statement of activities is the result of accrued interest payable.	40,717	
In the statement of activities, compensated absences and other post employment		
benefits are measured by the amounts earned during the year. In the		
governmental funds, these items are measured by the amounts paid.	(138,901)	
Repayment of bond principal is an expenditure in the governmental funds, but the		
repayment reduces long-term debt in the statement of net position.	3,865,000	
Governmental funds report district pension contributions as expenditures.		
However, in the Statement of Activities, the cost of pension benefits earned net of		
employee contributions is reported as pension expense		

(

C
(
(
(
(
(

(

C
(
(

(
(

(
(	District pension contributions
C	Cost of benefits earned net of employee contributions
C	Change in Net Position - Governmental Activities

(297,842)
    (2,155,000)	(2,452,842) 

   $	1,183,770 

(
C
(

(	6
(	THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
L

C	KEYSTONE OAKS SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGET VS ACTUAL- GENERAL FUND
(	FOR THE YEAR ENDED JUNE 30, 2016

Over

(	Original	Final	Actual	(Under)

(	Revenues

    Budget	Budget	(budgetary basis}	Budget - Final 

$	27,llS,892	$	27,llS,892	$	28,414,723	$	1,298,831	
539,496	539,496	670,710	131,214	
10,900,050	10,900,050	10,825,942	(74,108)	

(	Local Sources
Taxes
(	Other local Revenues

(

State Sources
Federal Sources	 	422,147	422,147	485,905	63,758 
(	Total Revenues	38,977,585	38,977,585	40,397,280	1,419,695
(	Expenditures

(

Instruction

(	Special Programs	4,426,561	4,426,561	4,809,299	382,738	
	445,652	445,652	409,242	(36,410)	

Regular Programs	15,672,271	15,672,271	15,403,819	(268,452)

Vocational Education
(	Other Instructional Programs	 	492,149	492,149	608,609	116,460 
Total Instruction	21,036,633	21,036,633	21,230,969	194,336
Support Services

Pupil Personnel	1,183,038	1,183,038	1,139,694	(43,344)	
Instructional Staff	396,976	396,976	426,389	29,413	
Administration	2,191,996	2,191,996	2,262,589	70,593	
Pupil Health	560,045	560,045	571,078	11,033	
Business	734,881	734,881	608,735	(126,146)	
Operation & Maintenance of Plant Services	4,217,914	4,217,914	4,358,078	140,164	
Student Transportation Services	2,201,039	2,201,039	2,265,496	64,457	
Central	581,168	581,168	653,057	71,889	

(
(
(

(
(	Other Support Services	 	40,000	40,000	37,058	(2,942)
Total Support Services	12,107,057	12,107,057	12,322,174	215,117
Operation of Non-Instructional Services
Student Activities	1,051,153	1,051,153	1,026,851	(24,302)	
Community Services	 	30,413	30,413	22,800	(7,613)	
Total Non-Instructional Services	1,081,566	1,081,566	1,049,651	(31,915)	

Debt Service
(	Principal and Interest	 	4,722,329	4,722,329	4,730,469	8,140 
Total Expenditures	38,947,585	38,947,585	39,333,263	385,678 
Excess (Deficiency) of Revenues

Over Expenditures	30,000	30,000	1,064,017	1,034,017	
Other Financing Sources (Uses)					
Insurance Proceeds
lnterfund Transfers In			7,570	7,570	

C

(
(	lnterfund Transfers (Out)	 	(30,000)	(30,000)	(1,164)	28,836 
Total Other Financing Sources & {Uses)	(30,000)	(30,000)	6,406	36,406
(	Net Change in Fund Balances	1,070,423	1,070,423
( 	Fund Balance - July 1, 2015	 	4,734,940	4,734,940	4,734,940	
Fund Balance - June 30, 2016	$ 	4,734,940	$	4,734,940	$	5,805,363	$	1,070,423 
(
(

(  

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
(  

l
(	KEYSTONE OAKS SCHOOL DISTRICT

(

'	STATEMENT OF NET POSITION - PROPRIETARY FUNDS JUNE 30, 2016
(
(	Food Service	Risk
 	Fund	Management Fund
(	ASSETS

Cash and Cash Equivalents	$	87,327	$	271,869	
Investments	441,952		
Due from Other Governments	116,918		
Other Receivables	11,443		

(	Current Assets:
(
(
(	Inventories	 	31,945	
(	Total Current Assets	689,585	271,869
(	Noncurrent Assets:
(	Food Service Equipment (Net of Depreciation)	134,460
(		Total Noncurrent Assets	 				134,460			 TOTAL ASSETS	 	$		824,045	$	271,869
LIABILITIES
(	Current Liabilities:
(	Due to Other Funds	$	531,356	$
Accounts Payable	 	7,792	
Total Current Liabilities	539,148
(
DEFERRED INFLOWS OF RESOURCES
(	Unearned Revenue	 	18,763	 Total Deferred  Inflows of Resources		18,763

NET POSITION
C	Net  Investment in Capital Assets	134,460
Restricted for:
Risk Management	271,869
C	Unrestricted	131,674

C	Total Net Position
TOTAL LIABILITIES, DEFERRED INFLOWS OF

 		266,134

 		271,869

(	RESOURCES, AND NET POSITION	 	$	824,045	$	271,869
(
(

(

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8

f
KEYSTONE OAKS SCHOOL DISTRICT
(	STATEMENT OF REVENUES, EXPENSES AND

f

CHANGES IN FUND NET POSITION PROPRIETARY FUNDS
(	FOR THE YEAR ENDED JUNE 30, 2016
(
(	Food	Risk
 	Service	Management Fund 
(	Operating Revenues
Food Service Revenue	$	446,806	$
Other Operating Revenue	 	31,038 
(
(	Total Operating Revenue	446,806

Personal Services - Salaries	376,755		
Personal Services - Benefits	161,575		
Purchased Professional and Technical Services	77		
Purchased Property Services	32,486		
Other Purchased Services	1,752		
Supplies	440,842	45	
Other Objects	59		
Depreciation Expense	39,545		
Total Operating Expenses	1,053,091	45	
Operating Income (Loss)	(606,285)	30,993	
Nonoperating Revenues (Expenses)			
Operating Subsidies			
State Subsidies	87,965		
Federal Subsidies			
Lunch and Breakfast Subsidies	403,168		
Value of Donated Commodities Received	56,898		
Refund of Prior Year Receipts		(218,160)	
Earnings on Investments	792	922	

(	Operating Expenses
' \.
(
(

C
(

(
C

(
Total Nonoperating Revenue and Expense	 	548,823	(217,238)
(
Income (Loss} Before Transfers	(57,462)	(186,245)

(	Contributions and Transfers
Transfers from Other Funds	 		1,164
(

Change in Net Position		(57,462)	(185,081)	
Net Position -July 1, 2015	 		323,596	 		456,950	

C

(
Net Position -June 30, 2016	$	266,134	$	271,869 
(

(_	THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
l	9
C

KEYSTONE OAKS SCHOOL DISTRICT
(	STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(	FOR THE YEAR ENDED JUNE 30, 2016
(

(

Food	Risk
 	Service	Management Fund

Cash Received from Customers	$	446,856	$	
Cash Payments to Employees for Services	(92,032)		
Cash Paid to Suppliers for Goods and Services	(431,834)		

(	Cash Flows from Operating Activities:
C
(	Cash Paid for  Risk Management Activities	(45)
Cash Received for Risk Management Activities	 	31,038 
(	Net Cash Provided {Used) by Operating Activities	(77,010)	30,993
(	Cash Flows from Noncapital Financing Activities:

(

Grants and Subsidies Received for Non-Operating Activities
State Subsidies	81,616
Federal Subsidies	307,811
Transfer from Other Funds	1,164
(		Refund of Prior Year Receipts	 		(221,683) Net Cash Provided (Used) by Noncapital Financing Activities		389,427	(220,S19)
(
Cash Flows from Capital and Related Financing Activities:
Purchase of Equipment	 	(53,666)	
(	Net Cash Provided (Used) by Capital and Related Financing Activities	(53,666)

C

Cash Flows from Investing Activities:
Earnings on Investments	792	922
(	Withdrawals (Purchases of) from Investment Pools	(243,111)
Net  Cash Provided (Used) by Investing Activities	 	(242,319)	922 

(
Net Increase (Decrease) in Cash and Equivalents
C

16,432	(188,604)

Cash and Cash Equivalents, Beginning of Year	 	70,895	460,473

Cash and Cash Equivalents, End of Year	 	$	87,327	$	271,869

(	Reconciliation of Operating Income (loss) to Net Cash Used By Operating Activities
(

(

Operating Income (Loss)	$	(606,285)	$	30,993
Adjustments to Reconcile Operating Income (Loss) to Net Cash Used by Operating Activities:
Depreciation	39,545
Donated Commodities Used	56,898
Changes in Assets and liabilities:
(	Accounts Receivable	50
Inventories	(9,346)
(	Due to/Due From Other Funds	446,298
Accounts Payable	(14,980)
Unearned Revenues	 	10,810	
(	Total Adjustments	 	529,275	
Net Cash Provided (Used) by Operating Activities	 	$	(77,010)	$	30,993

C

Noncash Noncapital Financing Activities:
During the year, the District received $39,545 of food commodities from the U.S. Department of Agriculture.

(

(	THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
l	10
(

(
(	KEYSTONE OAKS SCHOOL DISTRICT
(	STATEMENT OF FIDUCIARY NET POSITION - FIDUCIARY FUNDS
(	JUNE 30, 2016
(
(	Agency Funds
(	Private Purpose	Student
(	 	Trust Fund	Activities	
ASSETS
(	Cash and Cash Equivalents	 	$	7,041	$	93,105 (
(

(	TOTAL ASSETS
(	LIABILITIES
(	Current Liabilities:

 	$	7,041	$	93,105

(	Other Current Liabilities	 	$	93,105 Total Liabilities			93,105

NET POSITION
(	Unrestricted	 	7,041	
(	Total Net Position	 	7,041	

(	TOTAL LIABILITIES AND NET POSITION	 	$	7,041	$	93,105

(
(
(
(
(
(

(
(_
(
(

(
(_	THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
(_	11
(_
(_

(	KEYSTONE OAKS SCHOOL DISTRICT
(	STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - FIDUCIARY FUNDS
(	FOR THE YEAR ENDED JUNE 30, 2016
(
(

Private Purpose

(
(	Additions
(	Contributions

(	Interest Income

 	Trust Fund	

$	3,902
 	11 

Total Additions	3,913	
(	Deductions		
Scholarship Awards	1,822	
(		
Total Deductions	1,822	
(	Change in Net Position
(	
2,091	
Net Position -July 1, 2015	4,950	
(
Net Position - June 30, 2016	
   $	7,041 	

(
(
(
(
(
(
(
(

(
(
(
(
C C C
( THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
C	12
(

Keystone Oaks School District
(
(	Notes to the Financial Statements
(	June 30, 2016
(
f
Note 1 - Summary of Significant Accounting Policies
(	The Keystone Oaks School District {the "School District") is located in Allegheny County,

'	A. Reporting Entity

f	Pennsylvania, and provides public education to residents of the Boroughs of Castle Shannon, Dormont, and Green Tree.
(
(	A   reporting   entity   is   composed   of    the    primary   government,    component    units,    and   other C        organizations  that  are  included   to   insure  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,"
C	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. The Center is not considered part of the reporting entity, as the School
(	District is not financially accountable for the school.  See Note 8 for details on operating information
about this entity.
(
(	B. Basis of Presentation
(	The financial statements of  Keystone Oaks 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.
(
Following are the more significant of the School District's accounting policies.

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.
l
(
13

(	1. 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 (	comparison between direct expenses and program revenues for each program or function of the School District's governmental activities and business-type activity. 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
C	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.

2. Fund Financial Statements
(	The fund financial statements provide information about the School District's funds, including the
(	fiduciary  funds.	Separate  statement  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.

C.	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.
(
1.	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
(	the purposes 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.
(
C	The General Fund and the Capital Projects Fund are the School District's 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. C       Normal  debt  service  payments  for  general  long-term  debt  are  recorded  in  the  General  Fund  by  the (	School District.
(
(	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.
C
(	The other governmental fund of the School District, a debt service fund, accounts for other
(	resources whose use is restricted to a particular purpose.
(	Debt Service Fund - The Debt Service Fund accounts for resources accumulated to provide for payment of general long-term debt principal and interest.
C
2.	Proprietary Funds
(	Proprietary fund reporting focuses on the determination of operating income, changes in net position, financial position, and cash flows. The following are the School District's proprietary funds:
C
(	Enterprise Fund
(	The Enterprise Fund may be used to account for any activity for which a fee is charged to external
(	users for goods or services.
(	Food Service
(	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 Funds
(	The Internal Service Fund may be used to account for any activity for which a fee is charged to
(	internal users for goods or services.
(
l	Risk Management
(	The Risk Management internal service fund accounts for the financial transactions related to the risk
management  activities of the School District.  This fund is used to  account  for  the  potential claims
arising from certain  torts, thefts,  damages,  and catastrophic  loss  of  assets, errors and omissions,
(	injury to  employees  and natural disasters  incurred by the  School District.  The School District uses
l	this fund to  accumulate funds to  protect against losses for  which insurance  cannot be obtained by
(	reason of policy limitations or deductibles or uninsurability.	See Note 11 for additional details on
C	15
C

(	the operation of this fund. This fund is the School District's only internal service fund and it is
(	reported as a major fund.
(	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 include food 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 principal operating revenues of the School (	District's internal service fund are insurance reimbursements and transfers from the general fund.
(	Operating expenses for  the  School District's internal service fund include payments  for  claims.  All
(		revenues or expenses not meeting this definition are reported as nonoperating revenues and expenses.

(	3. 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. 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.  Agency funds  are custodial  irr
(	nature (assets equal liabilities) and do not involve measurement of results of operations. The School District's agency fund accounts for various student-managed activities.

Agency Funds
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.

Private Purpose Trust Fund
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 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.
(	D. Measurement Focus, Basis of Accounting
(
(	1. Government-wide, Proprietary, and Fiduciary Fund Financial Statements

C

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

16

t
C
C	in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations
C	is recognized in the fiscal year in which all eligibility requirements have been satisfied.
(	2. Governmental Fund Financial Statements
C       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 School District considers all revenues reported in the governmental
(	funds to be available if the revenues are collected within 60 days after year-end. 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 C 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.
C
3.	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
C	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.

C	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
C  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,
C	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.

4.	Unearned Revenues
Unearned revenues arise when assets are recognized before revenue recognition criteria have been satisfied.

l	17
(

(
(
(	Property taxes for which there  is an  enforceable  legal  claim  as of June 30, 2016,  but which were
(		levied to finance fiscal year 2017 operations, are recorded as unearned revenue. Grants and entitlements received before the eligibility requirements are met are also recorded as unearned
(	revenue.
(
(	On governmental fund financial statements, receivables that will not be collected within the
(	available period are reported as unearned revenue.
(	5. Expenses/Expenditures
(	On the accrual basis of accounting, expenses are recognized at the time they are incurred.

C

(	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.
(
(	E. Budgetary Process
(	Generally  accepted  accounting  principles serve  as the  budgetary  basis  of  accounting.  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 amounts reported as the original budgeted amounts on the budgetary statements reflect the amounts on the budget when the original appropriations were adopted.

C

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
C 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. The measurement level of control over expenditures for all budgeted funds is the
C	surplus or deficit of the fund as a whole.
(
l	The School District follows these procedures in establishing the budgetary data reflected in the
(	financial statements:
-	Prior to May of the preceding fiscal year, the School District prepares a budget for the next
(	succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures
and the means of financing them.
(		- A meeting of the Board of School Directors is then called for the purpose of adopting the proposed budget. The meeting may only be held after 30 days of public notification.
(		- Prior to July 1, the Board of School Directors legally enacts the budget through passage of a resolution.
C	,	- The budget must be filed with the Pennsylvania Department of Education by July 31 of the
fiscal year.

18
(

(
(	F. 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, 2016, the School District has no encumbrances.
(
(	G. Cash and Investments
(	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.
(
(	Custodial  Credit  Risk -  Under Section 440.1 of the  Public School Code of  1949, as amended, 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.

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 C 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.   Due to  higher  cash flows at certain times during the
C		year and the School District's investments in certificates of deposit, its demand deposit balances increase significantly.   As a result, the  amounts  collateralized with pooled deposit  funds not held in
the School District's name at those times were substantially higher than at year-end.
(
Interest  Rate  Risk  -   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 - The School District places no limit on the amount it may invest in any
(	one issue.
(
(	Method to Estimate Fair Value - Investments are stated at fair market value.
(	Deposits
(	Below is a summary of the School District's deposits which are insured by the Federal Depository Insurance Corporation, and those which are not insured or collateralized in the School District's name, but collateralized in accordance with Act 72 of the Pennsylvania State Legislature which

19
(

requires the financial institution to pool collateral for all government deposits and have the
(	collateral held by an approved custodian in the institution's name.
(
(

(
FDIC Insured

(	Cash and Deposits	 	$ 251,859 
(
(	Investments
(

Pooled Collateral

$3,733,576

Bank Balance	Carrying Amount

$ 3,985,435	$2,797,185

(	The District's investments at June 30, 2016 consist of:
(

Cost	Fair Value

(	Pennsylvania Local Government Investment Trust	$	7,358,340		$	7,358,340	
(	Pennsylvania School District Liquid Asset Fund	154,830		154,830	
Pennsylvania Treasurer's Investment Program	171,015		171,015	
(	Total	$ 7,684,185	$ 7,684,185
(	The Pennsylvania School District Liquid Asset Fund and the Pennsylvania Local Government Investment Trust 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 this price.

For PSDLAF, 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.
For PLGIT, 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 NASO.
(	H. Taxes Receivable
(	Taxes receivable consist of delinquent real estate taxes due at June 30, 2016, less an allowance for
(	the amount of these delinquencies not expected to be collected within the next fiscal year.
(	I. lnterfund Receivables/Payables
During the course of operations, transactions sometime 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.

20
(
l

(
(
J.	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
the  General Fund. The inventories in the  General Fund are equally offset by a fund balance reserve,
(	which  indicates they do not constitute  "available spendable  resources" even  though  they are a
C component of net current assets. The General Fund did not have a material inventory balance as of
( June 30, 2016.

A physical inventory of the  Food  Service  Fund food  and supplies was taken  as of June 30, 2016. The C       inventory   consisted   of  food  supplies  and   government   donated   commodities   (valued   using  USDA C values) using the first-in, first-out (FIFO) method. Any unused commodities donated by the federal
C	government at June 30, 2016 are reported as unearned revenue.
K.	Capital Assets
(	Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,

C

sidewalks and similar items) are reported in the  applicable governmental or business-type activities C	columns in  the  government-wide financial  statements.  Capital  assets  are  defined  by the  School (	District a 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,
C	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.
C		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.
C         All  capital  assets,  except  land,  are   depreciated.   Improvements  are   depreciated   over  the   remaining (           useful   lives  of  the   related   capital  assets.  Depreciation   is  computed   using  the   straight-line   method C over the following useful lives.

(	Description
Land Improvements
C.	Buildings and Building Improvements
(	Vehicles
C	Machinery and Equipment
C C.

Estimated Lives 10-15 years
20-	50 years
6	-10 years
6-10	years
6-10	

21

(
(	L. Long-Term Liabilities
In the government-wide financial statements and  proprietary funds 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. In the fund financial
(	statements, governmental  fund  types  recognize  bond  premiums  and  discounts,  as  well  as  bond (	issuance  costs,  during  the  current  period.  The face  amount  of  debt  issued  is  reported  as other (	financing sources while discounts  on debt issuances  are  reported  as other financing  uses. Issuance
costs, whether or not withheld from the actual debt proceeds received, are reported as debt service
(	expenditures.
(
(	M. 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 those estimates.

(	N. Fund Balances
(	In accordance with Governmental Accounting Standards Board Statement #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, 2016 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.
C	•	Committed  -  includes amounts that can  only be  used for specific  purposes. Committed
C	fund    balance   is   reported    pursuant   to    resolutions   passed by  the	Board of School Directors, the 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

C

Manager of the School District.
•	Unassigned - includes amounts that have not been assigned to other funds or restricted,
C	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,
C	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.
(
(
(	22
(_
(_

(
(
Fund balances in the School District's general fund totals $5,805,363 consisting of $2,601,128 that is
committed  for  employer  retirement  costs,  health  insurance  costs,  and   post-retirement  benefits,
(	$9,808 that  is nonspendable  for  prepaid  expenditures, $422,075 and  $40,136 that is assigned for a
(	16/17  budget  deficit  and  athletics,  respectively,  and  $2,732,216 that is unassigned.	In addition,
(	$1,390,775 is a committed fund balance in the capital projects fund.
0. Extraordinary and Special Items
(	Extraordinary  items are  transactions  or events that  are  both  unusual  in  nature  and  infrequent in
(	occurrence. Special items are  transactions or events that are within  the  control of  management and
(	are  either  unusual  in  nature  or  infrequent  in occurrence.  Neither  of these  types  of transactions
(	occurred during the fiscal year.
(
(	Note 2 - Real Estate and Unearned Revenue
(	Property taxes attach  as an  enforceable  lien on  property  as of July 1st  of the  year following  levy.
Taxes are levied on July 1. The School District bills and collects its own property taxes through locally (	elected  tax collectors. Collection  of delinquent  property taxes is contracted  to a  private collection (	agency.  The  tax  levy  for  fiscal  2016  was   based   on   assessed   values  on  January  1,   2015 of

(

$1,353,629,279. The School District tax rate for the year ended June 30, 2016 was 18.63 mills as levied by the School Board.

(	Taxes may be paid at a 2% discount until September 30th, at face until November 30th , and at a 10%
(	penalty until the lien date.
The School District, in accordance with GAAP, recognized the delinquent and unpaid taxes receivable reduced by an allowance for uncollectible taxes as determined by the administration. A portion of the net amount estimated to be collectible, which was measurable and available within
(	60 days, was recognized  as revenue and the  balance deferred  in the  fund financial statements. This
(	balance, net of allowances, is $138,241.
C

(

C
(
C

(

(	23
C
C

(	Note 3 - Changes in CaQital Assets
(	Capital asset activity for the year ended June 30, 2016 was as follows:
(	Beginning	Ending

(
Governmental Activities
Non-depreciable assets:

    Balance	Additions	Retirements	Balance	

(	Land
Depreciable assets	$	1,355,020	$	$	$	1,355,020	
Land Improvements	7,552,794	2,663,620	10,216,414	
(	Buildings	58,384,997	3,821,851	62,206,848	

(

Equipment	 	4,932,688	419,369	5,352,057 
Totals at historical cost	72,225,499	6,904,840	79,130,339 
(	less accumulated depreciation for:
land Improvements	(4,534,009)	(343,223)	(4,877,232)
(	Buildings	(31,101,704)	(1,153,249)	(32,254,953)
(	Equipment	 	(4,912,882)	(240,215)	(5,153,097)
Total accumulated depreciation	(40,548,595)	(1,736,687)	(42,285,282)

Governmental activities capital
assets, net

(	Business-type Activities
(	Depreciable assets:	$    31,676,904	$	5,168,153	$		$	36,845,057 	
Equipment·	$ 	372,669	$	53,666	$		$	426,335 	
Totals at historical cost
(	less accumulated depreciation for:
Equipment	 	372,669	53,666	426,335 

 	(252,330)	(39,545)	(291,875)	
Total accumulated depreciation	(252,330)	(39,545)	(291,875)	
Business-type activities capital
asset, net	$ 	120,339	$	14,121	$	$	134,460
C	· Depreciation expense was charged to governmental functions as follows:

Support		
Plant		
Transportation		
Unallocated-governmental funds	 	1,736,687	
Total depreciation expense	$ 	1,736,687	

C	Instruction	$

( C (
(	In the  2015-2016 school year, building renovations and equipment  purchases added $6,904,840 to   (	the  historical cost of governmental  activities  and $53,666 to  the  cost  basis of  business  activities. (	Depreciation expense for that same time period was $1,736,687 and $39,S45, resulting in a net
book  value  increase   of  $5,168,153  and   $14,121  for  the   governmental   activities  and business
activities, respectively.
(
(_

(
(_
(_

24

(	Note 4 - General Long-Term Debt

(	Changes in the School District's long-term obligations during fiscal year 2016 were as follows:
Amounts
(	Beginning	Ending	Due Within
(		Balance	Additions	Reductions	Balance	One Year Governmental activities:
(	Bonds, loans & leases payable

	33,375,000		(3,865,000)	29,510,000	3,935,000		
Plus net bond premium	925,022		(334,737)	590,285			
less net bond discount	(81,606)	12,729		(68,877)			
Total bonds, loans							
and leases payable	34,218,416	12,729	(4,199,737)	30,031,408	3,935,000		
							
Other liabilities:							
Compensated absences	408,674	91,893	(82,378)		418,189		
OPES Obligation	1,488,255	1,114,541	(985,155)		1,617,641		
Total other liabilities	1,896,929	1,206,434	(1,067,533)		2,035,830		
Governmental activities							
long-term liabilities	 $	36,115,345 	   $	1,219,163 	 $	(5,267,270) 	  $		32,067,238 	  $ 3,935,000 	

(	Capital improvement bonds	$	33,375,000	$	$	(3,865,000)	$	29,510,000	$ 3,935,000

{
'
(
(
(

(

(

(	General Obligation Bands
(	General Obligation Bonds, Series of 2010, issuance amount of $6,020,000, variable rates from 2.0%
(	to 3.6% with final payment due April 15, 2022. These bonds were partially refunded in the  14/15 year with the issuance of the Series C of 2014 Bonds. These bonds were fully repaid as of June 30, 2016.
C	General Obligation Bonds, Series of 2013, issuance amount of $9,440,000, variable rates from 2.0%
(	to 3.0% with final payment due October 15, 2019.
(
C		General Obligation Bonds, Series of 2013A, issuance amount of $3,950,000, variable rates from 0.5% to 3.0% with final payment due February 15, 2022.
(_	General Obligation Bonds, Series of 2014A, issuance amount of $970,000, variable rates from 0.25%
(	to 2.0% with final payment due October 15, 2017.

(	General Obligation Bonds, Series of 2014B, issuance amount of $6,165,000, variable rates from
(	0.25% to 2.0% with final payment due September 1, 2016.
General Obligation Bonds, Series of 2014C, issuance amount of $8,375,000, variable rates from 2.0% to 3.0% with final payment due April 15, 2023.

General Obligation Bonds, Series of 2015, issuance amount of $5,040,000, variable rates from 2.0% to 3.0% with final payment due March 1, 2021.

(	25
l
C

(	The balances remaining on the remaining seven series at June 30, 2016 are:

2013 General Obligation Bonds	$ 9,430,000	
2013A General Obligation Bonds	3,280,000	
2014A General Obligation Bonds	655,000	
2014B General Obligation Bonds	3,025,000	
2014C General Obligation Bonds	8,160,000	

(
(
(

(

(
(
(	2015 General Obligation Bonds
(
Total General Obligation Bonds

 	4,960,000 

$ 29,510,000

The amounts necessary to amortize outstanding bonds for the next five years and to maturity are:
(

	Principal	Interest	Total	
(	2017	$	3,935,000	$	785,126	$	4,720,126	
2018	4,370,000	683,131	5,053,131	
2019	4,495,000	553,081	5,048,081	
2020	4,505,000	439,797	4,944,797	
2021	4,560,000	361,813	4,921,813	
(	2022-2023	7,645,000	339,600	7,984,600	
C	Total	$	29,510,000       $	3,162,548 	$	32,672,548	

(	The General Fund is used to liquidate the liability for long-term debt. Interest expense disclosed in the government wide financial statements includes interest paid on long term debt obligations,
C	refund of prior year revenues and unamortized costs related to refunding of debt.
(
(
(	Note 5 - Pension Plan
C	1. Summary of Significant Accounting Policies
Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pension, and pension expense, information about the fiduciary net
l	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 by PSERS. For this purpose,  benefit  payments  (including refunds  of  employee  contributions) are

l	26
(_

(
(
(		recognized when due and 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.osers.state.oa.us.

Benefits Provided
(
PSERS  provides  retirement,  disability,  and  death  benefits.  Members  are  eligible  for  monthly  C       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)

C

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
C	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.

(
(
(	27

(	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, 2016 was
(	25.00%   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 District were $2,700,988 for the year ended June 30, 2016.
(	2. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
(	Inflows of Resources related to Pensions
(
(	At June 30, 2016, the  District reported a liability of $50,566,000  for  its proportionate  share  of  the
(	net pension liability. The net pension liability was measured as of June 30, 2015, 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, 2014 to June 30, 2015.  The District's proportion of the
C	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, 2015, the District's proportion
(	was 0.1167 percent, which was an increase of 0.0046 from its proportion measured as of June 30, 2014.

For the year ended June 30, 2016, the District recognized pension expense of $5,168,000. At June
(	30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

28

C

(	Deferred Outflows	Deferred Inflows
  of  Resources		of  Resources (	Difference  between  expected and actual	$	$		209,000 (		experience

Changes in proportions	2,763,000	
Contributions subsequent to the	2,700,988	
measurement date	 		
	   $	5,463,988	$	311,000	

(	Net  difference between projected and	102,000 actual investment earnings
(

(
(
(	$2,700,988 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, 2016. 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,

(

(
(	Actuarial assumptions

2016
2017
2018
2019

$	488,000
488,000
488,000
989,000

The total pension liability as of June 30, 2015 was determined by rolling forward the System's total pension liability as of the June 30, 2014 actuarial valuation to June 30, 2015 using the following actuarial assumptions, applied to all periods included in the measurement:
C
(	•	Actuarial cost method - Entry Age Normal - level% of pay
•	Investment return - 7.50%, includes inflation at 3.00%
(	•	Salary increases - Effective average of 5.50%, which reflects an allowance for inflation of
(	3.00%, real wage growth of 1%, and merit or seniority increases of 1.50%
•	Mortality rates were based on the RP-2000 Combined Healthy Annuitant Tables (male and
(	female) with age set back 3 years for both males and females. For disabled annuitants the
(	RP-2000 Combined Disabled Tables (male and female) with age set back 7 years for males and 3 years for females
(
(	The actuarial assumptions  used in the June 30, 2014 valuation were based on the experience study (	that was performed for the  five-year  period ending June 30, 2010.  The recommended  assumption (	changes based on this experience study were adopted by the Board at its March 11, 2011 Board
(	meeting, and were effective beginning with the June 30, 2011 actuarial valuation.
(	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

29

(	weighing the expected future real rates of return by the target asset a/location 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.

(	Long-Term
(	Target	Expected Real
(	Asset Class	Allocation	Rate of Return

Public markets global equity	22.5%	4.8%	
Private markets (equity)	15.0%	6.6%	
Private real estate	12.0%	4.5%	
Global fixed income	7.5%	2.4%	
U.S. long treasuries	3.0%	1.4%	
TIPS	12.0%	1.1%	
High yield bonds	6.0%	3.3%	
Cash	3.0%	0.7%	
Absolute return	10.0%	4.9%	
Risk parity	10.0%	3.7%	
MLPs/lnfrastructure	5.0%	5.2%	
Commodities	8.0%	3.1%	
Financing (LIBOR)	 	-14.0%		1.1%	
	 	100% 		

(
(
(
(

(
(
(
(
(
(
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, 2015.
C
(	Discount Rate
(	The discount rate used to measure the total pension liability was 7.50%. The projection of cash
C	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  project   future  benefit
(	payments of current  plan  members.   Therefore,  the  long-term  expected  rate of return on pension
(	plan investments was applied to all periods of projected  benefit payments to determine the total
(	pension liability.
(_	Sensitivity of the 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 7.50%, as well
(_	as what the net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower {6.50%) or 1-percentage-point higher {8.50%) than the current rate.
(_

30

(_

(
(
(
(	District's proportionate share of
(	the net pension liability
(	Pension plan fiduciary net position
(

Current
Discount	1%
1% Decrease	rate	Increase
 	6.50%	7.50%	8.50%	

$ 62,306,000	$ 50,549,000	$ 40,667,000

Detailed information about PSERS' fiduciary net position is available in PSERS Comprehensive
(	Annual Financial Report which can be found on the System's website at www.psers.state.pa.us.
(
r	 	2016	2015	2014	

Total payroll for the year ended	$ 15,658,553	$ 15,634,545	$ 15,073,581	

Total covered payroll	
14,811,188	
14,658,192	
13,920,136	

Total required retirement expense	
3,827,211	
3,136,853	
2,356,679	

Total actual retirement expense	
3,827,211	
3,136,853	
2,356,679	

Percentage of required contribution	
100%	
100%	
100%	

Contribution percentage actuarially determined	
25.84	
21.40	
16.93	

(
(
(

(
(
(
(
(
C

(	Note 6 - Compensated Absences & Other Post-Employment Benefits
The School  District has  made early retirement  benefits available to certain employees.  The benefit
(	is (1) payment for unused sick days at  retirement.  The payable for declared  retirements is recorded
(		as a current liability in the General Fund at the time of retirement. With respect to other employees that  do  not  meet  the  criteria   established   by  the   School   District  for   early   retirement,  these
(	employees are not eligible to receive payment for their unused sick days at retirement. The General
Fund  has  been   used  to  liquidate  the   accumulated  liability  for retirement  benefits.	The dollar
(	amounts of the benefits are as follows:
(
Sick Day

	   Liability		
June 30, 2015 Balance	$	408,674	
Increases	91,893	
Decreases	(82,378)	

(
(
(
(
C

(	June 30, 2016 Balance	$	418,189 
l

31
C

(	Note 7 - Other Post Employment Benefits
(	The District maintains a single-employer defined benefit healthcare plan. The plan provides health
(	insurance for eligible retirees and their spouses through the District's health insurance plan.
(	Funding Policy. The contribution requirements of plan members and the District are established and (	may be amended by the Board of School Directors.  The Annual Required Contribution for the year   (	ended June 30, 2016 was not made by the District.
(
Funded Status and Funding Progress. As of July 1, 2015 the actuarial accrued liability for benefits
(	was $5,431,723.
(
(	Schedule of Funding Progress
(

Actuarial	Actuarial	Accrued	Unfunded	
Valuation	Value of	Liability AAL-	AAL (UAAL)	
Date	Assets (a)	Entry Age (b)	(b)-(a)	

7L1L2011		
$	-0-	
$ 5,593,844	
$ 5,593,844	
7L1l2013		$	-0-	$ 5,641,870	$ 5,641,870	
7L1L2015		$	-0-	$ 5,431,723		$ 5,431,723	

(	Actuarial

(
(
(
(

(	Annual  Required Contribution.   For  the  2015/2016  year, the  District's annual required contribution
(	of $1,389,313 was not made. The required contribution was determined as part of the July 1, 2015
actuarial valuation using the projected unit credit method.

Fiscal Year	Annual Required
Contribution	

Percentage of	

Net Pension	
Ending	(ARC)	ARC Contributed	Obligation	
6/30/12	$1,303,204	82.7%	$ 569,655	
6/30/13	1,356,885	71.9%	845,767	
6/30/14	1,444,154	66.4%	1,174,810	
6/30/15	1,227,252	74.5%	1,488,255	
6/30/16	1,389,313	70.9%	1,617,141	

(
(
(
(
(
(
(

(
(

(
C
l
C
(	32
C
l

C
f	2015/2016 Contribution Details

(	Annual Required Contribution (ARC)
(	Interest on NET OPEB Obligation @ 4.00%
(	Adjustment to ARC Annual OPEB Cost
(	Contributions  Made
(	Estimated Increase in Net OPEB Obligation
(	Net OPEB Obligation - Beginning of Year Net OPEB Obligation - End of Year
(
(	The following assumptions were also made:
(

$  1,389,313
59,530
(334,302)

1,114,541
(985,155)

129,386
 	1,488,255 
   $	1,617,641 

(	Mortality- The RP-2014 Total Data Set Mortality Table Projected Using MP-201S.
(
Rates of Disablement- Not assumed.
(
(	Marital  Status  -   Actual  spousal  information  was  utilized  for current  retirees.	For the active
(	population, it was assumed that 50% of employees will have a covered spouse at retirement.
Females are assumed to be three years younger than males.
(	Salary Increase - 3.00%
(	Health Care Trend Rates - 7.0% in the first year, gradually decreasing to an ultimate rate of 4.5%.
(
Participation - It is assumed that 100% of eligible teachers and administrators will participate in the
retiree medical program.
(
(
(	Note 8 - 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.
(
(	Note 9- 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, 2016 have not yet been conducted. Accordingly, the School District's compliance with applicable

33
( .
'-
l

(
(

(

'	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.
(
(
(	Note 10-	lnterfund Balances

[

Individual fund interfund receivable and payable balances at June 30, 2016 were:
'(

 	lnterfund Receivable			 	lnterfund Payable			
Capital Projects Fund	$	1,100,000	General Fund	$	1,100,000	
General Fund	531,356	Cafeteria Fund	531,356	
	$ 1,631,356		$ 1,631,356	

(
(
(
(
C
(	The above amount due to the Capital Projects fund represents amounts being set aside for future
(	capital improvements.

(  ·	During the fiscal year ended June 30, 2016, the following interfund level transfers were made:
(
 	Transfers From		 	Transfers To	

General Fund	$	1,164 

Risk Management Fund -'$'--_

_:1::.c,=.16=-4'-

   $	1,164	$	1,164

C
(	Note 11- Risk Management
(	General  Risk -  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. However, for those amounts not covered by insurance by reason of policy limitations or deductibles or uninsurability, the School District has established a
(	Risk Management Fund to account for and to accumulate money to be used in the event of such
(	uninsured losses.
C
(	The District estimates that the amount of actual or potential claims against the District  as of  June 30, 2016 will not materially affect the financial condition of the District and will be covered under
(	the present insurance coverage.

Note 12 - Health Insurance Consortium

C

C	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

34
(
(

(
(	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, 2016, such net residual net assets (deficit)  were $43,916,293 for  the  Consortium as a C      whole,  of  which  a  share  of  the   residual  net  assets  of  $780,920  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, 2016 are
(	available by calling the School District business office.
(
Note 13 - Subsequent Event
(	On August 24, 2016, the  School District issued General Obligation Note, Series of  2016.  The Note
(	bears an original principal balance of $385,000, interest at the rate of 1.83%, with final payment due
(	March 1, 2020.

C
(
(
(
{
'
C
(

(
l
(

(
'
(

35

L

C C (
(
(
(

(
(
' (,
[
.
(
(

(
(	Supplementary Information
C ( C
(

'(
(
(
(
(
( C (
(

C C

C C (
(

(
C

(

KEYSTONE OAKS SCHOOL DISTRICT
(	STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - AGENCY FUNOS FOR THE YEAR ENDED JUNE 30, 2016
C
(

(

Student Activi!Y Fund		
	June 30,			June 30,	
	2015	Additions	Reductions	2016	
Assets					
Cash and Cash Equivalents	$	86,370	$	134,863	$	128,128	$	93,105	

Total Assets	$	86,370	$	134,863	$	128,128	$	93,105	

Liabilities					
Accounts Payable	$	$	$	$	
Other Liabilities	86,370	134,863	128,128	93,105	

c,
,(
(
(
( C (
(,
(	Total Liabilities	$ 86,370 $ 134,863 $ 128,128 $ 93,105   
C

(

C
(
(
C
(
(
(
(
(
( C (

C
(
C
l
(	36
(

_I
Cypher	& Cypher
Accountants  I  Auditors  I Advisors

www.cy ph e rcpa .com

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

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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Keystone Oaks School District, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise Keystone Oaks School District's basic financial statements and have issued our report thereon dated January 9, 2017.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered 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 Keystone Oaks School District's internal control. Accordingly, we do not express an opinion on the effectiveness of 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.

37

Canonsburg Office	Tel 724.745.3543 179 East Pike Street	Fax 724.745.3590
Canonsburg, PA 15317

Waynesburg Office	Tel  724.852. 1500
101 N. Woodland Ave.	Fax 724.852.1502
Waynesburg, PA 15370

Wexford Office	Tel 412.369.9992 8980 Perry Highway Fax  412.369.8225 Pitt sburgh, PA 15237

(
(
(	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 were not identified.  We did identify certain  deficiencies  in internal  control, described (	in  the  accompanying  schedule of  findings and questioned costs that we consider to  be a material
(	weakness. Financial Statement Finding #2016-001.
(
'	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 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
(	Standard.
(	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.
l
(	CYPHER & CYPHER

(
(	
(
(	CERTIFIED PUBLIC ACCOUNTANTS
l
(	Canonsburg, Pennsylvania
'(	January 9, 2017
(

l	38
l
(
l

_I
Cypher	& Cypher
Accountants  I  Auditors  I Advisors

www.cyphercpa.co m

Independent Audit or ' s Report on Compliance for Each Major Program And on Internal Control Over Compliance Required by the Uniform Guidance

Keystone Oaks School District Pit t sburgh , Pennsylvania

Repor t on Compliance for Each M a jor Federal Program
We have audited Keystone Oaks School District ' s  compliance  with  the  types  of  compliance requir ement s described in the 0MB Compliance Supplement that could have a direct and material effect on each of Keyst on e Oaks School Dist rict 's major federal programs for the year ended June 30, 2016. Key st one Oaks School District's major federal programs are iden tifi ed in the summ ary of auditor's results section of the accompanying schedule of fi ndings and questioned costs.

Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, cont r act s, and grants applicable to its f ederal programs.

Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Key st one 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 Am erica; the standards applicable to financial audits cont ained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requir ements 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 reasonabl e assurance about whet her 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 Keystone Oaks School Dist rict ' s compliance with those requirements and performing such other procedures as we considered necessary in the circumst ances .

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 Keystone Oaks School District ' s compliance.

39

Canonsburg Office	Tel 724 .745.3543
179 East Pike Street	Fax 724.745.3590
Canonsburg, PA 15317

Waynesburg Office	Tel 724.852.1500 101 N. Woodland Ave.	Fax 724.852.1502
Waynesburg, PA 15370
·	
Wexford Office	Tel 412.369.9992 8980 Perry Highway	Fax 41 2.369.8225 Pittsburgh, PA 15237
·	
(
C	Opinion on Each Major Federal Program
(	In  our  opinion,  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, 2016.
(
(	Report on Internal Control over Compliance

C

C	Management of 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 Keystone Oaks School District's 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
(	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

C

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
C	control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of
C	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.
C
(	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.
(	CYPHER & CYPHER

(

(	l117	?,../   ·· /l,,,d.
(	CERTIFIED PUBLIC ACCOUNTANTS

Canonsburg, Pennsylvania January 9, 2017
(	40
(

(	Keystone Oaks School District
(	Schedule of Findings and Questioned Costs
(
C	Year Ended June 30, 2016
(
Section 1- Summary of Auditor's Results

Financial Statements:	
	
i.	Type of auditor's report issued	Unmodified	
			
ii.	Internal control over financial reporting:		
			
	Material weakness(es) identified?	Yes	
			
	Significant deficiencies identified?	No	
			
iii.	Noncompliance material to financial statements noted?	No	

(
(
(
(
(
(
(
(
C C (
C

Federal Awards:	
	
iv.	Internal control over major programs:		
			
	Material weakness(es) identified?	No	
			
	Significant deficiencies identified?	None	
			
V.	Type of auditor's report issued on compliance for major programs:	Unmodified	
			
vi.	Any audit findings disclosed that
are required to be reported in accordance with 2CFR 200.516(a)?	No	

(
C C C

(
r·
\,
(
C
(
(
(
(
"
(
(

(
C C
(
l l
(	41
(

vii.	Major programs:		
			
	CFDA Number(s)	Name of Federal Program or Cluster	
			
	84.010	Title I, Part A	
	10.553
10.555
10.556	Child Nutrition Cluster	

viii.	Dollar threshold used to distinguish between Type A and Type B programs:	$750,000	
			
ix.	Auditee qualify as low-risk auditee?	No	

C C

C
(
C
C

C

(
f

(
C Section 2 - Findings Related to Financial Statements Required to Be Reported Under

Financial Statement Finding
#2016-001			
Criteria		Finding Criteria - A component of internal control relating to financial reporting is to verify the accuracy of ledger account balances.	
				
Condition		Condition Found - Various account balances were not reconciled and in balance at year end for the District's General, Cafeteria, Capital Reserve, and Risk Management Fund's accounting records.	
			
Cause/Effect		Cause of the Finding - Prior year balances were not recorded/adjusted in the current period. Ledger account balances were not  reconciled and verified to source documentation. Prior year-end accrual entries were not reversed. Current year-end accrual entries  were  not recorded and various types of account analysis was not completed.

Effect of the Finding- Caused financial misstatement of asset, liability, fund balance, income and expense to occur and not be  detected. More importantly the Board of School Directors did not receive accurate monthly reports to provide the information upon which  to base critical decisions regarding current year spending, budget size and composition, student and staffing needs, funding for programs, revenue levels, etc.

Questioned Costs - No questioned costs.	

GAGAS

C C

C C C C (

C
C	42

District's  Response	and
Corrective	Action
Plan		The District's administration is in agreement with this finding. Procedures are in the process of being implemented  to  assure the items listed above are not repeated.	

(
(
(
(	Section 3 - Findings and Questioned Costs for Federal Awards

None.
(
Section 4- Status of Prior Audit Findings

Financial Statement Finding #2015-001			
Criteria		Finding Criteria -A component of internal control relating to financial
reporting is to verify the accuracy of ledger account balances.	
			
Condition		Condition Found - Various account balances were not in balance at year end. The  reconciliation  process that verifies transactions recorded to the books and records was not performed to certain cash, accounts receivable, and fund balance accounts.

This was due to prior year balances not·adjusted in the current period and ledger account balances not verified to source documentation.	
			
Cause/Effect		Cause of the Finding - Change in key personnel of the business office occurred which lead to lack of oversight during the transition.

Effect of the Finding - Misstatement of income and expense  may occur within the district without being detected in a timely manner.

Questioned Costs - No questioned costs.	
			
Status of this finding as of June 30, 2016		This situation has not been corrected. A similar finding is noted in the
current audit.	
			
Federal Award Finding 2015-002 Title I			
Criteria		Finding Criteria - An employee who works solely within the Title I Program must furnish a semi-annual certification that documents they have been engaged solely in activities that support the Title I Program. The certification must be signed by the employee or a supervisory official having first-hand knowledge of the work performed by the employee.

In addition an employee whose time that is allocated between Title I and an Other Educational Programs must maintain time and effort distribution records documenting the portion of time and effort	

(
(
(
C

C

C C

(

C

(
43

		dedicated to the Title I Program, and each other program.	
			
Condition		Condition Found - The School District was unable to produce the Semi-Annual Time and Effort Certification for the Title I teachers.	
			
Cause/Effect		Cause of the Finding - The School District did not provide the Semi- Annual Time and Effort Certifications corresponding to the 2014-2015 year.
Effect of the Finding- The School District is not in compliance with the
requirements of the Title I program.	
			
Recommendations		The employee responsible for maintaining the Semi-Annual Time and Effort Certifications should keep a copy of these certifications and certified mail receipt with the rest of the Title I compliance materials.	
			
Status of this finding as of June 30, 2016		This issue has been corrected and is not included as a finding in the current audit.	

C
(
(
(

(
C

(
(
( C (

Federal Award Finding 2015-003 Title I			
Criteria		Finding Criteria - For programs funded under Title I Part A, the District
must notify private schools of available services to eligible children, teachers, and their families.	
			
Condition		Condition Found - The District was not able to produce copies of the
correspondence notifying them of available services.	
			
Cause/Effect		Cause. of	the	Finding  -	The   School   District  did   not	provide
correspondences documenting letters that were sent  to  private schools during the school year.

Effect of the Finding - The District is not in compliance with the requirements of the Title I program.	
			
Recommendations		The staff responsible for notifying private schools should  retain copy  of correspondence and mail receipt to document letters were sent to
private schools.	
			
Status of this finding as
of June 30, 2016		This issue has been corrected and is not included as a finding in the current audit.	

(

C

C C C (
( C (
(
(
(
(

Federal Award Finding 2015-004 Child
Nutrition Cluster			
Criteria		Finding Criteria  -   A child's eligibility  for  free  or  reduced price meals
under a Child Nutrition Cluster program is established by the submission  of  an annual application  which lists family size and family	

C
(

(	44
C

		income. The child's eligibility is determined by comparing this data to published income eligibility guidelines. The School District's verifying official then approves the application as either free, reduced or denied
and signs the application.	
			
Condition		Condition Found - Procedures note five instances of the  District used a "2013-2014" application and crossing out the date and wrote in "2014·2015" on the application.	
			
Cause/Effect		Cause of the Finding - The individual responsible for processing the family applications crossed out the "2013-2014" on the top of the application and replaced it with "2014-2015".

Effect of the Finding - The District was not in compliance with requirements because the individual responsible for processing the applications altered the federal documents and accepted an outdated application form.	
			
Recommendations		The staff responsible for processing family applications should only
accept current year application forms and under no circumstances make alterations to the existing form.	
			
Status of this finding as of June 30, 2016		This issue has been corrected and is not included as a finding in the current audit.	

(
(
(
C

(

(
(

(

(

Federal Award Finding 2015-005 Child
Nutrition Cluster			
Criteria		Finding Criteria - Direct Certification - Annual eligibility  for  the National School Lunch Program (NSLP) may also be determined based on the child receiving benefits under the Supplemental Nutrition Assistance Program (SNAP), Food Distribution Program on Indian Reservations (FDPIR), the Head Start Program, or, under most circumstances, the Temporary Assistance for Needy Families (TANF) program. A household may furnish documentation of its participation
in one of these programs to be eligible to participate in the NSLP.	
			
Condition		Condition Found - Procedures note four students listed as Direct Certified were not found on the Pennsylvania Direct Certification List, nor is there documentation to support there eligibility to participate in the NSLP.	
			
Cause/Effect		Cause of the Finding - The Direct Certification List was not cross checked with the student eligibility roster before assigning students a free/reduced status.

Effect of the Finding - Due to the lack of documentation, these seven students are not eligible to receive the benefit of free meals during	

C C
C C

C C C C C C

C

C C C C

45

C

		the school year.

Questioned Costs - The total questioned cost for this finding is
$1,984.50	
			
Recommendations		The responsible staff for performing student eligibility of the NSLP should cross reference the district's eligibility roster with the most recent Pennsylvania Direct Certification list, as well as, additional information provided by the family on a monthly basis.	
			
Status of this finding as of June 30, 2016		This issue has been corrected and is not included as a finding in the current audit.	

(
(
(
'
C

C
(

Federal Award Finding 2015-006 Child
Nutrition Cluster			
Criteria		Finding Criteria - Students of the District that submit an application or meet certain criteria, may participate in the National School Lunch Program (NSLP). Regulations require the District to verify 3% of approved applications on file to determine the accuracy of family income presented during the application process.	
			
Condition		Condition Found - During the verification process, a student's family income was incorrectly calculated which resulted in the student receiving reduced meal status, when the student should have been
paid meal status.	
			
Cause/Effect		Cause of the Finding - The staff responsible for performing the verification process did not properly calculate family income.

Effect of the Finding -The student received reduced meal prices when they were supposed to pay full meal price. As a result, the District was reimbursed for meals served to this student at the reduced reimbursement rate, rather than at the paid reimbursement rate.

Questioned Costs - The total questioned cost for this finding is
$379.40.	
			
Recommendations		The employee responsible for completing the verification process should have another staff member review their calculation to ensure
completeness and accuracy.	
			
Status of this finding as of June 30, 2016		This issue has been corrected and is not included as a finding in the current audit.	

(
(

C

C
(

C
(
( C (

(
(

(	46

(
C
(
(

C

(

C
C	i
C
(

(

C
I

I	·I

C

(	HI

(

(

(
(
(
(

l

(
Keystone Oaks School District

(

C	Notes to the Schedule of
(	Expenditures of Federal Awards

(

(	for the Year Ended June 30, 2016
(	Note 1-	Basis of Presentation
(	The accompanying schedule of expenditures of federal awards (the Schedule) includes federal
award activity of Keystone Oaks School District (the "School District") under programs of the federal C       government  for  the  year  ended June 30, 2016.   The information  in  this Schedule  is presented  in C 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 Keystone Oaks School District, it is not intended to and does not present the financial position, changes in net
(	position, or cash flows of Keystone Oaks School District.
C
Note 2 - Summary of Significant Accounting Policies

(1)	
C

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. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.

(	(2) Pass-through entity identifying numbers are presented where available.
Note 3 - Food Distribution
Nonmonetary  assistance is reported in the Schedule  at  the  fair market  value of the  commodities
(	received  and disbursed.   At June 30, 2016, the  District  had food commodities totaling  $14,545  in
C	inventory.
C	Note 4 - Indirect Cost Rates

C

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

C C

(

48

C

(
C C C C C C C C C
(
(

(
C

C
C

C
C

C C

(

(
C

(
C