LUTHERAN SERVICES FLORIDA, INC. & SUBSIDIARIES rpts/2014 lutheran... · Consolidated Financial...

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LUTHERAN SERVICES FLORIDA, INC. & SUBSIDIARIES Consolidated Financial Statements, Supplementary Financial Information and Reports as Required by the

Comptroller General of the United States and Office of Management and Budget Circular A-133 June 30, 2014 and 2013

LUTHERAN SERVICES FLORIDA, INC. & SUBSIDIARIES Table of Contents

AUDITED CONSOLIDATED FINANCIAL STATEMENTS Page

Independent Auditors' Report on Basic Consolidated Financial Statements

and Supplementary Financial Information 1 Consolidated Financial Statements:

Consolidated Statements of Financial Position 4 Consolidated Statements of Unrestricted Support and Revenue, Expenses and Other Changes in Unrestricted Net Assets 5 Consolidated Statements of Changes in Net Assets 6 Consolidated Statement of Functional Expenses 7 Consolidated Statements of Cash Flows 8 Notes to Consolidated Financial Statements 9

SUPPLEMENTARY FINANCIAL INFORMATION Schedule of Expenditures of Federal Awards and State Financial Assistance 27 Notes to Schedule of Expenditures of Federal Awards and State Financial

Assistance 31 Schedule of Governmental Grants and Contracts 33 Substance Abuse & Mental Health Services, Program/Cost Center

Actual Expenses and Revenues Schedules: Part I: Actual Funding Sources and Revenues 34

Part II: Actual Expenses 37 Schedule of State Earnings 40 Schedule of Bed-Day Availability Payments 41 Schedule of Related Party Transaction Adjustments 42 INTERNAL CONTROL AND COMPLIANCE Independent Auditors' Report on Internal Control over Financial

Reporting and on Compliance and Other Matters Based on an Audit of Consolidated Financial Statements Performed in Accordance with

Government Auditing Standards 43 Independent Auditors' Report on Compliance for Each Major Federal Program

and State Project and on Internal Control Over Compliance Required by OMB Circular A-133 and Chapter 10.650, Rules of the State of Florida Auditor General 45

Schedule of Findings and Questioned Costs 47 Management Letter 49

AUDITED CONSOLIDATED FINANCIAL STATEMENTS




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Independent Auditors' Report on Basic Consolidated Financial Statements and Supplementary Financial Information The Board of Directors Lutheran Services Florida, Inc. & Subsidiaries: Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Lutheran Services Florida, Inc. & Subsidiaries (the Organization), which comprise the consolidated statement of financial position as of June 30, 2014, and the related consolidated statements of unrestricted support and revenue, expenses and other changes in unrestricted net assets, changes in net assets, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We did not audit the financial statements of LSF Charter Schools, LLC, a subsidiary, which statements reflect total assets of $691,168 as of June 30, 2014, and total support and revenue of $954,705 for the year then ended. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to amounts included for LSF Charter Schools, LLC, is based solely on the report of the other auditors. 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization’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 consolidated financial statements.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lutheran Services Florida, Inc. & Subsidiaries as of June 30, 2014, and the changes in their net assets, their functional expenses and their cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Prior Period Financial Statements and Report on Summarized Comparative Information The consolidated financial statements of Lutheran Services Florida, Inc. & Subsidiaries as of June 30, 2013 were audited by other auditors, Lewis, Birch & Ricardo, LLC whose members became shareholders of Mayer Hoffman McCann P.C. as of February 1, 2014, and whose report dated December 19, 2013, expressed an unmodified opinion on those financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2013, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. Other Matters Other Information Our audits were performed for the purpose of forming an opinion on the consolidated financial statements of Lutheran Services Florida, Inc. & Subsidiaries as a whole. The accompanying schedule of expenditures of federal awards and state financial assistance as required by OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter 10.650, Rules of the State of Florida Auditor General, is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. The other supplementary financial information listed in the table of contents is presented for purposes of additional analysis and is also not a required part of the consolidated financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and accordingly, we do not express an opinion or provide any assurance on it.

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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 3, 2014, on our consideration of Lutheran Services Florida, Inc. & Subsidiaries’ internal control over financial reporting and on our tests of their 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, 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 and should be considered in assessing the results of our audit.

Tampa, Florida December 3, 2014

LUTHERAN SERVICES FLORIDA, INC. & SUBSIDIARIES

Consolidated Statements of Financial Position

June 30, 2014 and 2013

Assets 2014 2013

Current assets:Cash and cash equivalents, including restricted cash of $9,518

in 2014 and 2013 (note 14) $ 6,993,071 1,548,634 Accounts receivable:

Managing entity contract 4,353,864 12,870,272 Other grants and funding sources (note 14) 4,600,823 4,467,645 Program fees, net of allowance for doubtful accounts of

$66,716 and $74,311 in 2014 and 2013, respectively 572,819 628,928 Current portion of contributions receivable (note 4) 108,835 78,926 Current portion of gifted facilities (note 6) 523,720 - Other 78,828 19,774

Prepaid expenses 404,692 202,224

Total current assets 17,636,652 19,816,403

Investments (note 2) 731,665 657,791 Assets limited as to use (notes 2 and 12) 283,699 163,694 Beneficial interest in assets held by others (note 5) 162,360 149,511 Contributions receivable, less current portion (note 4) - 82,801 Gifted facilities, less current portion (note 6) 1,317,791 - Property and equipment, net (notes 3 and 8) 9,833,778 2,313,451 Other 78,161 58,559

$ 30,044,106 23,242,210

See accompanying notes to consolidated financial statements.

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Liabilities and Net Assets 2014 2013

Current liabilities:Line of credit (note 7) $ 800,000 3,800,000 Current installments under capital lease obligations (note 9) 263,689 - Current installments of long-term debt (note 8) 17,875 17,231 Accounts payable:

Managing entity contract 8,321,236 8,536,333 Trade 1,624,151 1,327,098

Accrued salaries and payroll related expenses 3,265,351 2,094,220 Accrued program expenses 323,705 291,298 Other accrued expenses 100,445 83,848 Deferred revenue 359,215 228,046

Total current liabilities 15,075,667 16,378,074

Refundable advances - 251,505 Capital lease obligations, less current installments (note 9) 3,472,352 - Long-term debt, excluding current installments (note 8) 47,321 65,193

Total liabilities 18,595,340 16,694,772

Net assets:Unrestricted-

Undesignated 2,212,957 2,356,178 Board designated for long-term investment 1,015,364 821,485 Net investment in property and equipment 1,792,834 2,231,027

5,021,155 5,408,690

Temporarily restricted (note 10) 6,279,085 990,222 Permanently restricted (notes 10 and 11) 148,526 148,526

Total net assets 11,448,766 6,547,438

Commitments and contingencies (notes 9 and 13)

$ 30,044,106 23,242,210


Consolidated Statements of Unrestricted Support and Revenue, Expenses andOther Changes in Unrestricted Net Assets

Years ended June 30, 2014 and 2013

2014 2013

Operating Support and Revenue:

Public Support:Special event revenue $ 87,897 74,418 Less special event costs (39,932) (15,750)

Net revenue from special events 47,965 58,668

Contributions 347,181 245,470 Bequests and trusts 20,658 1,408 Church grants 76,550 91,726 United Way allocations 129,967 106,530 In-kind contributions (note 15) 3,054,013 1,697,067

3,628,369 2,142,201

Revenue:Reimbursement of direct and indirect costs of providing

services by governmental and other agencies (note 14) 141,745,489 123,443,545 Program service fees (note 17) 1,472,711 1,327,848 Investment return designated for current operations (note 2) 36,599 22,564 Other 55,326 47,280

143,310,125 124,841,237

Net assets released from restrictions:Expiration of time restrictions on facilities 425,669 75,261 Expiration of time restrictions on gifted facilities 430,939 - Satisfaction of donor restrictions 217,169 45,933

1,073,777 121,194

Total operating support and revenue 148,060,236 127,163,300

Operating Expenses:

Program services 141,796,209 120,846,315 Supporting services 6,742,646 6,598,903

Total operating expenses 148,538,855 127,445,218

Decrease in unrestricted net assets from operations (478,619) (281,918)

Other Changes:

Investment return in excess of amounts designated forcurrent operations (note 2) 91,084 32,681

Decrease in unrestricted net assets $ (387,535) (249,237)


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Consolidated Statements of Changes in Net Assets


2014 2013

Unrestricted net assets:Unrestricted operating support and revenue $ 146,986,459 127,042,106 Unrestricted operating expenses (148,538,855) (127,445,218) Net assets released from restrictions 1,073,777 121,194 Investment return in excess of amounts designated for

current operations (note 2) 91,084 32,681

Decrease in unrestricted net assets (387,535) (249,237)

Temporarily restricted net assets:Capital grants and additions 3,729,531 75,000 Contributions of gifted facilities 2,272,450 - Other contributions 360,659 102,947 Net assets released from restrictions (1,073,777) (121,194)

Increase in temporarily restricted net assets 5,288,863 56,753

Increase (decrease) in net assets 4,901,328 (192,484)

Net assets at beginning of year 6,547,438 6,739,922

Net assets at end of year $ 11,448,766 6,547,438


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Consolidated Statement of Functional Expenses

Year ended June 30, 2014(With comparative totals for 2013)

Program Services Supporting Services Total Expenses

Children's Programs

Youth andFamily

Services Charter School

Resettlement Services

AdultServices

Managing Entity (SAMH) Other

Total Program Services

General & Administrative

Managing Entity Adminis-

tration Advance-

ment

Total Supporting

Services 2014 2013

Salaries $ 6,503,268 11,642,211 646,193 3,348,773 903,592 - 49,103 23,093,140 2,032,267 1,485,222 111,255 3,628,744 26,721,884 18,908,387 Payroll taxes and

employee benefits 1,337,502 2,033,168 104,242 557,811 217,515 - 3,642 4,253,880 431,687 236,349 14,517 682,553 4,936,433 3,559,257

Total salaries and related expenses 7,840,770 13,675,379 750,435 3,906,584 1,121,107 - 52,745 27,347,020 2,463,954 1,721,571 125,772 4,311,297 31,658,317 22,467,644

Professional fees and contract services 604,465 86,983 93,957 29,760 14,327 - 1,000 830,492 356,995 725,968 4,009 1,086,972 1,917,464 3,092,757 Subcontractor expenses 5,116,532 766,717 - 11,130 981,845 87,956,364 - 94,832,588 - - - - 94,832,588 88,700,996 Office expense and program supplies 774,816 175,890 118,316 161,637 12,375 - - 1,243,034 104,490 88,539 17,941 210,970 1,454,004 435,409 Food 661,461 119,240 8,432 - - - - 789,133 42 93 - 135 789,268 195,275 Assistance to individuals 3,628,238 286,171 - 1,914,600 196,567 - 1,539 6,027,115 - 145 954 1,099 6,028,214 6,156,862 Occupancy 1,124,356 626,421 118,272 594,788 95,040 - 171 2,559,048 209,844 139,992 13,152 362,988 2,922,036 1,718,869 Repairs and maintenance 484,153 194,567 13,953 40,829 13,136 - - 746,638 35,021 5,540 6,619 47,180 793,818 290,773 Equipment costs 448,217 89,265 - 57,108 11,455 - 6 606,051 24,877 28,694 54 53,625 659,676 240,712 Insurance and taxes 272,004 245,166 21,863 81,040 22,689 - 214 642,976 33,226 20,770 1,271 55,267 698,243 464,251 Transportation and travel 170,728 741,924 122,903 170,697 29,908 - 5,386 1,241,546 45,109 75,848 18,011 138,968 1,380,514 996,375 Postage, printing and publication 101,950 75,115 - 34,003 17,006 - 123 228,197 29,347 12,248 19,604 61,199 289,396 214,249 Interest 235,789 2,060 19,109 - - - - 256,958 7,403 10 - 7,413 264,371 3,424 In-kind expenses (note 15) 1,900,467 246,220 - 792,979 37,991 - - 2,977,657 76,356 - - 76,356 3,054,013 1,697,067 Other operating expenses 332,625 132,925 97,419 13,316 44,738 - 2,002 623,025 243,988 46,915 4,170 295,073 918,098 588,850

Total expenses beforedepreciation and amortization 23,696,571 17,464,043 1,364,659 7,808,471 2,598,184 87,956,364 63,186 140,951,478 3,630,652 2,866,333 211,557 6,708,542 147,660,020 127,263,513

Depreciation and amortization 686,132 54,797 92,863 4,777 6,162 - - 844,731 10,646 23,326 132 34,104 878,835 181,705

Total expenses $ 24,382,703 17,518,840 1,457,522 7,813,248 2,604,346 87,956,364 63,186 141,796,209 3,641,298 2,889,659 211,689 6,742,646 148,538,855 127,445,218


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Consolidated Statements of Cash Flows


2014 2013

Cash flows from operating activities:

Increase (decrease) in net assets $ 4,901,328 (192,484) Adjustments to reconcile increase (decrease) in net assets

to net cash provided by (used in) operating activities:Depreciation and amortization 878,835 181,705 Net realized and unrealized gains on investments (91,084) (32,681) Grants restricted for capital investment (247,046) - Noncash capital contributions (3,482,485) - Noncash contribution of gifted facilities (2,272,450) - Decrease (increase) in accounts receivable 8,433,177 (13,096,018) Decrease in gifted facilities 430,939 - Decrease (increase) in prepaid expenses and other assets (222,070) 12,948 Increase in accounts payable 81,956 8,906,670 Increase in accrued expenses 1,220,135 4,858 Increase (decrease) in deferred revenue and refundable advances (120,336) 115,984

Net cash provided by (used in) operating activities 9,510,899 (4,099,018)

Cash flows from investing activities:

Purchases of investments and assets whose use is limited (552,621) (550,292) Proceeds from the sale of investments 436,977 483,617 Purchases of property and equipment (911,562) (201,951)

Net cash used in investing activities (1,027,206) (268,626)

Cash flows from financing activities:

Cash received under grants restricted for capitalinvestment 247,046 -

Borrowings (repayments) under line of credit (3,000,000) 3,800,000 Principal payments on capital leases (269,074) - Principal payments on long-term debt (17,228) (11,836)

Net cash provided by (used in) financing activities (3,039,256) 3,788,164

Net increase (decrease) in cash and cash equivalents 5,444,437 (579,480)

Cash and cash equivalents at beginning of year 1,548,634 2,128,114

Cash and cash equivalents at end of year $ 6,993,071 1,548,634

Supplemental cash flow information:

Cash paid for interest $ 264,371 3,424


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(Continued) 9

LUTHERAN SERVICES FLORIDA, INC. & SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 2014 and 2013 (1) Description of Organization and Summary of Significant Accounting Policies

(a) Description of Organization

Lutheran Services Florida, Inc. (“LSF”) was organized on July 1, 1982 as a nonprofit organization to provide various social ministries throughout the State of Florida. LSF’s programs are funded by federal, state and local governmental grants and contracts, various program service fees, contributions, church grants, and other sources. Lutheran Nonprofit Management Solutions, LLC d/b/a LSF Health Systems (LSF Health) was organized on August 13, 2010 as a nonprofit organization to govern and advise LSF’s managing entity contract over substance abuse and mental health services provided in the Northeast region of Florida effective July 1, 2012. LSF Charter Schools, LLC d/b/a Belle Glade Excel Charter School (LSF Charter School) was formed in 2012 to operate a charter school in Belle Glade, Florida for children in grades K-3 starting the fall of 2013.

The principal social services provided by Lutheran Services Florida, Inc. & Subsidiaries include services to children, troubled youth and their families, refugees, the unemployed, incapacitated adults, and victims of disasters through the following programs:

Children’s Services - provides preschool care for disadvantaged children in licensed facilities and meals to children in licensed day care homes.

Youth and Family Services - provides residential, counseling and case management services to teens and their families.

Resettlement Services - provides job training, counseling, financial assistance and placement to new entrants to the United States.

Adult Services - provides guardianship and care management programs to elderly, mentally incapacitated and disabled persons. Also provides temporary and permanent housing for the homeless and health care treatment to low-income HIV-infected individuals.

Disaster Response - provides survivors of disasters with immediate aid and on-going assistance to help them rebuild their homes and their lives. Substance Abuse and Mental Health Services – provide substance abuse and mental health services to adults and children in 23 counties in Northeast Florida.

The following Lutheran judicatories are members of the Organization: the Florida-Bahamas Synod of the Evangelical Lutheran Church in America and the Florida-Georgia District of the Lutheran Church-Missouri Synod.


Notes to Consolidated Financial Statements

June 30, 2014 and 2013

(Continued)

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(b) Financial Statement Presentation and Principles of Consolidation

The consolidated financial statements include the financial statements of LSF (including LSF Health Systems), LSF Health and LSF Charter School (collectively “the Organization”). All significant intercompany balances and transactions have been eliminated in the consolidation. The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted net assets.

The consolidated statement of functional expenses includes certain prior-year summarized comparative information in total but not by functional category. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States. Accordingly, such information should be read in conjunction with the Organization’s financial statements for the year ended June 30, 2013, from which the summarized information was derived.

(c) Contributions

Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire or are otherwise satisfied in the fiscal year in which the contributions are recognized. Time-restricted contributions are required to be reported as temporarily restricted support and are then reclassified to unrestricted net assets upon expiration of the time restriction.

Contributions receivable which are due in more than one year are recorded at estimated fair value by discounting future cash flows using current risk-free rates of return based on yields of U.S. Treasury Securities with maturity dates similar to the expected collection period.

A significant portion of the Organization’s government grants are exchange transactions in which each party receives and sacrifices commensurate value. Funds from these exchange transactions are not considered contributions and are deemed to be earned and reported as revenue when such funds have been expended towards the designated purpose.

(d) Cash Equivalents

For purposes of the statements of cash flows, the Organization considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.

(e) Assets Limited As To Use

Assets limited as to use include board-designated assets held by trustees to fund the Supplemental Executive Retirement Plan (“SERP”) as more fully described in Note 12.



June 30, 2014 and 2013

(Continued)

11

(f) Investments

Investments in marketable securities with readily determinable fair values and all investments in debt securities are carried at their fair values in the Organization's consolidated statement of financial position. Donated securities are recorded at fair value as of the date received. Unrealized gains and losses are included in the change in net assets in the accompanying financial statements. Restrictions on investment earnings are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the earnings are recognized.

(g) Accounts Receivable

Receivables under grants and funding contracts and program service fees are due in less than one year. Management believes receivables under grants and funding contracts are fully collectible and has not provided an allowance for doubtful accounts. Accounts receivable for program service fees are stated at unpaid balances, less an allowance for doubtful accounts (when applicable). The Organization provides for losses on receivables using the allowance method. The allowance is based on historical experience, third-party contracts, and any other circumstances which may affect the ability of payors to meet their obligations. Receivables are considered impaired if full principal payments are not received in accordance with the contractual terms. It is the Organization's policy to charge off uncollectible accounts when management determines the receivable will not be collected.

(h) Property and Equipment

Expenditures for property and equipment are stated at cost, if purchased or at estimated market value at date of receipt if acquired by gift, and those in excess of $5,000 are capitalized. Depreciation of property and equipment is computed principally by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are depreciated over the shorter of the remaining lease term or the useful life of the asset. The estimated useful lives of related asset classes are as follows:

Building and improvements 30 yearsLeasehold improvements 5 yearsFurniture and equipment 2 - 5 yearsVehicles 3 - 5 years

Property acquired with governmental funds is considered to be owned by the Organization while used in the program for which it was purchased or in future authorized programs; however, its disposition as well as the ownership of any proceeds therefrom is subject to applicable regulations.



June 30, 2014 and 2013

(Continued)

12

(i) Refundable Advances

Refundable advances are funds received from governmental agencies for use in constructing a building. These refundable advances are amortized into revenue over the period of time that the provider of the funds restricts the use of the building. If the period of restricted use is not specified, the refundable advance is amortized over the period of time the provider holds a reversionary interest in the building.

(j) Donated Materials and Services

Donated materials are reflected in the accompanying financial statements at their estimated fair market value at date of receipt. Donated services are recognized and recorded at fair market value only to the extent they create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. The Organization records donated goods and services as in-kind support in the accompanying statement of unrestricted support and revenue, expenses and other changes in unrestricted net assets.

(k) Functional Expense Allocations

The costs of providing the Organization's various programs and other activities have been summarized on a functional basis in the Consolidated Statement of Functional Expenses. Accordingly, certain costs, such as salaries and other expenses which benefit more than one program, are allocated among the programs and supporting services benefitted.

(l) Income Taxes

The Organization is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code and from state income taxes under similar provisions of the Florida Statutes. Accordingly, no provision for income taxes has been included in the accompanying consolidated financial statements. Management is not aware of any activities that would jeopardize the Organization's tax exempt status.

The Organization has adopted FASB guidance regarding Uncertainty in Income Taxes as codified in FASB ASC 740-10. At June 30, 2014, management does not believe it has taken any tax positions that are subject to a significant degree of uncertainty. The Organization’s income tax filings for periods after the fiscal year ended June 30, 2010 remain subject to examination.

(m) Estimates in Consolidated Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.



June 30, 2014 and 2013

(Continued)

13

(n) Fair Value Measurements

The Organization has adopted the provisions of ASC 820, Fair Value Measurements. ASC 820 requires use of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels: quoted market prices that are observable for the assets or liabilities (Level 1); inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly (Level 2); and unobservable inputs for the asset or liability (Level 3). The carrying amount reported in the statement of financial position for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of the immediate or short-term maturities of these financial instruments.

(2) Investments and Assets Limited As To Use

At June 30, 2014 and 2013, the cost and market values of investments and assets limited as to use were as follows:

Cost Market Cost MarketInvestments

Money market funds $ - - 52,919 52,919 Fixed income securities 386,743 389,238 447,196 436,386 Equity securities 274,496 327,106 132,131 143,003 Real asset funds 13,840 15,321 29,152 25,483

$ 675,079 731,665 661,398 657,791

Assets Limited As to Use

Money market funds $ 83,748 83,748 52,493 52,493 Fixed income securities 22,140 22,870 13,377 13,398 Equity securities 122,598 157,100 85,438 97,803 Real asset funds 14,693 19,981 - -

$ 243,179 283,699 151,308 163,694

2014 2013

The Organization’s investments in equity and fixed income securities are not concentrated in a single entity or in a few entities, nor are there any specific industry concentrations. The Board of Directors designates only a portion of the Organization's cumulative investment return for support of current operations; the remainder is retained to support operations of future years and to offset potential market declines. The fixed amount determined by the Board of Directors at the beginning of each fiscal year as part of the Organization's budgeting process considers the Organization's long and short-term needs, present and anticipated financial requirements, and expected total return on its investments.



June 30, 2014 and 2013

(Continued)

14

The following schedule summarizes investment return for the years ended June 30, 2014 and 2013:

2014 2013

Dividend and interest income $ 46,168 30,908 Net realized and unrealized gains 91,084 32,681 Investment management fees (9,569) (8,344)

Total investment return 127,683 55,245

Investment return designated for current operations 36,599 22,564

Investment return in excess of amountsdesignated for current operations $ 91,084 32,681

(3) Property and Equipment

Property and equipment consists of the following at June 30, 2014 and 2013:

2014 2013

Land $ 1,735,899 550,899 Buildings and improvements 3,217,484 2,981,118 Construction in progress 239,550 - Vehicles 1,767,434 381,834 Leasehold improvements 4,893,760 29,760 Furniture and equipment 1,338,574 850,316

13,192,701 4,793,927 Less accumulated depreciation and amortization 3,358,923 2,480,476

$ 9,833,778 2,313,451

Depreciation and amortization expense for the years ended June 30, 2014 and 2013 was $878,835 and $181,705, respectively. In 2014, the Organization acquired certain properties, leasehold improvements, vehicles and furniture and equipment under federal governmental grant agreements which require the Organization to use the property and equipment in the Organization’s Head Start programs operated in Pinellas and Duval counties over the corresponding lives of the assets acquired. Total property and equipment acquired under Head Start funding was $3,656,175 for the year ended June 30, 2014.



June 30, 2014 and 2013

(Continued)

15

(4) Contributions Receivable

Contributions receivable as of June 30, 2014 and 2013 consist of the following:

2014 2013

Outstanding pledges $ 111,034 163,926 Less unamortized discount (2,199) (2,199)

$ 108,835 161,727

Amounts due in: Less than one year $ 111,034 78,926 One to five years - 85,000

$ 111,034 163,926

The fair value of contributions receivable as of June 30, 2014 and 2013 due in one to five years is estimated by discounting future cash flows using a discount rate of .86%, the risk-free rate of return of U.S. Treasury Securities with similar maturities.

(5) Beneficial Interest in Assets Held by Others

The Organization has established endowments at Community Foundation of Broward, Inc. and Community Foundation of Tampa Bay, Inc. (the Foundations) and named itself as the beneficiary. Under the terms of the endowment agreements, the Community Foundation of Broward has variance power over the funds and the Community Foundation of Tampa Bay does not have variance power over the funds. The change in the value of assets held by others was an increase of $20,110 for the year ended June 30, 2014 and increase of $14,225 for the year ended June 30, 2013. Distributions of net earnings were received from the Foundations totaling $7,261 and $7,175 for fiscal 2014 and 2013, respectively. The balance of funds held by the Foundations at June 30, 2014 and 2013 was as follows:

2014 2013

Community Foundation of Broward, Inc $ 155,635 143,489 Community Foundation of Tampa Bay. Inc 6,725 6,022

$ 162,360 149,511



June 30, 2014 and 2013

(Continued)

16

(6) Gifted Facilities

Gifted facilities represents the present value of the excess of the aggregate fair rental value of building leases over below market rent payments due under several lease agreements executed in connection with the Organization’s Head Start programs in Pinellas and Duval counties. Recognition of the fair values of these leases is summarized as follows:

Pinellas DuvalProperties Properties Total

Balances at June 30, 2013 $ - - - Recognition of intital contribution 1,846,175 426,275 2,272,450 Recognition of annual fair value of gifted

building leases 16,827 - 16,827 Recognition of rent expense for the year

ended June 30, 2014 (440,367) (7,399) (447,766)

Balances at June 30, 2014 1,422,635 418,876 1,841,511

Current portion of gifted facilities 441,270 82,450 523,720

Gifted facilities, less current portion $ 981,365 336,426 1,317,791

(7) Short-Term Note Payable

The Organization has a revolving line of credit with the Lutheran Church Extension Fund-Missouri Synod, a nonprofit organization that allows the Organization to borrow up to $7,000,000 at one-month LIBOR plus 3% (3.15% at June 30, 2014). The line of credit is secured with the Organization’s receivables (except for amounts due from Coordinated Childcare Food Program) and requires the Organization to meet certain covenants. At June 30, 2014, the Organization was in compliance with these covenants. The line of credit matures in February 2015. The outstanding balance on the revolving line of credit at June 30, 2014 and 2013 was $800,000 and $3,800,000, respectively.



June 30, 2014 and 2013

(Continued)

17

(8) Long-Term Debt Long-term debt consists of the following at June 30, 2014 and 2013:

2014 2013

3.625% mortgage note payable to the Lutheran Church Extension Fund - Missouri Synod in monthly intallments of $1,665, including interest, through February 2018, secured by real property. $ 65,196 82,424

Total long-term debt 65,196 82,424

Less current installments 17,875 17,231

Long-term debt, excluding current installments $ 47,321 65,193

The aggregate maturities of long-term debt for the four years subsequent to June 30, 2014 are: $17,875 in 2015; $18,540 in 2016; $19,237 in 2017; and $9,544 in 2018.

(9) Leases

The Organization is obligated under capital lease agreements for certain facilities which expire over the next thirteen years. Upon expiration of these leases, title to the properties will automatically transfer to LSF. The Organization leases the majority of its office space and office equipment under operating lease agreements which expire at various dates over the next four years. Security deposits related to such leases are included in other assets. Rental expense on operating leases was approximately $1,460,000 in fiscal 2014 and $1,134,000 in fiscal 2013. The majority of the Organization’s operating leases include 30 day cancellation provisions in the event the Organization’s loses its funding.

At June 30, 2014, the gross amount of facilities and related accumulated amortization recorded under capital leases was $4,005,114 and $355,933, respectively. Amortization of assets held under capital leases is included in depreciation expense.



June 30, 2014 and 2013

(Continued)

18

Future minimum lease payments under noncancellable operating leases (with initial or remaining terms in excess of one year) and the present value of future minimum capital lease payments as of June 30, 2014 are as follows:

Captial Leases

Operating Leases Total

Year ending June 30:

2015 $ 504,862 1,287,666 1,792,528 2016 504,862 890,173 1,395,035 2017 504,862 398,056 902,918 2018 504,862 135,321 640,183 2019 504,862 - 504,862

Thereafter 2,736,868 - 2,736,868

Total minimum lease payments 5,261,178 2,711,216 7,972,394

Less amount representing interest 1,525,137

Present value of capital leaseobligations 3,736,041

Less current installments undercapital lease obligations 263,689

Obligations under capital leases,excluding current installments $ 3,472,352

(10) Temporary and Permanent Restrictions on Net Assets

Temporary restrictions on net assets as of June 30, 2014 and 2013 relate to the following:

2014 2013

Facilities and equipment subject to time restrictions $ 4,239,707 634,412 Gifted facilities 1,841,511 - Employee tuition reimbursement 83,454 85,434 Shelter-based youth and family programs 66,200 75,138 Disaster relief - 109,564 Charter school - 32,947 Early childcare program 23,333 42,547 Other 24,880 10,180

$ 6,279,085 990,222



June 30, 2014 and 2013

(Continued)

19

Permanently restricted net assets as of June 30, 2014 and 2013 relate to the following:

2014 2013

Broward County program endowment $ 138,526 138,526 Tampa Bay program endowment 10,000 10,000

$ 148,526 148,526

(11) Endowment Funds

The Organization’s internally-controlled endowment net assets are comprised of investments held in a Board-designated endowment fund. The Organization’s externally-controlled endowment net assets are comprised of two endowment funds established with the Community Foundation of Broward, Inc. and the Community Foundation of Tampa Bay, Inc. Interpretation of Relevant Law The Board of Directors has interpreted the wishes of donors and state law as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Organization classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the endowment, and (c) accumulations to the endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. Investment Return Objectives, Risk Parameters and Strategies. The Organization has adopted investment and spending policies, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also preserving the purchasing power of those endowments over the long-term. The policies stipulate that the endowments should be managed as a long-term goal designed to maximize the returns without exposure to undue risk, as defined herein. Whereas it is understood that fluctuating rates of return are characteristic of the securities markets, the greatest concern should be long-term appreciation of the assets and consistency of total portfolio returns. Recognizing that short-term market fluctuations may cause variations in the account performance, the Organization will pursue a strategy seeking to exceed a benchmark return of a target portfolio consisting of 75% fixed income securities and 25% equity securities for the general endowment fund.

Spending Policy. The Organization has a policy prohibiting the spending of its Board-designated

endowment. Earnings distributed by the Community Foundations are used to support programs in those counties.



June 30, 2014 and 2013

(Continued)

20

Endowment net asset composition by type of fund as of June 30, 2014 and 2013 is as follows:

Total

Permanently Endowment

Unrestricted Restricted Net Assets

2014:Board-designated endowment $ 1,015,364 - 1,015,364

Broward County program endowment - 138,526 138,526

Tampa Bay program endowment - 10,000 10,000

$ 1,015,364 148,526 1,163,890

2013:Board-designated endowment $ 821,485 - 821,485

Broward County program endowment - 138,526 138,526

Tampa Bay program endowment - 10,000 10,000

$ 821,485 148,526 970,011

Changes in the Board-designated endowment for the year ended June 30, 2014 consist of transfers of $90,000 and reinvested earnings and unrealized gains of $103,879. Changes in the Board-designated endowment for the year ended June 30, 2013 consist of transfers of $50,000 and reinvested earnings net of unrealized losses of $15,516.

(12) Retirement Plans

The Organization has adopted a 403(b) multiple employer retirement plan (the “Plan”) administered by Evangelical Lutheran Church in America (ELCA) subject to the provisions of the ELCA Master Institutional Retirement Plan. Under the Plan, employees are eligible to participate once they attain the age of twenty-one, complete three years of service and work a minimum of 1,000 hours during the plan year. The Organization is required to contribute 3% of each participant’s compensation and match 100% of employee contributions up to 3% of each eligible employee’s compensation. Participants’ rights to employer contributions immediately and fully vest.



June 30, 2014 and 2013

(Continued)

21

The Organization also participates in a 457(b) multiple employer plan administered by ELCA and subject to the provisions of the ELCA Master 457(b) Deferred Compensation Trust (the “457(b) Plan”). Under the amended 457(b) Plan, employees are eligible to participate if they are common law employees who are regularly scheduled to work 20 or more hours a week, have reached the age of 21, and have completed 3 years of service. The Organization is required to contribute 3% of each eligible employee’s compensation and match 100% of employee contributions up to 3% of each eligible employee’s compensation. Eligible participants must work a minimum of 1,000 hours during the plan year and be employed with the Organization on the last day of the plan year to receive the required and match contributions. Employer contributions are immediately 100% vested. Effective January 1, 2013, the Organization suspended its matching contributions in the 403(b) and 457(b) plans described above. Retirement plan expense for the years ended June 30, 2014 and 2013 under both plans totaled approximately $0 and $161,000, respectively.

The Organization has also adopted a 457(f) employee benefit plan or SERP, which provides two key executives (the Participants) deferred compensation benefits outside of the two plans described above. Benefits under the SERP accumulate from annual contributions and earnings thereon. The Participants’ rights to receive cumulative contributions to the SERP fully vest on each Participant’s 60th birthday. Subsequent contributions paid after each Participant’s 60th birthday vest upon each Participant’s 65th birthday. For the years ended June 30, 2014 and 2013, the Organization incurred expenses under the SERP of $125,000 and $60,000, respectively. At June 30, 2014 and 2013, the Organization has $283,699 and $163,694, respectively, of assets limited as to use for payment of its obligation under the SERP and $283,699 and $163,694, respectively, of deferred compensation payable included in accrued salaries and payroll related expenses in the accompanying statements of financial position.

(13) Contingencies

The Organization routinely enters into grant agreements and contracts with governmental agencies that provide for reimbursement of the eligible direct and indirect costs of providing certain of the Organization's program services. The grants and contracts are subject to audit or review and retroactive adjustment based on a final determination by the grantor of eligible reimbursable expenditures. The effect of such adjustments, if any, on the Organization's financial statements cannot be determined at this time and no provision has been made for any such adjustment in the accompanying consolidated financial statements. The Organization is involved in legal actions arising during the ordinary course of its operations. The potential loss under these claims is not determinable at this time. Management believes any potential loss would be expected to fall within the Organization’s insurance policy limits. The only anticipated financial exposure would be payment of the insurance deductible, a nominal amount. In the opinion of management, no material liability exists with respect to these claims.



June 30, 2014 and 2013

(Continued)

22

(14) Funding and Credit Concentrations

Substantially all of the Organization's activities are supported by funds provided by the United States Federal Government, the State of Florida, and local municipalities. As of June 30, 2014 and 2013, the Organization's receivables from these funding sources were approximately $8.9 million and $17.3 million, respectively. Revenues earned under contracts from these sources accounted for approximately 96% and 97% of total operating support and revenue for fiscal 2014 and 2013, respectively.

The Organization maintains several deposit accounts with what management believes to be a high credit quality financial institution. The total of these balances exceeded federal insurance limits by approximately $6,598,000 as of June 30, 2014.

The Organization maintains a Mission Investment Fund account (a money market mutual fund) with ELCA and a Lutheran Church Extension Fund account which are not covered to any extent by federal deposit insurance or any other insurance provided by a federal or state regulatory agency. The total balance of these accounts at June 30, 2014 was approximately $2,900.

The Organization also maintains a money market account with a brokerage firm which is not covered by federal deposit insurance; however, the balance is covered by Securities Investors Protection Corporation (SIPC) for up to $500,000. The total balance exceeding SIPC coverage at June 30, 2014 was approximately $457,000.

(15) In-Kind Contributions

The values of in-kind contributions (i.e. donated materials and services) included in the consolidated financial statements and the corresponding expenses for the years ended June 30, 2014 and 2013, are as follows:

2014 2013

Professional services $ 223,238 112,823 Head Start supplies 727,286 - Food, clothing and household items 2,103,489 1,584,244

$ 3,054,013 1,697,067

In addition, donated services for the years ended June 30, 2014 and 2013 with estimated values of approximately $229,000 and $263,000, respectively, were not recognized in the consolidated financial statements because they did not meet the criteria for recognition.

(16) Matching Requirements

The Organization received a substantial portion of its support from various funding sources which required local matches. These requirements were met through program service fees, local grants, and public donations during the years ended June 30, 2014 and 2013.



June 30, 2014 and 2013

(Continued)

23

(17) Guardianship Program

In connection with the Organization’s guardianship program, the Organization holds assets in trust for individuals who have been declared incapacitated. The Organization is a court-appointed legal guardian for these individuals. Assets held in trust by the Organization include tangible personal property and real property valued in the table below at their fair value on the date the Organization was appointed guardian. Cash and investments are included in the table below at current market value. Income earned on assets held in trust is applied to each individual’s account balance. Assets held in trust by the Organization are not included in the accompanying consolidated financial statements. The value of assets held in trust at June 30, 2014 and 2013 are as follows:

2014 2013

Cash and cash equivalents $ 7,302,152 7,122,533 Investments in debt and equity securities 6,296,076 6,821,974 Real property 2,605,969 2,930,249 Cash surrender value of life insurance

and other annuities 2,908,597 1,973,885 Other 595,566 530,755

$ 19,708,360 19,379,396

For the years ended June 30, 2014 and 2013, program service fees earned under the guardianship program were approximately $1,135,000 and $1,015,000, respectively.

(18) Fair Value Measurements

Financial instruments measured at fair value are classified and disclosed in the following categories:

Level 1 - Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments included in Level 1 are cash reserve balances and certificates of deposit.

Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. The fair value of the Organization’s beneficial interest in assets held by others is based on valuation information provided by the Community Foundations which is primarily derived from or corroborated by observable market data as it relates to the Community Foundations’ underlying investments.

Level 3- Valuation is based on unobservable inputs.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.



June 30, 2014 and 2013

(Continued)

24

Fair value of assets, measured at fair value, on a recurring basis at June 30, 2014 are as follows:

Fair Value Level 1 Level 2 Level 3Assets:Investments

Equity securities:Small/mid cap funds $ 19,883 19,883 - - Emerging markets 96,555 96,555 - - Growth funds 87,261 87,261 - - Value funds 109,054 109,054 - - Index funds 14,353 14,353 - -

Debt securities:High yield bond funds 42,679 42,679 - - Index bonds 51,960 51,960 - - Total return funds 72,638 72,638 - - Tactical allocation 40,932 40,932 - - Short duration funds 35,140 35,140 - - Convertible funds 44,158 44,158 - - Nontraditional bond funds 101,731 101,731 - -

Other:Real asset funds 15,321 15,321 - -

731,665 731,665 - -

Assets limited as to useMoney market funds 83,748 83,748 - - Equity securities:

Large blend 5,334 5,334 - - Large cap 24,022 24,022 - - Small/mid cap funds 44,287 44,287 - - Emerging markets 38,444 38,444 - - Growth funds 19,129 19,129 - - Index funds 7,300 7,300 - - Energy 8,213 8,213 - - Health 10,370 10,370 - -

Debt securities:High yield bond funds 16,205 16,205 - - Short duration bond funds 6,666 6,666 - -

Real asset funds 19,981 19,981 - - 283,699 283,699 - -

Beneficial interest in assets held by others 162,360 - 162,360 -

$ 1,177,724 1,015,364 162,360 -



June 30, 2014 and 2013

(Continued)

25

Fair value of assets measured at fair value on a recurring basis at June 30, 2013 are as follows:

Fair Value Level 1 Level 2 Level 3Investments

Money market funds $ 52,918 52,918 - - Equity securities:

Small/mid cap funds 9,868 9,868 - - Emerging market funds 28,786 28,786 - - Growth funds 34,946 34,946 - - Value funds 47,104 47,104 - - Index funds 22,299 22,299 - -

Debt securities:High yield bond funds 31,557 31,557 - - Foreign bond funds 48,185 48,185 - - Total return funds 103,837 103,837 - - Global bond funds 133,192 133,192 - - Short duration funds 88,669 88,669 - - U.S. governmental securities funds 30,947 30,947 - -

Other:Real asset funds 25,483 25,483 - -

657,791 657,791 - -

Assets limited as to useMoney market funds 52,493 52,493 - - Equity securities:

Large cap funds 23,441 23,441 - - Growth funds 27,209 27,209 - - Emerging market funds 20,374 20,374 - - Index funds 15,867 15,867 - - Energy 4,618 4,618 - - Health 6,294 6,294 - -

Debt securities:High yield bond funds 9,461 9,461 - - Intermediate term bond 3,937 3,937 - -

163,694 163,694 - -

Beneficial interest in assets held by others 149,511 - 149,511 -

$ 970,996 821,485 149,511 -



June 30, 2014 and 2013

26

(19) Subsequent Events

The Organization has evaluated subsequent events through December 3, 2014, the date the consolidated financial statements were available for issuance.

***********

SUPPLEMENTARY FINANCIAL INFORMATION


Schedule of Expenditures of Federal Awards and State Financial Assistance

Year ended June 30, 2014

(Page 1 of 4)

Federal/State Agency CFDA/ Contract Transfers Pass-through Entity CSFA Grant To

Federal Program/State Project Number Number Expenditures Subrecipients

U.S. Department of Agriculture:Passed-through from Florida Department of Health:

Child and Adult Care Food Program 10.558 D-154 $ 4,032,710 - S-121 790,839 -

H-3109 19,216 - H-3110 14,544 - H-3654 15,518 - H-3365 34,538 -

4,907,365 -

Subtotal - U.S. Department of Agriculture 4,907,365 -

U.S. Department of Housing and Urban Development:Passed-through from Miami-Dade County, State of Florida:

Supportive Housing Program 14.235 FL0216B4D001104 41,678 - FL0216L4D001205 219,050 - FL0168B4D001104 31,800 19,245 FL0168L4D001205 286,145 232,931 FL0218B4D001104 57,000 55,551 FL0218L4D001205 521,649 458,781

1,157,322 766,508 Passed-through from Miami-Dade County, State of Florida:

Home Investment Partnerships Program 14.239 # R-165-13 44,285 -

Passed-through from Florida Department of Health:Housing Opportunities for Persons with AIDS 14.241 CODIO 302,923 -

Subtotal - U.S. Department of Housing and Urban Development 1,504,530 766,508

U.S. Department of Justice:Passed-through from the State of Florida Office of Attorney General:

Crime Victim Assistance 16.575 V12105/V13105 131,558 -

Subtotal - U.S. Department of Justice 131,558 -

U.S. Department of State:Passed-through from Lutheran Immigration and Refugee Services:

U.S. Refugee Admissions Program 19.510 SPRMCO12CA0125 414,776 - SPRMCO14CA1006 879,070 -

1,293,846 -

Subtotal - U.S. Department of State 1,293,846 -

U.S. Department of Health and Human Services:Head Start 93.600 04CH0197/28 284,562 -

04CH4683/01 657,167 - 04CH4644/01 8,006,716 2,406,244 04CH4644/02 6,401,498 1,831,521 04CH4699/01 337,156 -

n/a 3,482,485 - 19,169,584 4,237,765

Basic Center Grant 93.623 90CY2471/03 20,648 - 90CY6522/01 70,117 - 09CY2639/02 47,048 - 09CY2639/03 99,615 - 90CY2468/03 42,721 - 90CY6582/01 99,350 -

379,499 -

27




(Page 2 of 4)



Passed-through from Hillsborough County, State of Florida:Head Start 93.600 04SA3035/47 $ 347,650 208,514

04SA3035/48 964,933 669,304 1,312,583 877,818

Passed-through Central Florida Behaviorial Heath Network:Block Grants for Prevention and Treatment of Substance Abuse 93.959 QA025 23,991 -

Passed-through from State of Florida Department of Children and Families:

Projects for Assistance in Transition from Homelessness (PATH) 93.150 EH003 699,409 675,106

Temporary Assistance for Needy Families 93.558 EH003 2,202,900 2,125,940

Refugee and Entrant Assistance - State Administered Programs 93.566 LK172 708,796 - LK154 40,745 - LK145 428,847 - LK156 700,589 -

1,878,977 -

Refugee and Entrant Assistance - Discretionary Grants 93.576 LK172 150,689 - LK154 79,625 - LK183 61,871 -

292,185 -

Refugee and Entrant Assistance - Targeted Assistance Grants 93.584 LK154 200,000 - LK183 1,034,838 -

1,234,838 -

Children's Health Insurance Program 93.767 EH003 980,000 962,843

Medical Assistance Program 93.778 EH003 1,362,723 1,322,697

Block Grants for Community Mental Health Services 93.958 EH003 4,527,590 4,358,681

Block Grants for Prevention and Treatment of Substance Abuse 93.959 EH003 16,563,418 15,810,092

Passed-through from State of Florida Department of Health:HIV Care Formula Grants 93.917 CODHZ 1,003,866 778,329

CODHZ-R1 282,649 203,516 1,286,515 981,845

Passed-through from Lutheran Immigration and Refugee Services:Refugee and Entrant Assistance - Voluntary Agency Programs 93.567 90RV0062/02 459,237 -

90RV0062/03 987,616 - 1,446,853 -

Unaccompanied Alien Children Program 93.676 90ZU0103/01 53,476 - 90ZU0084/01 36,448 - 90ZU0067/03 24,160 - 90ZU0057/03 20,110 -

134,194 -

Passed-through from Florida Network of Youth and Family Services, Inc.:Foster Care - Title IV-E 93.658 Southeast 31,390 -

Southwest 40,407 - Northwest 37,402 -

109,199 -

28




(Page 3 of 4)



Passed-through Eckerd Youth Alternatives, Inc.:Promoting Safe and Stable Families 93.556 ECA-CMO-FY14 $ 15,965 -

Temporary Assistance for Needy Families 93.558 ECA-CMO-FY14 1,043,912 -

Stephanie Tubbs Jones Child Welfare Services Programs 93.645 ECA-CMO-FY14 117,611 -

Foster Care - Title IV-E 93.658 ECA-CMO-FY14 1,999,847 -

Adoption Assistance 93.659 ECA-CMO-FY14 307,581 -

Passed-through from Children's Network of Southwest Florida, LLC:Promoting Safe and Stable Families 93.556 ABK01 70,931 -

Temporary Assistance for Needy Families 93.558 ABK01 884,239 - FAJ09 330,676 -

1,214,915 -

Grants to States for Access and Visitation Programs 93.597 ABK01 24,288 -

Stephanie Tubbs Jones Child Welfare Services Programs 93.645 ABK01 136,064 - FAJ09 13,426 -

149,490 -

Foster Care - Title IV-E 93.658 ABK01 1,027,536 - WAJ02 85,504 -

1,113,040 -

Adoption Assistance 93.659 ABK01 371,981 -

Social Services Block Grant 93.667 WAJ02 35,907 -

Child Abuse and Neglect State Grants 93.669 FAJ09 20,385 -

Passed-through from South Florida Workforce Investment Board:Refugee and Entrant Assistant - Targeted Assistance Grants 93.584 RET-DP-PY 12-08-02 459,618 -

RET-DP-PY 13-08-00 752,269 - RET-DP-PY 13-08-02 368,134 -

1,580,021 -

Passed-through from Lakeview Center, Inc.:Foster Care - Title IV-E 93.658 C-010-100 88,569 -

Social Services Block Grant 93.667 C-010-100 57,996 -

Block Grants for Community Mental Health Services 93.958 B-010-100 49,724 -

Subtotal - U.S. Department of Health and Human Services 61,866,621 31,352,787

U.S. Department of Homeland Security:Emergency Food and Shelter National Board Program 97.024 159400-020 63,750 -

Subtotal - U.S. Department of Homeland Security 63,750 -

Total Expenditures of Federal Awards $ 69,767,670 32,119,295

29




(Page 4 of 4)



State Courts System:Passed-through from Gulf Coast Kid's House:

Florida Network of Children Advocacy Centers 22.016 n/a $ 109,450 -

Passed-through from Santa Rosa Kid's House:Florida Network of Children Advocacy Centers 22.016 n/a 19,586 -

Subtotal - State Courts System 129,036 -

Passed-through from Eckerd Youth Alternatives, Inc.:Out-of-Home Supports 60.074 ECA-CMO-FY14 464,480 - In-Home Supports 60.075 ECA-CMO-FY14 242,136 -

- Passed-through from Children's Network of Southwest Florida, LLC:

Out-of-Home Supports 60.074 WAJ02 38,689 - ABK01 1,424,200 -

1,462,889 -

In-Home Supports 60.075 FAJ09 132,976 - ABK01 742,444 -

875,420 -

Passed-through from Lakeview Center, Inc.:Out-of-Home Supports 60.074 C-010-100 46,705 -

B-010-100 33,602 -

Community Forensic Beds and Competency Restoration Training 60.114 EH003 1,098,427 1,060,306

Subtotal - Department of Children and Families 4,223,659 1,060,306

Department of Health:Medical Services for Abused and Neglected Children 64.006 CSAPN1 35,000 -

Subtotal - Department of Health 35,000 -

Department of Juvenile Justice:Passed-through from Florida Network of Youth and Family Services, Inc.:

Children and Families in Need of Services (CINS/FINS) 80.005 Southeast 1,066,989 - Southwest 1,316,161 - Northwest 1,337,557 -

Subtotal - Department of Juvenile Justice 3,720,707 -

Total Expenditures of State Financial Assistance $ 8,108,402 1,060,306

See accompanying notes to Schedule of Expenditures of FederalAwards and State Financial Assistance.

30

31


Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance


(Page 1 of 2)

(1) Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) includes the federal and state grant activity of Lutheran Services Florida, Inc. & Subsidiaries under programs of the federal government and the State of Florida for the year ended June 30, 2014. The information in the Schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter 10.650, Rules of the State of Florida Auditor General. Because the Schedule presents only a selected portion of the operations of Lutheran Services Florida, Inc. & Subsidiaries, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Lutheran Services Florida, Inc. & Subsidiaries.

(2) Summary of Significant Accounting Policies

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

(3) Nonmonetary Assistance

Nonmonetary assistance is reported in the Schedule at the fair market value of the property and equipment received and utilized in operating certain Head Start programs in the total amount of $3,482,485.

(4) Other

The accompanying Schedule presents federal expenditures and state financial assistance by pass-through agency. Expenditures of certain federal programs and state projects were awarded to Lutheran Services Florida, Inc. & Subsidiaries by more than one pass-through agency or under more than one contract. Total expenditures by federal award program are summarized on page 32.

State Financial Assistance

(Page 2 of 2)

CFDA No. Federal Program

10.558 Child and Adult Care Food Program $ 4,907,365 14.235 Supportive Housing Program 1,157,322 14.239 Home Investment Partnerships Program 44,285 14.241 Housing Opportunities for Persons with AIDS 302,923 16.575 Crime Victim Assistance 131,558 19.510 U.S. Refugee Admission Program 1,293,846 93.150 Projects for Assistance in Transition from Homelessness (PATH) 699,409 93.556 Promoting Safe and Stable Families 86,896 93.558 Temporary Assistance for Needy Families 4,461,727 93.566 Refugee and Entrant Assistance - State Administered Programs 1,878,977 93.567 Refugee and Entrant Assistance - Voluntary Agency Programs 1,446,853 93.576 Refugee and Entrant Assistance - Discretionary Grants 292,185 93.584 Refugee and Entrant Assistance - Targeted Assistance Grants 2,814,859 93.597 Grants to States for Access and Visitation Programs 24,288 93.600 Head Start 20,482,167 93.623 Basic Center Grant 379,499 93.645 Stephanie Tubbs Jones Child Welfare Services Programs 267,101 93.658 Foster Care - Title IV-E 3,310,655 93.659 Adoption Assistance 679,562 93.667 Social Services Block Grant 93,903 93.669 Child Abuse and Neglect State Grants 20,385 93.676 Unaccompanied Alien Children Program 134,194 93.767 Children's Health Insurance Program 980,000 93.778 Medical Assistance Program 1,362,723 93.917 HIV Care Formula Grants 1,286,515 93.958 Block Grants for Community Mental Health Services 4,577,314 93.959 Block Grants for Prevention and Treatment of Substance Abuse 16,587,409 97.024 Emergency Food and Shelter National Board Program 63,750

Total expenditures of federal awards $ 69,767,670



Notes to Schedule of Expenditures of Federal Awards and

Federal Expenditures

32


Schedule of Governmental Grants and Contracts


Direct federal funding:U.S. Department of Health and Human Services $ 19,549,083 U.S. Department of Homeland Security 63,750

19,612,833

Direct state funding:State of Florida Department of Health 35,000

35,000

Pass-through awards of federal and state funding:State of Florida Department of Health 6,496,803 State of Florida Department of Children and Families 94,498,212 Children's Network of Southwest Florida, LLC 6,249,167 Lutheran Immigration and Refugee Services 2,877,743 Eckerd Youth and Family Alternatives, Inc. 4,555,529 Miami-Dade County, State of Florida 1,231,951 South Florida Workforce Investment Board 1,580,020 Lakeview Center, Inc. 295,641 ChildNet, Inc. 19,735 Florida Network of Youth and Family Services, Inc. 3,964,770 National Children's Alliance 129,036 Hillsborough County, State of Florida 1,312,583 State of Florida Office of Attorney General 131,558 Voluntary Pre-Kindergarten 378,148 Central Florida Behavioral Health Network, Inc. 64,045

123,784,941

Local and other grants and contracts:Children's Services Council of Palm Beach County 421,314 Children's Trust of Miami-Dade 321,505 Lee County, State of Florida 278,655 Okaloosa County, State of Florida 89,637 Sarasota County, State of Florida 45,642 Santa Rosa County, State of Florida 49,384 Department of Elder Affairs 20,000 Charter School funding 816,109

2,042,246

Total governmental grants and contracts $ 145,475,020

33

AGENCY: Lutheran Services Florida, Inc. DATE PREPARED: 12/3/2014

CONTRACTS: EH003 & QA025 BUDGET PERIOD: 07/01/2013 to 06/30/2014

PART I: ACTUAL FUNDING SOURCES & REVENUES

Aftercare/ Follow-up Assessment

Case Management

Children's Emergency

Stabilization Special Projects

Community Forensic

Beds - Adult Services

Crisis Stabilization

Crisis Support -

EmergencyDay/ Night

Drop-In/ Self-Help Centers

IA. STATE SAMH FUNDINGContract EH003 $ 118,238 387,823 3,541,492 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989 Contract QA025 - - 36,581 - - - - - -

TOTAL STATE SAMH FUNDING = 118,238 387,823 3,578,073 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989

IB. OTHER GOVT. FUNDING (1) Other State Agency Funding - - - - - - - - - (2) Medicaid - - - - - - - - - (3) Local Government - - - - - - - - - (4) Federal Grants and Contracts - - - - - - - - - (5) In-kind from local govt. only - - - - - - - - -

TOT. OTHER GOVT. FUNDING = - - - - - - - - -

IC. ALL OTHER REVENUES (1) 1st & 2nd Party Payments - - - - - - - - - (2) 3rd Party Payments (except Medicare) - - - - - - - - - (3) Medicare - - - - - - - - - (4) Contributions and Donations - - 623 - - - - - - (5) Other - - - - - - - - - (6) Refunds - - - - - - - - - (7) In-kind - - - - - - - - -

TOT. ALL OTHER REVENUES = - - 623 - - - - - -

TOTAL FUNDING = $ 118,238 387,823 3,578,696 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989

AUDIT SCHEDULESUBSTANCE ABUSE AND MENTAL HEALTH SERVICES

PROGRAM / COST CENTER ACTUAL EXPENSES AND REVENUES SCHEDULE(Page 1 of 6)

FUNDING SOURCES & REVENUES

STATE-DESIGNATED SAMH COST CENTERSSTATE SAMH-FUNDED COST CENTERS

AMH/CMH/ASA/CSA

34

Florida Assertive

Community Treatment (FACT) Team HIV Services

Incidental Expenses

Indigent Psych

Medication Program

Information & Referral

In-Home/ On-site

Intensive Case

Manage-ment

Special Projects

Adult Mental Health

Medical Services

Mental Health

Clubhouse Services

Methadone Treatment

6,080,627 549,375 527,950 115,739 694,284 283,984 314,274 1,017,716 5,123,418 259,993 289,667 - - - - - - - - - - -

6,080,627 549,375 527,950 115,739 694,284 283,984 314,274 1,017,716 5,123,418 259,993 289,667

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - -

6,080,627 549,375 527,950 115,739 694,284 283,984 314,274 1,017,716 5,123,418 259,993 289,667


AMH/CMH/ASA/CSA







AMH/CMH/ASA/CSA

Outreach

PATH Community

Support Services Federal Prevention

Respite Services SA Detox

Supported Employment

Special Projects

Adult Substance

AbuseSupported

Living TASC

IA. STATE SAMH FUNDINGContract EH003 $ 1,374,859 716,687 4,271,270 38,787 6,594,940 86,338 1,679,754 227,450 480,603 Contract QA025 - - 27,464 - - - - - -

STATE SAMH FUNDING = 1,374,859 716,687 4,298,734 38,787 6,594,940 86,338 1,679,754 227,450 480,603

IB. OTHER GOVT. FUNDING (1) Other State Agency Funding - - - - - - - - - (2) Medicaid - - - - - - - - - (3) Local Government - - - - - - - - - (4) Federal Grants and Contracts - - - - - - - - - (5) In-kind from local govt. only - - - - - - - - -

OTHER GOVT. FUNDING = - - - - - - - - -

IC. ALL OTHER REVENUES (1) 1st & 2nd Party Payments - - - - - - - - - (2) 3rd Party Payments (except Medicare) - - - - - - - - - (3) Medicare - - - - - - - - - (4) Contributions and Donations - - 468 - - - - - - (5) Other - - - - - - - - - (6) Refunds - - - - - - - - - (7) In-kind - - - - - - - - -

ALL OTHER REVENUES = - - 468 - - - - - -

TOTAL FUNDING = $ 1,374,859 716,687 4,299,202 38,787 6,594,940 86,338 1,679,754 227,450 480,603


35


AMH/CMH/ASA/CSA

Intervention OutpatientResidential

Services

Room and Board with Supervision Bnet

Purchased Residential

TherapuerticServices

Recovery Support

Total for AMH/CMH/

ASA/CSA

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 87,956,364 - - - - - - - 64,045

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 88,020,409

`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - -

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

- - - - - - - 1,091

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 88,021,500

AUDIT SCHEDULESUBSTANCE ABUSE & MENTAL HEALTH SERVICES





Managing Entity Administrative

Services

Total for State SAMH Cost

Centers

Total for Non-State-Funded SAMH Cost

Centers

Tot. for All State-

Designated SAMH Cost

CentersNon-SAMH Cost Centers Total Funding

IA. STATE SAMH FUNDING $Contract EH003 3,136,367 91,092,731 - 91,092,731 - 91,092,731 Contract QA025 - 64,045 - 64,045 - 64,045

TOTAL STATE SAMH FUNDING = 3,136,367 91,156,776 - 91,156,776 - 91,156,776

IB. OTHER GOVT. FUNDING (1) Other State Agency Funding - - - - 19,769,121 19,769,121 (2) Medicaid - - - - 19,045 19,045 (3) Local Government - - - - 884,631 884,631 (4) Federal Grants and Contracts - - - - 30,162,962 30,162,962 (5) In-kind from local govt. only - - - - - -

TOT. OTHER GOVT. FUNDING = - - - - 50,835,759 50,835,759

IC. ALL OTHER REVENUES (1) 1st & 2nd Party Payments - - - - 1,472,711 1,472,711 (2) 3rd Party Payments (except Medicare) - - - - - - (3) Medicare - - - - - - (4) Contributions and Donations - 1,091 - 1,091 6,736,824 6,737,915 (5) Other - Interest & Misc - - - - 183,009 183,009 (6) Refunds - - - - - - (7) In-kind - - - - 3,054,013 3,054,013

TOT. ALL OTHER REVENUES = - 1,091 - 1,091 11,446,557 11,447,648

TOTAL FUNDING = $ 3,136,367 91,157,867 - 91,157,867 62,282,316 153,440,183


36





PART II: ACTUAL EXPENSES


AMH/CMH/ASA/CSA

EXPENSE CATEGORIESAftercare/ Follow-up Assessment

Case Management

Children's Emergency Stabilization Special Projects

Community Forensic Beds - Adult

ServicesCrisis

Stabilization

Crisis Support -

EmergencyDay/ Night

Drop-In/ Self-Help Centers

IIA. PERSONNEL EXPENSES (1) Salaries $ - - 24,578 - - - - - - (2) Fringe Benefits - - 3,142 - - - - - -

TOTAL PERSONNEL EXPENSES - - 27,720 - - - - - -

IIB. OTHER EXPENSES (1) Building Occupancy - - 2,301 - - - - - - (2) Professional Services - - - - - - - - - (3) Travel - - 2,998 - - - - - - (4) Equipment - - 243 - - - - - - (5) Food Services - - - - - - - - - (6) Medical and Pharmacy - - - - - - - - - (7) Subcontracted Services: - - - - - - - - -

From Northeast Region 118,238 387,823 3,541,492 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989 Other - - - - - - - - -

(8) Insurance - - 455 - - - - - - (9) Interest Paid - - - - - - - - - (10) Operating Supplies & Expenses - - 1,003 - - - - - - (11) Other - - 713 - - - - - - (12) Donated Items - - - - - - - - -

TOTAL OTHER EXPENSES 118,238 387,823 3,549,205 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989

TOTAL PERSONAL AND OTHER EXPENSES 118,238 387,823 3,576,925 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989

IIC. DISTRIBUTED INDIRECT COSTS (a) Other Support Costs (Optional) - - - - - - - - - (b) Administration - - 3,348 - - - - - -

TOTAL DISTRIBUTED INDIRECT COSTS - - 3,348 - - - - - -

TOTAL ACTUAL OPERATING EXPENSES 118,238 387,823 3,580,273 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989

IID. UNALLOWABLE COSTS - - 138 - - - - - -

TOTAL ALLOWABLE OPERATING EXPENSES $ 118,238 387,823 3,580,411 587,666 1,045,897 14,531,620 7,619,450 963,691 745,989

IIF. CAPITAL EXPENDITURES $ - - - - - - - - -

37


AMH/CMH/ASA/CSAFlorida

Assertive Community Treatment

(FACT) Team HIV Services

Incidental Expenses

Indigent Psych

Medication Program

Information & Referral

In-Home/ On-site

Special Projects

Adult Mental Health

Intensive Case

Manage-ment

Medical Services

Mental Health

Clubhouse Services

Methadone Treatment

- - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

6,080,627 549,375 527,950 115,739 694,284 283,984 1,017,716 314,274 5,123,418 259,993 289,667 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

6,080,627 549,375 527,950 115,739 694,284 283,984 1,017,716 314,274 5,123,418 259,993 289,667

6,080,627 549,375 527,950 115,739 694,284 283,984 1,017,716 314,274 5,123,418 259,993 289,667

- - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - -

6,080,627 549,375 527,950 115,739 694,284 283,984 1,017,716 314,274 5,123,418 259,993 289,667

- - - - - - - - - - -

6,080,627 549,375 527,950 115,739 694,284 283,984 1,017,716 314,274 5,123,418 259,993 289,667

- - - - - - - - - - -







AMH/CMH/ASA/CSA

EXPENSE CATEGORIES Outreach

PATH Community

Support Services Federal Prevention

Respite Services SA Detox

Sheltered Employment

Special Projects

Adult Substance

AbuseSupported

Living TASC

IIA. PERSONNEL EXPENSES (1) Salaries $ - - 18,542 - - - - - - (2) Fringe Benefits - - 2,371 - - - - - -

TOTAL PERSONNEL EXPENSES - - 20,913 - - - - - -

IIB. OTHER EXPENSES (1) Building Occupancy - - 1,735 - - - - - - (2) Professional Services - - - - - - - - - (3) Travel - - 2,261 - - - - - - (4) Equipment - - - - - - - - - (5) Food Services - - - - - - - - - (6) Medical and Pharmacy - - - - - - - - - (7) Subcontracted Services: - - - - - - - - -

From Northeast Region 1,374,859 716,687 4,271,270 38,787 6,594,940 86,338 1,679,754 227,450 480,603 Other - - - - - - - - -

(8) Insurance - - 344 - - - - - - (9) Interest Paid - - - - - - - - - (10) Operating Supplies & Expenses - - 756 - - - - - - (11) Other - - 538 - - - - - - (12) Donated Items - - - - - - - - -

TOTAL OTHER EXPENSES 1,374,859 716,687 4,276,904 38,787 6,594,940 86,338 1,679,754 227,450 480,603

TOTAL PERSONAL AND OTHER EXPENSES 1,374,859 716,687 4,297,817 38,787 6,594,940 86,338 1,679,754 227,450 480,603

IIC. DISTRIBUTED INDIRECT COSTS (a) Other Support Costs (Optional) - - - - - - - - - (b) Administration - - 2,525 - - - - - -

TOTAL DISTRIBUTED INDIRECT COSTS - - 2,525 - - - - - -

TOTAL ACTUAL OPERATING EXPENSES 1,374,859 716,687 4,300,342 38,787 6,594,940 86,338 1,679,754 227,450 480,603

IID. UNALLOWABLE COSTS - - 104 - - - - - -

OTAL ALLOWABLE OPERATING EXPENSES $ 1,374,859 716,687 4,300,446 38,787 6,594,940 86,338 1,679,754 227,450 480,603

IIF. CAPITAL EXPENDITURES $ - - - - - - - - -

38

cc08 cc08 cc08 SCPSTATE-DESIGNATED SAMH COST CENTERS

STATE SAMH-FUNDED COST CENTERSAMH/CMH/ASA/CSA

Intervention OutpatientResidential

Services

Room and Board with Supervision Bnet

Purchased Residential Therapuetic

ServicesRecovery Support

Total for AMH/CMH/

ASA/CSA

- - - - - - - 43,120 - - - - - - - 5,513

- - - - - - - 48,633

- - - - - - - 4,036 - - - - - - - - - - - - - - - 5,259 - - - - - - - 243 - - - - - - - - - - - - - - - - - - - - - - - -

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 87,956,364 - - - - - - - - - - - - - - - 799 - - - - - - - - - - - - - - - 1,759 - - - - - - - 1,251 - - - - - - - -

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 87,969,711

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 88,018,344

- - - - - - - - - - - - - - - 5,873

- - - - - - - 5,873

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 88,024,217

- - - - - - - 242

1,885,206 5,589,178 16,018,872 3,035,766 962,843 194,583 335 88,024,459

- - - - - - - -

AUDIT SCHEDULESUBSTANCE ABUSE & MENTAL HEALTH SERVICES





EXPENSE CATEGORIES

ME Administrative

Services

Total for State SAMH Cost

Centers

Total for Non-State-Funded SAMH Cost

Centers

Tot. for All State-

Designated SAMH Cost

CentersNon-SAMH Cost Centers Administration Advancement Total Expenses

IIA. PERSONNEL EXPENSES (1) Salaries $ 1,485,222 1,528,342 - 1,528,342 23,050,020 2,032,267 111,255 26,721,884 (2) Fringe Benefits 236,349 241,862 - 241,862 4,248,367 431,687 14,517 4,936,433

L EXPENSES 1,721,571 1,770,204 - 1,770,204 27,298,387 2,463,954 125,772 31,658,317

IIB. OTHER EXPENSES (1) Building Occupancy 139,992 144,028 - 144,028 2,555,012 209,844 13,152 2,922,036 (2) Professional Services 725,968 725,968 - 725,968 830,492 356,995 4,009 1,917,464 (3) Travel 75,848 81,107 - 81,107 1,236,287 45,109 18,011 1,380,514 (4) Equipment 57,560 57,803 - 57,803 2,197,177 70,544 6,805 2,332,329 (5) Food Services 93 93 - 93 789,133 42 - 789,268 (6) Medical and Pharmacy - - - - - - - - (7) Subcontracted Services: -

From Northeast Region - 87,956,364 - 87,956,364 - - - 87,956,364 Other - - - - 6,876,224 - - 6,876,224

(8) Insurance 20,770 21,569 - 21,569 642,177 33,226 1,271 698,243 (9) Interest Paid 10 10 - 10 256,958 7,403 - 264,371 (10) Operating Supplies & Expenses 100,932 102,691 - 102,691 7,496,587 133,837 38,499 7,771,614 (11) Other 46,915 48,166 - 48,166 621,774 243,988 4,170 918,098 (12) Donated Items - - - - 2,977,657 76,356 - 3,054,013

R EXPENSES 1,168,088 89,137,799 - 89,137,799 26,479,478 1,177,344 85,917 116,880,538

R EXPENSES 2,889,659 90,908,003 - 90,908,003 53,777,865 3,641,298 211,689 148,538,855

IIC. DISTRIBUTED INDIRECT COSTS (a) Other Support Costs (Optional) - - - - - - - - (b) Administration 202,287 208,160 - 208,160 3,385,592 (3,593,752) - -

RECT COSTS 202,287 208,160 - 208,160 3,385,592 (3,593,752) - -

G EXPENSES 3,091,946 91,116,163 - 91,116,163 57,163,457 47,546 211,689 148,538,855

IID. UNALLOWABLE COSTS 3,586 3,828 - 3,828 84,468 47,546 10 135,842

G EXPENSES $ 3,088,360 91,112,335 - 91,112,335 57,078,989 - 211,679 148,403,013

IIF. CAPITAL EXPENDITURES $ 73,356 73,356 - 73,356 820,722 17,484 - 911,562

39


Schedule of State Earnings


1 Total Expenditures (Excluding Managing Entity Expenditures) * $ 57,490,545

2 Less: Other State and Federal Funds (49,951,128)

3 Less: Non-Match SAMH Funds (52,908)

4 Less: Unallowable Costs (1,591,312)

5 Total Allowable Expenditures 5,895,197

6 Maximum Available Earnings 4,421,398

7 Amount of State Funds Requiring Match 11,137

8 Amount Due to Department $ -

NOTE:

* Total Expenditures, Excluding Managing Entity Expenditures

Total expenditures $ 148,538,855 Total managing entity expenditures (91,048,310)

$ 57,490,545

The above schedule excludes expenditures related to the Northeast SAMH Managing Entity contract. Lutheran Services Florida, Inc. (LSF) has met their match requirements related to the amount of State funds requiring match ($46,319,755) for contract EH003 through match provided by their subcontractors. Management has received schedules of State Earnings from each subcontractor or reviewed other documentation indicating that their individual match has been met.

40


Substance Abuse & Mental Health ServicesSchedule of Bed-Day Availability Payments*


* This schedule does not apply for the year ended June 30, 2014.

41


Substance Abuse & Mental Health ServicesSchedule of Related Party Transaction Adjustments*


* There were no related party transaction adjustments for the year ended June 30, 2014.

42

INTERNAL CONTROL AND COMPLIANCE




43

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an

Audit of Consolidated Financial Statements Performed in Accordance With Government Auditing Standards

The Board of Directors Lutheran Services Florida, Inc. & Subsidiaries: 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 consolidated financial statements of Lutheran Services Florida, Inc. & Subsidiaries, which comprise the consolidated statement of financial position as of June 30, 2014, and the related consolidated statements of unrestricted support and revenue, expenses and other changes in unrestricted net assets, changes in net assets, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated December 3, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Lutheran Services Florida, Inc. & Subsidiaries’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of Lutheran Services Florida, Inc.& Subsidiaries’ internal control. Accordingly, we do not express an opinion on the effectiveness of Lutheran Services Florida, Inc. & Subsidiaries’ 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 Organization’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

44

Compliance and Other Matters As part of obtaining reasonable assurance about whether Lutheran Services Florida, Inc. & Subsidiaries’ consolidated financial statements are free from material misstatement, we performed tests of their 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 consolidated financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 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 Organization’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 Organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.





45

Independent Auditors' Report on Compliance for Each Major Federal Program and State Project and on Internal Control Over Compliance Required by

OMB Circular A-133 and Chapter 10.650, Rules of the State of Florida Auditor General

The Board of Directors Lutheran Services Florida, Inc. & Subsidiaries:

Report on Compliance for Each Major Federal Program and State Project We have audited Lutheran Services Florida, Inc. & Subsidiaries’ compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement and the requirements described in the Department of Financial Services’ State Projects Compliance Supplement, that could have a direct and material effect on each of its major federal programs and state projects for the year ended June 30, 2014. Lutheran Services Florida, Inc. & Subsidiaries’ major federal programs and state projects are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs and state projects. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of Lutheran Services Florida, Inc. & Subsidiaries’ major federal programs and state projects based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Chapter 10.650, Rules of the State of Florida Auditor General. Those standards, OMB Circular A-133, and Chapter 10.650, Rules of the State of Florida Auditor General, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about Lutheran Services Florida, Inc. & Subsidiaries’ compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program and state project. However, our audit does not provide a legal determination of Lutheran Services Florida, Inc. & Subsidiaries’ compliance.

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Opinion on Each Major Federal Program and State Project In our opinion, Lutheran Services Florida, Inc. & Subsidiaries 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 and state projects for the year ended June 30, 2014. Report on Internal Control Over Compliance Management of Lutheran Services Florida, Inc. & Subsidiaries is responsible for establishing and maintaining effective internal control over compliance with the requirements referred to above. In planning and performing our audit, we considered Lutheran Services Florida, Inc. & Subsidiaries’ internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program and state project 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 state project and to test and report on internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.650, 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 Lutheran Services Florida, Inc. & Subsidiaries’ internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state project on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project 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 or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133 and Chapter 10.650. Accordingly, this report is not suitable for any other purpose.


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Schedule of Findings and Questioned Costs

Year ended June 30, 2014 (Page 1 of 2)

(A) Summary of Audit Results

1. The auditors’ report expresses an unmodified opinion on the consolidated financial statements of Lutheran Services Florida, Inc. & Subsidiaries.

2. No significant deficiencies relating to the audit of the consolidated financial statements are

reported in the Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Consolidated Financial Statements Performed in Accordance with Government Auditing Standards.

3. No instances of noncompliance material to the consolidated financial statements of Lutheran

Services Florida, Inc. & Subsidiaries were disclosed during the audit.

4. No significant deficiencies relating to the audit of the major federal programs and state projects are reported in the Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project and on Internal Control Over Compliance Required by OMB Circular A-133 and Chapter 10.650, Rules of the State of Florida Auditor General.

5. The auditors’ report on compliance for the major federal award programs and state projects for

Lutheran Services Florida, Inc. expresses an unmodified opinion.

6. Audit findings relative to the major federal award programs and state projects for Lutheran Services Florida, Inc. & Subsidiaries are reported in Part C. and Part D. of this schedule.

7. The programs tested as major federal programs and state projects were:

Federal Programs:CFDA# Program

10.558 Children and Adult Care Food Program93.150 Projects for Assistance in Transition from Homelessness93.600 Head Start93.767 Children's Health Insurance Program93.778 Medical Assistance Programs93.958 Block Grants for Community Mental Health Services93.959 Block Grants for Prevention and Treatment of Substance Abuse

State Projects:CFSA# Project

60.114 Community Forensic Beds and Competency Restoration Training80.005 Children and Families in Need of Services

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Schedule of Findings and Questioned Costs

Year ended June 30, 2014 (Page 2 of 2)

8. The threshold for distinguishing Types A and B programs was $2,093,030 for major federal

programs and $300,000 for major state projects.

9. Lutheran Services Florida, Inc. & Subsidiaries were determined to be low-risk auditees. (B) Findings - Audit of Financial Statements None. (C) Findings and Questioned Costs - Major Federal Award Programs Audit

None.

(D) Findings and Questioned Costs - Major State Financial Assistance Projects

None.

(E) Other Issues

A Summary Schedule of Prior Audit Findings is not required because there were no prior audit findings related to a major federal program or to a major state project.




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Management Letter The Board of Directors Lutheran Services Florida, Inc.& Subsidiaries We have audited the consolidated financial statements of Lutheran Services Florida, Inc. & Subsidiaries as of and for the fiscal year ended June 30, 2014, and have issued our report thereon dated December 3, 2014. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter 10.650, Rules of the State of Florida Auditor General. We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Consolidated Financial Statements Performed in Accordance with Government Auditing Standards, our Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project and on Internal Control over Compliance Required by OMB Circular A-133 and Chapter 10.650, Rules of the State of Florida Auditor General, and the Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated December 3, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.650, Rules of the State of Florida Auditor General, which requires disclosure in the management letter of violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse that have an effect on the consolidated financial statements or State Project amounts that is less than material but more than inconsequential. In addition, for matters that have an inconsequential effect on the consolidated financial statements or State project amounts, considering both quantitative and qualitative factors, the following may be reported based on professional judgment: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts or abuse that have occurred, or are likely to have occurred, (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, the following matter is required to be disclosed:

Expansion of Accounting Department

Over the past two fiscal years, the Organization has experienced significant growth in the size and number of programs being administered. While the Organization has expanded its accounting staff during the past two years, we recommend that management consider upgrading some of the accounting positions which are currently open to higher level positions to enable the Organization to weather future periods of turnover and to improve the timeliness of monthly account reconciliations and closing procedures. Planned Corrective Action: Management agrees with the recommendations above and plans to upgrade certain open accounting positions by hiring more experienced staff with advanced degrees and to expand the number of accountants on staff.2014

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Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties.


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