SCHOOL DISTRICT OF BOROUGH OF STONE HARBOR · SCHOOL DISTRICT OF BOROUGH OF STONE HARBOR ... B-6...

SCHOOL DISTRICT

OF

BOROUGH OF STONE HARBOR

Borough of Stone Harbor Board of EducationStone Harbor, New Jersey

Comprehensive Annual Financial ReportFor the Fiscal Year Ended June 30, 2012

Comprehensive AnnualFinancial Report

of the

Borough of Stone Harbor Board of Education

Stone Harbor, New JerseyFor the Fiscal Year Ended June 30, 2012

Prepared by

Borough of Stone Harbor Board of Education

Finance Department

TABLE OF CONTENTSINTRODUCTORY SECTION Page

Letter of Transmittal 1-5Organizational Chart 6Roster of Officials 7Consultants and Advisors 8

FINANCIAL SECTION

Independent Auditor's Report 9-11

Required Supplementary Information - Part IManagement's Discussion and Analysis 12-20

Basic Financial Statements

A District-wide Financial Statements:

A-1 Statement of Net Assets 21A-2 Statement of Activities 22

B Fund Financial Statement

Governmental Funds:B-1 Balance Sheet 23B-2 Statement of Revenues, Expenditures, and Changes in Fund Balances 24B-3 Reconciliation of the Statement of Revenues, Expenditures, and

Changes in Fund Balances of Governmental Funds to the Statement 25 of Activities

Proprietary Funds:B-4 Statement of Net Assets 26B-5 Statement of Revenues, Expenses, and Changes in Net Assets 27B-6 Statement of Cash Flows 28

Fiduciary Funds:B-7 Statement of Fiduciary Net Assets 29B-8 Statement of Changes in Fiduciary Net Assets 30

Notes to the Financial Statements 31-48

TABLE OF CONTENTS (continued)Required Supplemental Information - Part II Page

C Budgetary Comparison Schedules

C-1 Budgetary Comparison Schedule - General Fund 49-56C-1a Combining Schedule of Revenues, Expenditures, and Changes

in Fund Balance - Budget to Actual N/AC-1b Education Jobs Fund Program - Budget to Actual 57C-2 Budgetary Comparison Schedule - Special Revenue Fund 58-59

Notes to the Required Supplementary Information

C-4 Budget-to-GAAP Reconciliation 60

Other Supplementary Information

D School Level Schedules:D-1 Combining Balance Sheet N/AD-2 Blended Resource Fund - Schedule of Expenditures

Allocated by Resource Type - Actual N/AD-3 Blended Resource Fund - Schedule of Blended

Expenditures - Budget and Actual N/A

E Special Revenue Fund:

E-1 Combining Schedule of Revenues and Expenditures Special Revenue Fund - Budgetary Basis 61

E-2 Preschool Education Aid Schedule of Expenditures - Budgetary Basis N/A

F Capital Projects Fund:F-1 Summary Schedule of Project Expenditures N/AF-2 Summary Schedule of Revenues and Expenditures N/A

G Proprietary Funds

Enterprise Fund:G-1 Combining Statement of Net Assets N/AG-2 Combining Statement of Revenues, Expenses, and

Changes in Fund Net Assets N/AG-3 Combining Statement of Cash Flows N/A

TABLE OF CONTENTS (continued)Page

Internal Service Fund:G-4 Combining Statement of Net Assets N/AG-5 Combining Statement of Revenues, Expenses, and

Changes in Fund Net Assets N/AG-6 Combining Statement of Cash Flows N/A

H Fiduciary Funds:

H-1 Combining Statement of Fiduciary Net Assets 62H-2 Student Activity Agency Fund Statement of Changes in Assets 63

and LiabilitiesH-3 Student Activity Agency Fund Schedule of Receipts and

Disbursements 64H-4 Payroll Agency Fund Statement of Changes in Assets

and Liabilities 65

I Long-Term Debt:

I-1 Schedule of Serial Bonds N/AI-2 Schedule of Obligations under Capital Leases N/AI-3 Debt Service Fund Budgetary Comparison Schedule N/A

STATISTICAL SECTION (Unaudited)

Introduction to the Statistical Section

Financial TrendsJ-1 Net Assets by Component 66J-2 Changes in Net Assets 67-68J-3 Fund Balances - Governmental Funds 69J-4 Changes in Fund Balances - Governmental Funds 70J-5 General Fund Other Local Revenue by Source 71

Revenue CapacityJ-6 Assessed Value and Estimated Actual Value of Taxable Property 72J-7 Direct and Overlapping Property Tax Rates 73J-8 Principal Property Taxpayers 74J-9 Property Tax Levies and Collections 75

Debt CapacityJ-10 Ratios of Outstanding Debt by Type 76J-11 Ratios of General Bonded Debt Outstanding 77J-12 Direct and Overlapping Governmental Activities Debt 78J-13 Legal Debt Margin Information 79Demographic and Economic InformationJ-14 Demographic and Economic Statistics 80J-15 Principal Employers 81

TABLE OF CONTENTS (continued)STATISTICAL SECTION (Unaudited) (Continued) Page

Operating InformationJ-16 Full-time Equivalent District Employees by Function/Program 82J-17 Operating Statistics 83J-18 School Building Information 84J-19 Schedule of Required Maintenance Expenditures

by School Facility 85J-20 Insurance Schedule 86

SINGLE AUDIT SECTION

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 87-88

Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and New Jersey OMB Circular Letter 04-04 N/A

K-1 Schedule of Expenditures of Federal Awards, Schedule A 89

K-2 Schedule of Expenditures of State Financial Assistance, Schedule B 90

Notes to the Schedules of Awards and Financial Assistance 91-93

Schedule of Findings and Question Costs Part I - Summary of Auditor's Results N/A Part 2 - Schedule of Financial Statement Findings 94 Part 3 - Schedule of State Award Findings and Questioned Costs 94

Summary Schedule of Prior Audit Findings 94

Introductory Section

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STONE HARBOR BOARD OF EDUCATION 275 93rd STREET STONE HARBOR, NJ 08247

PH #609-368-4596 X24 FAX #609-368-6545

STACEY LaROCCA-TRACY DR. RENEE MURTAUGH LINDA FIORI Chief School Administrator Supervisor of Curriculum Business Administrator

& Instruction September 21, 2012 Honorable President and Members of the Board of Education Borough of Stone Harbor School District County of Cape May Stone Harbor, New Jersey Dear Board Members: The comprehensive annual financial report of the Borough of Stone Harbor School District (District) for the fiscal year ended June 30, 2012, is hereby submitted. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with the management of the Board of Education (Board). To the best of our knowledge and belief, the data presented in this report is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the District. All disclosures necessary to enable the reader to gain an understanding of the District's financial activities have been included. The comprehensive annual financial report is presented in four sections: introductory, financial, statistical and single audit. The introductory section includes this transmittal letter, the District's organizational chart and a list of principal officials. The financial section includes the Management’s Discussion and Analysis, basic financial statements and schedules, as well as the auditor's report thereon. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The District is not required to undergo an annual single audit in conformity with the provisions of the Single Audit Act, OMB Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations, and State Treasury Circular Letter 04-04 OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. However, the auditor's report on the internal control structure and compliance with applicable laws and regulations and findings and recommendations, are included in the single audit section of this report.

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1) REPORTING ENTITY AND ITS SERVICES: The Borough of Stone Harbor School District is an independent reporting entity as set forth in Section 2100 of the GASB Codification of Governmental Accounting and Financial Reporting Standards. All funds and account groups of the District are included in this report. The Borough of Stone Harbor Board of Education and the school district constitute the District's reporting entity. The District provides a full range of educational services appropriate to grade levels K through 4 and includes servicing Avalon students as tuition students to the District. Students in grade levels 5 through 8 attend Avalon School District. Additionally, it provides tuition for grades 9 through 12 to Middle Township High School and to the Cape May County Special Services School District. These include regular, as well as special education for handicapped students. The District completed the 2011-2012 fiscal year with an enrollment of 73 students, which is 2 students below the previous year’s enrollment. The following details the changes in the student enrollment of the District over the last ten years.

Average Daily Enrollment

Fiscal Student Percent Year Enrollment Change

2011-2012 73 (2.7)% 2010-2011 75 19.0% 2009-2010 63 (19.3)% 2008-2009 78 (7.1)% 2007-2008 84 (12.5)% 2006-2007 96 12.9% 2005-2006 85 2% 2004-2005 83 (4.6)% 2003-2004 87 (9.4)% 2002-2003 96 5.9%

2) ECONOMIC CONDITION AND OUTLOOK: Stone Harbor Borough is an affluent seashore community consisting primarily of residential properties. The estimated 866 permanent, year round resident population (2010 U.S. Bureau of Census, Population Division) swells to approximately 25,000 during the summer season. There is no major industry and very little room for growth in both the residential and business districts. Most residential properties are used for income purposes (summer rentals).

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3) MAJOR INIATIVES: Students continued to score above the state and national averages During the 2011-12 school year the district of Stone Harbor & Avalon implemented a shared instructional model for educating students on the island. Stone Harbor Elementary School will educate all the K-4 students & Avalon Elementary School will educate grades 5-8. We continue to align our curriculum syllabus K-8 with the New Jersey State Department’s Common Core Content Standards and with the Work Place Readiness Standards. Technology continues to play a supplemental role in all academic areas. 4) INTERNAL ACCOUNTING CONTROLS: Management of the District is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). Internal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by the District management. As a recipient of federal awards and state financial assistance, the District also is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to those programs. Internal control is also subject to periodic evaluation by the District management. 5) BUDGETARY CONTROLS: In addition to internal accounting controls, the District maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the voters of the municipality. Annual appropriated budgets are adopted for the general fund and the special revenue fund. Project-length budgets are approved for the capital improvements accounted for in the capital projects fund. The final budget amount as amended for the fiscal year is reflected in the financial section. An encumbrance accounting system is used to record outstanding purchase commitments on a line item basis. Open encumbrances at year-end are either canceled or are included as re-appropriations of fund balance in the subsequent year. Those amounts to be re-appropriated are reported as reservations of fund balance at June 30, 2012.

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6) ACCOUNTING SYSTEM AND REPORTS: The District's accounting records reflect generally accepted accounting principles, as promulgated by the Governmental Accounting Standards Board (GASB). The accounting system of the District is organized on the basis of funds and account groups. These funds and account groups are explained in "Notes to the Financial Statements", Note 1. 7) CASH MANAGEMENT: The investment policy of the District is guided in large part by state statute as detailed in "Notes to the Financial Statements”, Note 2. The District has adopted a cash management plan which requires it to deposit public funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Act ("GUDPA"). GUDPA was enacted in 1970 to protect Governmental Units from a loss of funds on deposit with a failed banking institution in New Jersey. The law requires governmental units to deposit public funds only in public depositories located in New Jersey, where the funds are secured in accordance with the Act. 8) RISK MANAGEMENT: The Board carries various forms of insurance, including, but not limited to, general liability, automobile liability, hazard and theft insurance on property and contents, and fidelity bonds. 9) OTHER INFORMATION: Independent Audit - State statutes require an annual audit by independent certified public accountants or registered municipal accountants. The accounting firm of Ford Scott & Associates, LLC, CPAs, was selected by the Board. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of the Single Audit Act, OMB Circular A-133 and State Treasury Circular Letter 04-04 OMB. The auditor's report on the general purpose financial statements and combining and individual fund statements and schedules are included in the financial section of this report. The auditor's reports related specifically to the single audit are included in the single audit section of this report.

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10) ACKNOWLEDGMENTS:

We would like to express our appreciation to the members of the Borough of Stone Harbor Board of Education for their concern in providing fiscal accountability to the citizens and taxpayers of the school district and thereby contributing their full support to the development and maintenance of our financial operation. The preparation of this report could not have been accomplished without the efficient and dedicated services of our financial and accounting staff.

Respectfully submitted,

Linda Fiori Business Administrator

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BOROUGH OF STONE HARBOR BOARD OF EDUCATION

STONE HARBOR, NEW JERSEY

ROSTER OF OFFICIALSJune 30, 2012

TermMembers of the Board of Education Expires

Mr., John Atwood President 2014

Mr. David Hoy, Vice President 2014

Dr. John McAllister 2013

Mr. William Stump 2012

Ms. Terri Hand 2012

Mr. Brian Heenan (Avalon Representative) 2014

Other Officials

Mrs. Stacey LaRocca-Tracy, Chief School Administrator

Ms. Linda Fiori, School Business Administrator

Ms. Patricia Wagner, Treasurer of School Monies

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BOROUGH OF STONE HARBOR BOARD OF EDUCATIONConsultants and Advisors

Audit Firm

Ford Scott & Associates, LLC1535 Haven Avenue

PO Box 538Ocean City, NJ 08226

(609) 399-6333

Attorney

Alan R. Schmoll, Esq.Capehart Scatchard Attorneys at Law

Laurel Corporate Center8000 Midlantic Drive, Suite 300 South

Mount Laurel, New Jersey 08504

Official Depository

Sturdy Savings Bank9417 Third Avenue

P.O. Box 98Stone Harbor, New Jersey 08247

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Financial Section

Independent Auditor’s Report

Honorable President and Members of the Board of Education Borough of Stone Harbor School District County of Cape May, New Jersey We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Board of Education of the Borough of Stone Harbor School District in the County of Cape May, State of New Jersey, as of and for the year ended June 30, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Borough of Stone Harbor Board of Education’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and in compliance with audit requirements as prescribed by the Division of Finance, Department of Education, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund and the aggregate remaining fund information of the Borough of Stone Harbor Board of Education, in the County of Cape May, State of New Jersey, as of June 30, 2012 and the respective changes in financial position and cash flows, where applicable, for the year then ended in conformity with accounting principles generally accepted in the United States of America.

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In accordance with Government Auditing Standards, we have also issued our report dated September 21, 2012 on our consideration of the Borough of Stone Harbor Board of Education’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the 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. Accounting principles generally accepted in the United States of America require that the Management Discussion and Analysis and the Budgetary Comparison Information identified in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements. The schedule of expenditures of federal and state awards is presented for purposes of additional analysis as required by the U.S Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and New Jersey Office of Management and Budget Circular 04-04 and is also not a required part of the basic financial statements. The supplementary information, as listed in the table of contents, and the schedule of expenditures of federal and state awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or

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to the financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In ouropinion, the information is fairly stated in all material respects in relation to the financialstatements as a whole.

%4d Scoi~ ~ oC6~e4, £4?

Ford Scott & Associates, LLCCertified Public Accountants

September 21, 2012

PARobertLicensed Public School AccountantNo. CS00667

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Required Supplemental InformationPart I

MANAGEMENT’S DISCUSSION AND ANALYSIS This section of the Borough of Stone Harbor School District (“District”) annual financial report presents our discussion and analysis of the District’s financial performance during the fiscal year that ended on June 30, 2012. Please read it in conjunction with the transmittal letter at the front of this report and the District’s financial statement. FINANCIAL HIGHLIGHTS

• The net assets of the District decreased compared to the prior year as a result of an excess of expenditures over revenues.

• The State of New Jersey reimbursed the District $70,632 during the fiscal year ended June 30, 2012 for the employer’s share of social security contributions. The State of New Jersey also paid $100,744 in pension contributions and retiree health coverage for TPAF members as calculated on their base salaries on behalf of the District. This amount, which is not budgeted, is included as both a revenue and appropriation in the financial statements.

• As indicated by New Jersey State Statutes, the unreserved fund balance of the general fund is limited to 2% of the total general fund expenditures or $250,000, whichever is greater. Any excess is required to be designated as Reserved Fund Balance – Excess Surplus and included in the next year’s budget as budgeted fund balance. As of June 30, 2012 the District had excess surplus of $372,479, of which $221,498 was required to be budgeted as a revenue for the year ending June 30, 2013 and $150,981 is designated for subsequent year budgets.

• During the fiscal year ended June 30, 2012, the District’s expenses were approximately $21,000 more than total revenue realized in the fund financial statements.

OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of four parts – management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for special revenue, proprietary, and fiduciary funds. The basic financial statements include two kinds of statements that present different views of the District.

• The first two statements are government-wide financial statements that provide both long-term and short-term information about the District’s overall financial status.

• The remaining statements are fund financial statements that focus on individual parts of the District’s government, reporting on the District’s operations in more detail than the government-wide statements.

The governmental funds statements tell how general government services like instruction were financed in the short term as well as what remains for future spending.

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Proprietary fund statements offer short- and long-term financial information about the activities the District operates like businesses, such as the milk program.

Fiduciary fund statements provide information about the financial relationships – like the unemployment trust fund – in which the District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong.

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A-1 shows how the required parts of this annual report are arranged and relate to one another. Figure A-1 summarizes the major features of the District’s financial statements, including the portion of the District’s government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

Figure A-1 Major Features of Borough of Stone Harbor Board of Education’s

Government-wide and Fund Financial Statements Fund Statements Government

wide Governmental Proprietary Fiduciary

Statements Funds Funds Funds Scope Entire District

(except fiduciary funds)

The activities of the District that are not

proprietary or fiduciary, such

as food service and

student activities

Activities the District

operates similar to private

businesses; food service

Instances in which the District is the trustee or

agent for someone else’s resources, such

as payroll agency and

student activities.Required financial

statements

Statement of net assets

Statement of

activities

Balance sheet

Statement of revenues,

expenditures, and changes

in fund balances

Statement of net assets

Statement of

revenues, expenses,

and changes in net assets

Statement of cash flows

Statement of fiduciary net

assets

Statement of changes in

fiduciary net assets

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Accounting basis and measurement focus

Accrual accounting and

economic resources focus

Modified accrual

accounting and current

financial resources

focus

Accrual accounting

and economic resources

focus

Accrual accounting and

economic resources focus

Type of asset/liability information

All assets and liabilities, both financial and capital, and

short-term and long-term.

Only assets expected to be used up

and liabilities that come due

during the year or soon thereafter; no capital assets

included.

All assets and liabilities, both financial and capital, and short-term

and long-term.

All assets and liabilities, both short-term and

long-term.

Type of inflow/outflow information

All revenues and expenses during

the year, regardless of when cash is

received or paid.

Revenues for which cash is

received during or soon after the end of the year;

expenditures when goods or services have been

received and payment is

due during the year or soon

thereafter

All revenues and

expenses, regardless of when cash is received or

paid.

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

Government-wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the District’s net assets and how they have changed. Net assets – the difference between the District’s assets and liabilities – is one way to measure the District’s financial health, or position.

• Over time, increases or decreases in the District’s net assets are an indicator of whether its financial health is improving or deteriorating, respectively.

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• To assess the overall health of the District you need to consider additional non-financial factors such as changes in the Borough’s property tax base and the condition of the District’s facilities.

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

• Governmental activities – most of the District’s basic services are included here, such as instruction, transportation, administration, and plant operations. Property taxes and state and federal grants finance most of these activities.

• Business-type activities – the District charges fees to customers to help it cover the costs of certain services it provides. The District’s milk fund program is included here.

Fund Financial Statements The fund financial statements provide more detailed information about the District’s most significant funds – not the District as a whole. Funds are accounting devices that the District uses to keep track of specific sources of funding and spending for particular purposes. The District has three kinds of funds:

• Governmental funds – Most of the District’s basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement that explains the relationship (or differences) between them.

• Proprietary funds – Services for which the District charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long- and short-term financial information. In fact, the District’s enterprise funds (one type of proprietary fund) are the same as its business-type activities, but provide more detail and additional information, such as cash flows.

• Fiduciary funds – The District is the trustee, or fiduciary, for other assets that - because of a trust arrangement – can be used only for the trust beneficiaries. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the District’s fiduciary activities are reported in separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the District’s

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government-wide financial statements because the District cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Net assets. The District’s governmental activities net assets decreased between fiscal years 2012 and 2011 as a result of an excess of expenditures over revenues. The business-type activities net assets increased slightly due to an excess of revenues over costs.

2012 2011 2012 2011 2012 2011

Current and other assets $1,327,257 1,293,792 719 690 1,327,976 1,294,482 Capital assets 1,734,899 1,794,232 1,734,899 1,794,232 Total assets 3,062,156 3,088,024 719 690 3,062,875 3,088,714

Other liabilities 180,628 124,001 180,628 124,001 Total liabilities 180,628 124,001 - - 180,628 124,001

Net assets Invested in capital assets 1,734,899 1,794,232 1,734,899 1,794,232 Restricted 1,015,417 1,041,086 1,015,417 1,041,086 Unrestricted 131,212 128,705 719 690 131,931 129,395 Total net assets $2,881,528 2,964,023 719 690 2,882,247 2,964,713

Governmental ActivitiesBusiness-type

Activities Total

Net assets of the District decreased slightly due to an excess of expenses over revenues. Also, included in long-term liabilities are amounts due to be paid on compensated absences. As required by New Jersey Statutes, the unrestricted net assets of the District are not permitted to exceed 2% of total general fund expenditures, after reductions for On-behalf TPAF pension and social security. Any excess must be appropriated as budgeted fund balance in the subsequent years’ budget. As of June 30, 2012, the District had excess fund balance in the amount of $372,479 of which $221,498 has been included in the 2012-2013 budget and the remaining $150,981 will be included in the 2013-2014 budget. Changes in net assets. The total general fund revenue of the District increased approximately $813,000 due to an increase in tuition revenue and an increase in general fund state aid. Approximately 7% of the District’s governmental funds revenue comes from the State of New Jersey in the form of non-restricted federal and state aid. This aid is based on the District’s enrollment as well as other factors related to the District’s formula aid which is a relationship of the adequacy budget and the Borough’s property values

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and income of the residents. The District expenses are primarily related to instruction, administration, and plant operations.

Amount Percentage Amount Percentage

Property taxes $ 2,215,104 65.17% 2,215,103 85.57%Unrestricted Federal and State aid 221,509 6.52% 159,464 6.16%Tuition 924,680 27.20% 170,849 6.60%Operating grants and contributions 33,475 0.98% 33,612 1.30%Other 4,380 0.13% 9,618 0.37%Totals $ 3,399,148 100.00% 2,588,646 100.00%

2012 2011

{This space intentionally left blank}

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Governmental Activities The following schedule summarizes the governmental and business-type activities of the District during the 2012 and 2011 fiscal years:

Governmental Activities Business-type Activities2012 2011 2012 2011 2012 2011

RevenuesProgram revenue Charges for services $ 937,233 276,376 848 1,111 938,081 277,487 State grants and entitlements 33,475 33,612 33,475 33,612 General revenues Property taxes 2,215,104 2,215,103 2,215,104 2,215,103 State aid entitlements 221,509 159,464 221,509 159,464 Other 4,380 9,618 4,380 9,618 Total revenues 3,411,701 2,694,173 848 1,111 3,412,549 2,695,284

ExpensesInstruction: Regular 1,122,672 1,229,421 1,122,672 1,229,421 Special Education 108,924 54,763 108,924 54,763 Other Instruction 121,088 15,157 121,088 15,157 Support services: Tuition 1,182,222 196,793 1,182,222 196,793 Student & instruction related 431,288 367,940 431,288 367,940 School administration services 90,564 93,023 90,564 93,023 General & business admin 100,103 93,526 100,103 93,526 Plant operations & maintenance 267,438 238,060 267,438 238,060 Pupil transportation 57,344 43,280 57,344 43,280 Internal service fund 12,553 105,527 12,553 105,527 Business-type activities 819 1,845 819 1,845 Total expenses 3,494,196 2,437,490 819 1,845 3,495,015 2,439,335 Increase/(Decrease) in net assets (82,495) 256,683 29 (734) (82,466) 255,949

Totals

Business-type Activities Operating and non-operating revenues of the District’s business-type activities decreased $263 from the previous year and expenses decreased by $1,026.

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS As of the year end, the governmental funds reported a combined fund balance of $1,263,777 which is approximately $21,000 lower than the beginning of the year. General Fund Budgetary Highlights

18

General Fund Budgetary Highlights As further explained in the Notes to the Financial Statements, annual appropriated budgets are prepared in the spring of each year for the general and special revenue funds. The budgets are submitted to the County office and, as a Type II School District, are approved by the voters annually. Beginning with the 2012-2013 budget voter approval is no longer required if the budget meets certain statutory requirements. Transfers of appropriations may be made by Board resolution at any time during the fiscal year. The District is permitted to encumber funds throughout the year for purchases ordered but not yet received. Any open encumbrances as of June 30th carry over to the next fiscal year and are added to the appropriation reflected in the certified budget. After adjusting total revenue reported on Exhibit C-1 for the Reimbursed TPAF Social Security Contribution and on-behalf TPAF Pension Contributions, which are not budgeted, the District’s actual revenue exceeded the budgeted revenue by approximately $15,000. This is a result of excess unbudgeted state aid. Again, after adjusting for the Reimbursed TPAF Social Security Contribution and on-behalf TPAF Pension Contributions, actual expenditures were below the budgeted appropriations by approximately $178,000. CAPITAL ASSET Capital Assets At the end of 2012, the District had invested $1.73 million in a broad range of capital assets, including land, buildings, vehicles and machinery.

2012 2011 2012 2011 2012 2011

Land 410,630 410,630 410,630 410,630 Buildings and Bldg improvements 1,298,748 1,349,603 1,298,748 1,349,603 Machinery & equipment 25,521 33,999 25,521 33,999

- Total 1,734,899 1,794,232 - - 1,734,899 1,794,232

Governmental Activities Business-type Acticities Totals

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The student population in the District has fluctuated over the past 10 years, however state aid has remained fairly constant despite a decrease in student population. The District budget for the 2013 fiscal year includes required supplies and anticipated contractual increases in salaries and employee benefits.

19

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This financial report is designed to present users (residents, receiving districts, and creditors) with a general overview of the District’s finances and to demonstrate the District’s accountability. If you have questions about the report or need additional financial information, contact the District’s business administrator at 275 93rd Street, Stone Harbor, New Jersey, 08243.

20

BASIC FINANCIAL STATEMENTS

The basic financial statements provide a financial overview of the district'soperation. These financial statements present the financial position andoperating results of all funds as of June 30, 2012.

DISTRICT-WIDE FINANCIAL STATEMENTS

The district-wide financial statements provide a financial overview of the district'soperation. These financial statements present the financial position andoperating results of the governmental and business-like funds as of June 30, 2012.

EXHIBIT A-1

Governmental Business-typeActivities Activities Total

ASSETSCash and cash equivalents 1,241,265$ 719 1,241,984 Receivables, net 560 560 Due from Agency Fund 533 533 Due from other governments 84,899 84,899 Capital assets, net Land and land improvements 410,630 410,630 Depreciable assets, net of depreciation 1,324,269 1,324,269

Total Assets 3,062,156 719 3,062,875

LIABILITIESDeferred revenue 200 200 Noncurrent liabilities: Due within one year - - Due beyond one year 117,148 117,148 Total liabilities 180,628 - 180,628

NET ASSETSInvested in capital assets, net of related debt 1,734,899 - 1,734,899

BOROUGH OF STONE HARBOR SCHOOL DISTRICTStatement of Net Assets

June 30, 2012

Restricted for: Other purposes 1,015,417 1,015,417 Unrestricted 131,212 719 131,931 Total net assets 2,881,528$ 719 2,882,247

See Accompanying Notes to the Financial Statements21

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22

FUND FINANCIAL STATEMENTS

The combining and individual fund and account group statements and schedulespresent more detailed information for the individual funds in a format that segregatesinformation by fund type. The statements are segregated as follows:

Governmental Funds - This section consists of the general and special revenue funds.

Proprietary Funds - This section consists of the milk program and the internal service fund. These funds are operated in a manner similar to a private businessenterprise.

Fiduciary Funds - This section consists of the unemployment compensation insurancetrust fund, the student activity and payroll agency funds and the scholarship expendabletrust fund.

EXHIBIT B-1

TotalSpecial Governmental

General Revenue FundsASSETS

Cash and Cash Equivalents 1,241,065$ 200 1,241,265 Due from other funds 533 533 Intergovernmental receivable - state 299 299 Intergovernmental receivable - other 84,600 84,600 Other Accounts Receivable 560 560

Total Assets 1,327,057 200 1,327,257

LIABILITIES AND FUND BALANCES

LIABILITIES:Accounts payable 63,280 63,280 Deferred revenue 200 200

Total Liabilities 63,280 200 63,480

FUND BALANCES Restricted for:

Excess surplus 150,981 150,981

BOROUGH OF STONE HARBOR SCHOOL DISTRICTBalance Sheet

Governmental FundsJune 30, 2012

See Accompanying Notes to the Financial Statements

Excess surplus - designated for subsequent year's expenditures 221,498 221,498

Committed to:Capital reserve account 210,304 210,304 Maintenance reserve account 140,000 140,000 Emergency reserve account 250,000 250,000 Designated for subsequent year's expenditures 37,310 37,310

Assigned to:Encumbrances 5,324 5,324

Unreserved, reported in:General fund 248,360 248,360 Special revenue fund -

Total Fund Balances 1,263,777 - 1,263,777

Total Liabilities and Fund Balances 1,327,057$ 200

Amounts reported for governmental activities in the statementof net assets (A-1) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds 1,734,899

Long-term liabilities are not due and payable in the current period and therfore are not reported in the funds. (117,148)

Net assets of governmental activities 2,881,528


EXHIBIT B-2BOROUGH OF STONE HARBOR SCHOOL DISTRICT

Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental Funds

for the Fiscal Year ended June 30, 2012

Special Total General Revenue Governmental

Fund Fund Funds

REVENUES:Local tax levy 2,215,104$ 2,215,104 Interest earned on capital reserve funds 200 200 Tuition 924,680 924,680 Miscellaneous 4,180 4,180 Local sources 3,911 3,911 State sources 219,232 219,232 Federal sources 2,277 29,564 31,841

Total Revenues 3,365,673 33,475 3,399,148

EXPENDITURES:Current expense

Instruction 876,494 12,061 888,555 Special education instruction 85,869 85,869 Other instruction 107,908 107,908

Support services and undistributed costs:Tuition 995,934 995,934 Student & instruction related services 354,491 354,491 School administrative services 38,687 38,687 Other administrative services 78,438 78,438 Central services 30,524 30,524 Plant operations and maintenance 221,416 221,416 Pupil transportation 48,308 48,308 Unallocated benefits 537,599 537,599

Capital outlay 10,790 21,414 32,204

Total Expenditures 3,386,458 33,475 3,419,933

Excess (deficiency) of revenuesover (under) expenditures (20,785) - (20,785)

Net change in fund balances (20,785) - (20,785)

Fund Balances, July 1 (restated) 1,284,562 1,284,562

Fund Balances, June 30 1,263,777$ - 1,263,777


EXHIBIT B-3

Total net change in fund balances - governmental funds (from B-2) (20,785)$

Amounts reported for governmental activities in the statementof activities (A-2) are different because:

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

Depreciation expense (69,932) Capital outlays 10,599 (59,333)

In the statement of activities, certain operating expenses, e.g., compensated absences (vacations) are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are reported in the amount of financial resources used (retired). When the earned amount exceeds the retired amount, the difference is reduction in the reconciliation (-); when the retired amount exceeds the earned amount the difference is an addition to the reconciliation (+). (2,377)

Change in net assets of governmental activities (82,495)$

for the Year Ended June 30, 2012

BOROUGH OF STONE HARBOR SCHOOL DISTRICTReconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities

See Accompanying Notes to the Financial StatementsSee Accompanying Notes to the Financial Statements25

EXHIBIT B-4

Non Major FundsBusiness-type Activities - Governmental

Enterprise Funds ActivitiesMilk Internal ServiceFund Fund

ASSETS

Current assets:Cash and cash equivalents 719$ Accounts receivableInventories Total current assets 719 -

Noncurrent assets:Furniture, machinery & equipment Less accumulated depreciation Total noncurrent assets - - Total assets 719 -

Liaibilities

Current liabilities

BOROUGH OF STONE HARBOR SCHOOL DISTRICTStatement of Net Assets

June 30, 2012Proprietary Funds

Interfund payableAccounts payable - Total current liabilities - -

Total liabilities - -

NET ASSETS

Invested in capital assets, net of related debt - - Unrestricted 719 Total net assets 719$ -


EXHIBIT B-5

Business-typeActivities - Governmental


OPERATING REVENUES:Local sources:

Daily sales - Non-reimbursable programs 843$ Other revenue 5 12,553

Total Operating Revenues 848 12,553

OPERATING EXPENSES:Salaries 10,156 Employee Benefits 2,397 Cost of sales 819

Total Operating Expenses 819 12,553

Operating profit 29 -

Net loss before contributions and transfers 29 -

BOROUGH OF STONE HARBOR SCHOOL DISTRICTStatement of Revenues, Expenses and Changes in Fund Net Assets

Proprietary Fundsfor the Fiscal Year ended June 30, 2012

Non Major Funds


OPERATING TRANSFERS:Transfers in - General Fund

Change in net assets 29 -

Total net assets - beginning 690

Total net assets - ending 719$ -


EXHIBIT B-6

Business-typeActivities - Governmental


Cash Flows from Operating Activities:Receipts from customers and others 848$ 12,553 Payments to employees (10,156) Payments for employee benefits (2,397) Payments to suppliers (819)

Net cash provided by operating activities 29 -

Net increase in cash and cash equivalents 29 Balances - beginning of year 690 Balances - end of year 719$ -

Reconciliation of operating loss to net cash used by operating activitiesOperating income 29$ - Adjustments to reconcile operating loss to cash used by operating activities

Change in assets and liabilities:

None

Non Major Funds

BOROUGH OF STONE HARBOR SCHOOL DISTRICT Statement of Cash Flows

Proprietary Fundfor the Fiscal Year ended June 30, 2012


Total adjustments - - Net cash (used) by operating activities 29$ -


Scholarship Unemployment AgencyFund Compensation Trust Fund

ASSETS:Cash and Cash Equivalents 2,102$ 39,228 34,672

Total Assets 2,102 39,228 34,672

LIABILITIES:Payable to Student Groups 3,325 Payroll liabilites 30,814 Interfund Payable 533

Total Liabilities - - 34,672 NET ASSETS

Held in trust for unemployment claims and other purposes 2,102$ 39,228

June 30, 2012

EXHIBIT B-7BOROUGH OF STONE HARBOR SCHOOL DISTRICT

Statement of Fiduciary Net AssetsFiduciary Funds


EXHIBIT B-8

Unemployment ScholarshipCompensation Trust Fund

ADDITIONSContributions: Plan member 1,967$ Board Total Contributions 1,967 -

Investment earnings: Interest 47 3 Net investment earnings 47 3 Total additions 2,014 3

DEDUCTIONSUnemployment claims 2,145 Total deductions 2,145 - Change in net assets (131) 3 Net assets—beginning of the year 39,359 2,099 Net assets—end of the year 39,228$ 2,102

BOROUGH OF STONE HARBOR SCHOOL DISTRICTStatement of Changes in Fiduciary Net Assets

Fiduciary Fundsfor the Year Ended June 30, 2012


Borough of Stone Harbor School District Notes to Financial Statements June 30, 2012

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Borough of Stone Harbor School District is an instrumentality of the State of New Jersey, established to function as an educational institution. The Board consists of elected officials and is responsible for the fiscal control of the District. A superintendent is appointed by the Board and is responsible for the administrative control of the District. The financial statements of the Board of Education (Board) of the Borough of Stone Harbor School District (District) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. In its accounting and financial reporting, the District follows the pronouncements of the Governmental Accounting Standards Board (GASB). The more significant accounting policies established in GAAP and used by the District are discussed below. A. REPORTING ENTITY: The Borough of Stone Harbor School District is a Type II district located in the County of Cape May, State of New Jersey. As a Type II District, the School District functions independently through a Board of Education. The board is comprised of five board members and 1 representative from Avalon elected to three-year terms. The purpose of the district is to educate students in grades K-8. The Borough of Stone Harbor School District had an approximate enrollment at June 30, 2012 of 73 students. The primary criterion for including activities within the District's reporting entity, as set forth in Section 2100 of the GASB Codification of Governmental Accounting and Financial Reporting Standards, is whether:

the organization is legally separate (can sue or be sued in their own name) the District holds the corporate powers of the organization the District appoints a voting majority of the organization’s board the District is able to impose its will on the organization the organization has the potential to impose a financial benefit/burden on the

District there is a fiscal dependency by the organization on the District

Based on the aforementioned criteria, the District has no component units.

31


B. BASIC FINANCIAL STATEMENTS – GOVERNMENT-WIDE STATEMENTS: The District’s basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District’s major funds). Both the government-wide and fund financial statements categorize primary activities as either governmental or business type. The District’s general and special revenue activities are classified as governmental activities. The District’s milk fund program is classified as business-type activities. Fiduciary funds are excluded from the government-wide financial statements. In the governmental-wide Statement of Net Assets, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, (b) and are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The District’s net assets are reported in three parts-invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The District first utilizes restricted resources to finance qualifying activities. The government-wide Statement of Activities reports both the gross and net cost of each of the District’s functions and business-type activities (milk fund). The functions are also supported by general government revenues (property taxes, tuition, certain intergovernmental revenues, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (regular instruction, student & instruction related services, etc.) or a business-type activity. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. The net costs (by function or business-type activity) are normally covered by general revenue (property taxes, tuition, interest income, etc.).

a. The District does allocate indirect costs such as depreciation expense, compensated absences, On-behalf TPAF Pension Contributions, and Reimbursed TPAF Social Security Contributions.

The government-wide focus is more on the sustainability of the District as an entity and the change in the District’s net assets resulting from the current year’s activities. C. BASIC FINANCIAL STATEMENTS – FUND FINANCIAL STATEMENTS The financial transactions of the District are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, reserves, fund equity, revenues

32


and expenditures/expenses. The various funds are reported by generic classification within the financial statements. The following fund types are used by the District:

1. Governmental Funds: The focus of the governmental funds’ measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the governmental funds of the District.

a. General fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund.

b. Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for a specific purpose.

2. Proprietary Funds: The focus of proprietary fund measurement is upon determination of operating income, changes in net assets, financial position, and cash flows. The generally accepted accounting principles applicable are those similar to businesses in the private sector. The following is a description of the proprietary funds of the District:

a. Enterprise funds are required to be used to account for operations for which a fee is charged to external users for goods or services and the activity (a) is financed with debt that is solely secured by a pledge of the net revenues, (b) has third party requirements that the cost of providing services, including capital costs, be recovered with fees and charges or (c) establishes fees and charges based on a pricing policy designated to recover similar costs.

3. Fiduciary Funds: Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support District programs. The reporting focus is on net assets and changes in net assets and are reported using accounting principles similar to proprietary funds. The emphasis in fund financial statements is on the major funds in either the governmental or business-type activities categories. Non-major funds by category are summarized into a single column. GASBS No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund

33


category or the governmental and enterprise combined) for the determination of major funds. The non-major funds are combined in a column in the fund financial statements. The District’s fiduciary funds are presented in the fiduciary fund financial statements by type (pension, private purpose and agency). Since by definition these assets are being held for the benefit of a third party (other local governments), private parties, pension participants, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. D. BASIS OF ACCOUNTING Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied. 1. Accrual: Both governmental and business-type activities in the government-wide financial statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. 2. Modified Accrual: The governmental fund financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or within 60 days after year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. E. FINANCIAL STATEMENT AMOUNTS 1. Cash and Cash Equivalents: Cash and cash equivalents include petty cash, change funds, cash in banks and all highly liquid investments with a maturity of three months or less at the time of purchase and are stated at cost plus accrued interest. U.S. Treasury and agency obligations and certificates of deposit with maturities of one year or less when purchased are stated at cost. All other investments are stated at fair value. For the purpose of determining cash equivalents the District considers all investments with an original maturity of three months or less as cash equivalents.

34


New Jersey school districts are limited as to the types of investments and types of financial institutions they may invest in. New Jersey statute 18A:20-37 provides a list of permissible investments that may be purchased by New Jersey school districts. Additionally, the District has adopted a cash management plan that requires it to deposit public funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Act (“GUDPA”). GUDPA was enacted in 1970 to protect Governmental Units from a loss of funds on deposit with a failed banking institution in New Jersey. NJSA 17:9-41 et. Seq. establishes the requirements for the security of deposits of governmental units. The statute requires that no governmental unit shall deposit public funds in a public depository unless such funds are secured in accordance with the Act. Public depositories include Savings and Loan institutions, banks (both state and national banks) and savings banks the deposits of which are federally insured. All public depositories must pledge collateral, having a market value at least equal to five percent of the average daily balance of collected public funds, to secure the deposits of Governmental Units. If a public depository fails, the collateral it has pledged, plus the collateral of all other public depositories, is available to pay the full amount of their deposits to the Governmental units. 2. Investments: Investments, including deferred compensation and pension funds, are stated at fair value, (quoted market price or the best available estimate). Interest earned on investments in the Capital Projects Fund is recognized in the District’s General Fund. 3. Capital Assets: Capital assets purchased or acquired with an original cost of $2,000 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives:

Buildings 20-50 years Machinery and equipment 5-10 years Improvements 10-20 years

GASBS No. 34 requires the District to report and depreciate new infrastructure assets. Infrastructure assets include roads, parking lots, underground pipe, etc. Neither their

35


historical cost nor related depreciation has historically been reported in the financial statements. The District has included all infrastructure assets in the current fiscal year. 4. Fund Balances – Governmental Funds Stone Harbor Board of Education elected to implement GASB No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, in fiscal year 2011. In the fund financial statements, governmental funds report the following classifications of fund balance:

Nonspendable – includes amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact.

Restricted – includes amounts restricted by external sources

(creditors, laws of other governments, ect.) or by constitutional provision or enabling legislation.

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

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

Unassigned – includes amounts that have not been assigned to

other funds or restricted, committed or assigned to a specific purpose within the General Fund. The District reports all amounts that meet the unrestricted General Fund Balance Policy described below as unassigned:

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balance are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed.

36


5. Revenues: Substantially all governmental fund revenues are accrued. Property taxes are susceptible to accrual and under New Jersey State Statutes a municipality is required to remit to its school district the entire balance of taxes in the amount voted upon or certified, prior to the end of the school year. The District records the entire approved tax levy as revenue (accrued) at the start of the fiscal year, since the revenue is both measurable and available. Subsidies and grants to proprietary funds, which finance either capital or current operations, are reported as non operating revenue based on GASBS No. 33. In applying GASBS No. 33 to grant revenues, the provider recognizes liabilities and expenses and recipient recognizes receivables and revenue when the applicable eligibility requirements, including requirements are met are reported as advances by the provider and deferred revenue by the recipient. 6. Expenditures: Expenses are recognized when the related fund liability is incurred. Inventory costs are reported in the period when inventory items are used, rather than in the period purchased. 7. Compensated Absences: Compensated absences are those absences for which employees will be paid, such as vacation, sick leave, and sabbatical leave. A liability for compensated absences that are attributable to services already rendered, and that are not contingent on a specific event that is outside the control of the District and its employees, is accrued as the employees earn the rights to the benefits. Compensated absences that relate to future services, or that are contingent on a specific event that is outside the control of the District and its employees, are accounted for in the period in which such services are rendered or in which such events take place. In governmental and similar trust funds, compensated absences that are expected to be liquidated with expendable available financial resources are reported as an expenditure and fund liability in the fund that will pay for the compensated absences. The remainder of the compensated absences liability is reported in the District-wide Financial Statements as a Governmental Activity. In proprietary and similar trust funds, compensated absences are recorded as an expense and liability of the fund that will pay for them. 8. Interfund Activity: Interfund activity is reported as either loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and

37


are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related costs as reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. 9. Budgets/Budgetary Control: Annual appropriated budgets are prepared in the spring of each year for the general, special revenue and debt service funds. The budgets are submitted to the county office for approval and are voted upon at the annual school election on the third Tuesday in April. Budgets are prepared using the modified accrual basis of accounting, except for the special revenue fund as described later. The legal level of budgetary control is established at line item accounts within each fund. Line item accounts are defined as the lowest (most specific) level of detail as established pursuant to the minimum chart of accounts referenced in N.J.A.C. 6:23-2(g). Transfers of appropriations may be made by School Board resolution at any time during the fiscal year. The following material transfers were made to/(from) budgetary line items during the year:

Budget Category From To

Regular programs - Purch. Prof and Technical Services 47,159 Tuition to other LEA's within the State - regular 109,500 Tuition to other LEA's within the State - special 101,450 Educational Media Services/ School Library - salaries 73,839 Educational Media Services/ School Library - Purch. Prof and Technical Services 47,211

Formal budgetary integration into the accounting system is employed as a management control device during the year. For governmental funds there are no substantial differences between the budgetary basis of accounting and generally accepted accounting principles with the exception of the legally mandated revenue recognition of the last state aid payment for budgetary purposes only and the special revenue fund as noted below. Encumbrance accounting is also employed as an extension of formal budgetary integration in the governmental fund types. Unencumbered appropriations lapse at fiscal year end.

38


The accounting records of the special revenue fund are maintained on the grant accounting budgetary basis. The grant accounting budgetary basis differs from GAAP in that the grant accounting budgetary basis recognizes encumbrances as expenditures and also recognizes the related revenues, whereas the GAAP basis does not. Sufficient supplemental records are maintained to allow for the presentation of GAAP basis financial reports.

10. Encumbrances: Under encumbrance accounting purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve a portion of the applicable appropriation. Open encumbrances in governmental funds, other than the special revenue fund, are reported as reservations of fund balances at fiscal year end as they do not constitute expenditures or liabilities but rather commitments related to unperformed contracts for goods and services. Open encumbrances in the special revenue fund, for which the District has received advances, are reflected in the balance sheet as deferred revenues at fiscal year end. The encumbered appropriation authority carries over into the next fiscal year. An entry will be made at the beginning of the next fiscal year to increase the appropriation reflected in the certified budget by the outstanding encumbrance amount as of the current fiscal year end. 11. Tuition Payable Tuition charges for the fiscal years 2011-12 were based on rates established by the receiving district. These rates are subject to change when the actual costs have been determined. 12. Tuition Receivable Tuition is received through an interlocal agreement negotiated annually with the Avalon Board of Education 13. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those results.

39


14. Allocation of Costs In the government-wide statement of activities, the District has allocated unallocated benefits to various programs based on the amended budget by program. NOTE 2. INVESTMENTS As of June 30, 2012, the District had no investments. Interest Rate Risk. The district does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. However, New Jersey Statutes 18A:20-37 limits the length of time for most investment to 397 days. Credit Risk. New Jersey Statutes 18A:20-37 limits district investments to those specified in the Statutes. The type of allowable investments are Bonds of the United States of America or of the district or the local units in which the district is located; obligations of federal agencies not exceeding 397 days; government money market mutual funds; the State of New Jersey Cash Management Plan; local government investment pools; or repurchase of fully collateralized securities. Concentration of Credit Risk. The district places no limit on the amount the district may invest in any one issuer. NOTE 3. CASH Custodial Credit Risk—Deposits. Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The district’s policy is based on New Jersey Statutes requiring cash be deposited only in New Jersey based banking institutions that participate in the New Jersey Governmental Depository Protection Act (GUDPA) or in qualified investments established in New Jersey Statutes 18A:20-37 that are treated as cash equivalents. Under the act, all demand deposits are covered by the Federal Deposit Insurance Corporation (FDIC). Public funds owned by the District in excess of FDIC insured amounts are protected by GUDPA. However, GUDPA does not protect intermingled trust funds such as salary withholding or student activity funds. As of June 30, 2012, $0 of the government’s bank balance of $1,465,813 was exposed to custodial credit risk. NOTE 4. CAPITAL RESERVE ACCOUNT A capital reserve account was established by the Borough of Stone Harbor Board of Education by the inclusion of $1 on October 11, 2000 for the accumulation of funds for the use as capital outlay expenditures in subsequent fiscal years. The capital reserve

40


account is maintained in the general fund and its activity is included in the general fund annual budget. Funds placed in the capital reserve account are restricted to capital projects in the district’s approved Long Range Facilities Plan (LRFP) and updated annually in the Quality Assurance Annual Report (QAAR). Upon submission of the LRFP to the department, a district may increase the balance in the capital reserve by appropriating funds in the annual general fund budget certified for taxes or by transfer by board resolution at year end (June 1 to June 30) of any unanticipated revenue or unexpended line-item appropriation amounts, or both. A district may also appropriate additional amounts when the express approval of the voters has been obtained either by a separate proposal at budget time or by a special question at one of the four special elections authorized pursuant to N.J.S.A 16:60-2. Pursuant to NJAC 6:23A-14.1(g), the balance in the account cannot at any time exceed the local support costs of uncompleted capital projects in its approved LRFP. The activity is shown as follows:

6/30/12 Beginning balance, July 1 $ 210,104Interest 200Ending balance, June 30 $ 210,304

NOTE 5. MAINTENANCE RESERVE New Jersey Statute 18A:7G-9 permits districts to accumulate funds for the required maintenance of a facility in accordance with the Educational Facilities Construction and Financing Act (EFCFA). The balance may only be increased through an appropriation in the annual general fund budget certified for taxes. Upon completion of a school facilities project, districts are required to submit a plan for the maintenance of that facility. As of June 30, 2012 the District has reserved $140,000 for maintenance.

41


NOTE 6. FIXED ASSETS Capital asset activity for the year ended June 30, 2012 was as follows:

Balance June 30,

2011 AdditionsDisposals/

Adjustments

Balance June 30,

2012Governmental Activities:Capital assets that are not beingdepreciated:

Land $ 410,630 410,630 Total capital assets not beingdepreciated 410,630 - - 410,630

Bldg and bldg improve 2,290,307 2,290,307

Site improvements 86,965 86,965 Machinery and Equipment 585,677 10,599 596,276 Total at historical cost 2,962,949 10,599 - 2,973,548

Less: Accumulated depreciation (1,579,347) (69,932) (1,649,279)Total capital assets being depr,net of accum depr 1,383,602 (59,333) 1,324,269

Governmental activitiescapital assets, net $1,794,232 (59,333) - 1,734,899

Depreciation expense as charged to governmental functions as follows: Regular instruction $ 34,966Special education 6,993Student & instruction related services 10,490School administrative expenses 6,993General and business administration 6,993Plant operations and maintenance 3,497 $ 69,932

42


NOTE 7. GENERAL LONG-TERM DEBT Long-term liability activity for the year ended June 30, 2011 was as follows:

Balance 6/30/2011 Issued Retired

Balance 6/30/2012

One year

Governmental Activities

$

Other liabilities:Compensated Absences Payable 114,771 62,433 60,056 117,148 - Governmental activities long-term liabilities $ 114,771 62,433 60,056 117,148 -

NOTE 8. PENSION PLANS Description of Plans All required employees of the District are covered by either the Public Employees’ Retirement System or the Teacher’s Pension and Annuity Fund cost-sharing multiple-employer defined benefit pension plans which have been established by state statute and are administered by the New Jersey Division of Pension and Benefits (Division). According to the State of New Jersey Administrative Code, all obligations of both Systems will be assumed by the State of New Jersey should the Systems terminate. The Division issues a publicly available financial report that includes the financial statements and required supplementary information for the Public Employees Retirement System and the Teachers’ Pension and Annuity Fund. These reports may be obtained by writing to the Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey, 08625 or the reports can be accessed on the internet at http://www.state.nj.us/treasury/pensions/annrpts_archive.htm. Teachers' Pension and Annuity Fund The Teachers' Pension and Annuity Fund was established in January, 1955 under the provisions of N.J.S.A. 18A:66 to provide retirement benefits, death, disability and medical benefits to certain qualified members. The Teachers’ Pension and Annuity Fund is considered a cost-sharing multiple-employer plan with a special funding situation, as under current statute, all employer contributions are made by the State of New Jersey on behalf of the District and the system’s other related non-contributing employers. Membership is mandatory for substantially all teachers or members of the professional staff certified by the State Board of Examiners, and employees of the

43


Department of Education who have titles that are unclassified, professional and certified. Public Employees' Retirement System The Public Employees' Retirement System was established in January, 1955 under the provisions of N.J.S.A. 43:15A to provide retirement, death, disability and medical benefits to certain qualified members. The Public Employees’ Retirement System is a cost-sharing multiple-employer plan. Membership is mandatory for substantially all full time employees of the State or any county, municipality, school district or public agency provided the employee is not required to be a member of another State-administered retirement system or other state or local jurisdiction. Funding Policy The contribution policy is set by N.J.S.A. 43:15A, Chapter 62, P.L. of 1994, Chapter 115, P.L. of 1997 and N.J.S.A. 18:66, and requires contributions by active members and contributing employers. Plan member and employer contributions may be amended by State of New Jersey legislation. TPAF and PERS provide for employee contributions of 5.5% of employees’ annual compensation, as defined. Employers are required to contribute at an actuarially determined rate in both TPAF and PERS. The current TPAF rate is 6.5% and the PERS rate is 6.5% of covered payroll. The School District’s contributions to TPAF for the years ending June 30, 2012, 2011 and 2010 were $33,467, $3,249, and $3,546 respectively, and paid by the State of New Jersey on behalf of the board. The required contributions for 2010 and 2011 were not made by the State of New Jersey. The School District’s contributions to PERS for the years ending June 30, 2012, 2011 and 2010 were $14,635, $13,820 and $10,813 respectively, equal to the required contributions for each year. During the fiscal years ended June 30, 2012, 2011 and 2010, the State of New Jersey contributed $67,277, $69,015, and $66,608, respectively, to the TPAF for post-retirement medical benefits on behalf of the Board. Also, in accordance with NJSA 18A:66-66 the State of New Jersey reimbursed the Board $70,632, $79,915, $78,058 during the same fiscal years for the employer’s share of social security contributions for TPAF members as calculated on their base salaries. These amounts, which are not required to be budgeted, have been included in the financial statements, and the combining and individual fund and account group statements and schedules as revenues and expenditures in accordance in GASB 27. NOTE 9. POST-RETIREMENT BENEFITS Chapter 384 of Public Laws 1987 and Chapter 6 of Public Laws 1990 required Teachers’ Pensions and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS), respectively, to fund post-retirement medical benefits for those State

44


employees who retire after accumulating 25 years of credited service or on a disability retirement. P.L. 2007, c. 103 amended the law to eliminate the funding of post-retirement medical benefits through the TPAF and PERS. It created separate funds outside of the pension plans for the funding and payment of post-retirement medical benefits for retired State employees and retired educational employees. As of June 30, 2011, there were 93,323 retirees eligible for post-retirement medical benefits. The cost of these benefits is funded through contributions by the State in accordance with Chapter 62, P.L. 1994. Funding of post-retirement medical premiums changed from a pre-funding basis to a pay-as-you-go basis beginning in Fiscal Year 1994. The State is also responsible for the cost attributable to Chapter 126, P.L. 1992, which provides free health benefits to members of PERS and the Alternate Benefit Program who retired from a board of education or county college with 25 years of service. The State paid $144 million toward Chapter 126 benefits for 15,709 eligible retired members in Fiscal Year 2011. NOTE 10. DEFERRED COMPENSATION The Board offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 403(b). The plans, which are administered by the entities listed below, permits participants to defer a portion of their salary until future years. Amounts deferred under the plans are not available to employees until termination, retirement, death or unforeseeable emergency. The plan administrators are as follows: Lincoln Investment Planning Travelers Insurance Company NOTE 11. COMPENSATED ABSENCES The District accounts for compensated absences (e.g. sick leave) as directed by Governmental Accounting Standards Board Statement No. 16 (GASB 16), “Accounting for Compensated Absences”. A liability for compensated absences attributable to services already rendered and not contingent on a specific event that is outside the control of the employer and employee is accrued as employees earn the rights to the benefits. District employees are granted vacation and sick leave in varying amounts under the District’s personnel policies. Unused sick leave may be accumulated and carried forward to subsequent years. Upon retirement for those who have not less than fifteen (15) years of service in the District, the District shall pay the employee for unused sick leave in accordance with the District’s agreements with the various employee unions. Vacation days not used during the year may only be carried forward with approval from the Superintendent.

45


In the district-wide Statement of Net Assets, the liabilities whose average maturities are greater than one year should be reported in two components – the amount due within one year and the amount due in more than one year. NOTE 12. LITIGATION From time to time, the District is a defendant in legal proceedings relating to its operations as a school district. In the best judgment of the District’s management, the outcome of any present legal proceedings will not have any adverse material affect on the accompanying financial statements. NOTE 13. FUND BALANCE APPROPRIATED General Fund – Of the $1,263,777 General Fund fund balance at June 30, 2012, $5,324 is reserved for encumbrances; $372,479 is reserved as excess surplus in accordance with N.J.S.A. 18A:7F-7 ($221,498 of the total reserve for excess surplus has been appropriated and also included as anticipated revenue for the year ending June 30, 2013); $37,310 has been legally restricted and included as anticipated revenue for the year ending June 30, 2013; $210,304 has been reserved in the Capital Reserve Account; $140,000 has been reserved in the Maintenance Reserve Account. $250,000 has been reserved in the Emergency Reserve Account and $248,360 is unreserved and undesignated. NOTE 14. CALCULATION OF EXCESS SURPLUS In accordance with NJSA 18A:7F-7, as amended by P.L. 2004, C.73 (S1701), the designation for Reserved Fund Balance – Excess Surplus is a required calculation. New Jersey school districts are required to reserve General Fund fund balance at the fiscal year end of June 30 if they did not appropriate a required minimum amount as budgeted fund balance in their subsequent years’ budget. The excess fund balance at June 30, 2012 is $372,479, of which $221,498 has been appropriated and included as anticipated revenue for the year ended June 30, 2013.

46


NOTE 15. INTERFUND RECEIVABLES AND PAYABLES As of June 30, 2012, an interfund remained on the various balance sheets of the Borough of Stone Harbor Board of Education.

From ToGeneral Fund: Agency Fund $ 533 Agency Fund: General Fund 533

533$ 533

Interfunds were created throughout the year due to short term borrowings to cover cash flow needs in the various funds. The fund financial interfunds were eliminated in the governmental-wide statements. NOTE 16. RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Property and Liability Insurance – The District maintains commercial insurance coverage for property, liability, student accident and surety bonds. During the fiscal year ended June 30, 2012 the District did not incur claims in excess of their coverage and the amount of coverage did not significantly decrease. New Jersey Unemployment Compensation Insurance –The District has elected to fund its New Jersey Unemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan, the School is required to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged to its account with the State. The School is billed quarterly for amounts due to the State. The following is a summary of District contributions, employee contributions, reimbursements to the State for benefits paid and the ending balance of the School's expendable trust fund for the current and prior year:

47


Fiscal Year

District Contributions

Employee Contributions

Amount Reimbursed

Ending Balance

2011-2012 $ 0 2,014 2,145 39,2282010-2011 $ 0 2,064 1,186 39,3592009-2010 $ 0 1,963 297 38,481

Worker’s Compensation Fund –The Board currently maintains traditional insurance for its worker’s compensation coverage. NOTE 17. ECONOMIC DEPENDENCY The District is heavily reliant on local property taxation to fund District operations. Property taxes funded 65% of the Districts 2011-2012 governmental operations. NOTE 18. RESTATEMENT OF BALANCES The net assets and general fund fund balance as of July 1, 2011 has been restated due to unrecorded accounts payable in the prior year. The net assets and general fund fund balance were reduced by $7,146 NOTE 19- SUBSEQUENT EVENTS The District has evaluated subsequent events through September 21, 2012, the date on which the financial statements were available to be issued, and no items were identified that require disclosure.

48

Required Supplemental InformationPart II

BUDGETARY COMPARISON SCHEDULES

The budgetary comparison schedules consist of the comparison of anticipatedrevenues and budgeted expenditures to actual results for the general and thespecial revenue funds.

EXH

IBIT

C-1

Var

ianc

e w

ithO

rigin

alB

udge

tFi

nal

Und

er/(O

ver)

Bud

get

Tran

sfer

sB

udge

tA

ctua

lFi

nal B

udge

t to

Act

ual

RE

VE

NU

ES

:Lo

cal s

ourc

es:

Loca

l tax

levy

2,21

5,10

4$

2,

215,

104

2,21

5,10

4

-

Inte

rest

ear

ned

on c

apita

l res

erve

fund

s10

0

100

20

0

200

-

Tu

ition

935,

600

93

5,60

0

924,

680

(10,

920)

Mis

cella

neou

s3,

084

3,08

4

4,

180

1,09

6

Tota

l loc

al s

ourc

es3,

153,

888

100

3,

153,

988

3,14

4,16

4

(9,8

24)

Sta

te s

ourc

es:

Spe

cial

Edu

catio

n A

id23

,025

23

,025

23,0

25

-

Sec

urity

Aid

1,72

3

1,

723

2,92

0

1,

197

A

djus

tmen

t Aid

-

4,63

1

4,

631

Tr

ansp

orta

tion

Aid

-

18,9

20

18,9

20

O

ther

Sta

te A

id-

29

9

299

On

beha

lf TP

AF

Pen

sion

Con

tribu

tions

(non

-bud

gete

d)-

10

0,74

4

10

0,74

4

Rei

mbu

rsed

TP

AF

Soc

ial S

ecur

ityC

ontri

butio

ns (n

on-b

udge

ted)

-

70,6

32

70,6

32

28

28

221

11

196

23

BO

RO

UG

H O

F ST

ON

E H

ARB

OR

SC

HO

OL

DIS

TRIC

T

for t

he F

isca

l Yea

r end

ed J

une

30, 2

012

Gen

eral

Fun

dB

udge

tary

Com

paris

on S

ched

ule

Tota

l sta

te s

ourc

es24

,748

-

24

,748

221,

171

196,

423

Fede

ral S

ourc

es:

Edu

catio

nal J

obs

Fund

2,20

8

69

2,27

7

2,

277

-

Tota

l fed

eral

sou

rces

2,20

8

69

2,27

7

2,

277

-

Tota

l Rev

enue

s3,

180,

844

169

3,

181,

013

3,36

7,61

2

186,

599

EXP

EN

DIT

UR

ES

:C

urre

nt E

xpen

se:

Reg

ular

pro

gram

s - I

nstru

ctio

n:S

alar

ies

of te

ache

rs:

Pre

scho

ol/k

inde

rgar

ten

110,

287

11

0,28

7

109,

284

1,

003

G

rade

s 1

- 558

8,16

3

(30,

467)

55

7,69

6

556,

830

86

6

G

rade

s 6

-8

85

85

85

-

Reg

ular

pro

gram

s - h

ome

inst

ruct

ion:

Sal

arie

s of

teac

hers

250

25

0

250

Reg

ular

pro

gram

s - u

ndis

tribu

ted

inst

ruct

ion:

Oth

er s

alar

ies

for i

nstru

ctio

n37

,092

(1

3,09

4)

23,9

98

23

,360

63

8

P

urch

ased

pro

fess

iona

l/ed

ucat

iona

l ser

vice

s4,

047

47,1

59

51,2

06

51

,206

-

P

urch

ased

tech

nica

l ser

vice

s50

0

500

50

0

O

ther

pur

chas

ed s

ervi

ces

14,8

00

(835

)

13

,965

7,73

7

6,

228

49

EXH

IBIT

C-1

Var

ianc

e w

ithO

rigin

alB

udge

tFi

nal

Und

er/(O

ver)

Bud

get

Tran

sfer

sB

udge

tA

ctua

lFi

nal B

udge

t to

Act

ual

BO

RO

UG

H O

F ST

ON

E H

ARB

OR

SC

HO

OL

DIS

TRIC

T

for t

he F

isca

l Yea

r end

ed J

une

30, 2

012

Gen

eral

Fun

dB

udge

tary

Com

paris

on S

ched

ule

Gen

eral

sup

plie

s11

8,64

3

(7,3

49)

11

1,29

4

105,

479

5,81

5

Text

book

s22

,960

22

,960

14,7

63

8,19

7

Oth

er o

bjec

ts12

,957

12

,957

7,75

0

5,

207

Tota

l reg

ular

pro

gram

s90

9,69

9

(4,5

01)

90

5,19

8

876,

494

28,7

04

Res

ourc

e ro

om/R

esou

rce

cent

er:

Sal

arie

s of

teac

hers

85,4

54

(568

)

84

,886

84,0

13

873

Gen

eral

sup

plie

s20

0

1,65

6

1,

856

1,85

6

-

Te

xtbo

oks

100

(7

7)

23

23

Tota

l res

ourc

e ro

om/re

sour

ce c

ente

r85

,754

1,

011

86,7

65

85

,869

89

6

Tota

l spe

cial

edu

catio

n - i

nstru

ctio

n85

,754

1,

011

86,7

65

85

,869

89

6

Bas

is S

kills

/Rem

edia

l - in

stru

ctio

n:S

alar

ies

of te

ache

rs10

3,70

5

103,

705

10

3,70

5

-

Tota

l res

ourc

e ro

om/re

sour

ce c

ente

r10

3,70

5

-

103,

705

10

3,70

5

-

Sch

ools

pons

ored

cocu

rricu

lara

ctiv

ities

-ins

truct

ion:

Sch

ool s

pons

ored

coc

urric

ular

act

iviti

es -

inst

ruct

ion:

Sal

arie

s7,

630

1,59

0

9,

220

4,20

3

5,

017

Tota

l sch

ool s

pons

ored

coc

urric

ular

ac

tiviti

es -

inst

ruct

ion

7,63

0

1,

590

9,22

0

4,

203

5,01

7

Com

mun

ity S

ervi

ceS

alar

ies

8,00

0

(5

,949

)

2,05

1

2,

051

Tota

l oth

er in

stru

ctio

nal p

rogr

ams

- ins

truct

ion

8,00

0

(5

,949

)

2,05

1

-

2,05

1

Tota

l - In

stru

ctio

n1,

114,

788

(7,8

49)

1,

106,

939

1,07

0,27

1

36,6

68

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IBIT

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IBIT

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59

EXHIBIT C-4

Note A - Explanation of Difference between Budgetary Inflows andOutflows and GAAP Revenues and Expenditures

General SpecialFund Revenue

Sources/inflows of resourcesActual amounts (budgetary basis) "revenue" from the budgetary 3,367,612$ 32,500

comparison schedule

Difference - budget to GAAP:Grant accounting budgetary basis differs from GAAP in that encumbrances are recognized as expenditures, and the related revenue is recognized

Prior year 975 Current year

State aid payment recognized for GAAP statements in thecurrent year, previously recognized for budgetary purposes.

State aid payment recognized for budgetary purposes, notrecognized for GAAP statements until the subsequent year. (1,939)

Total revenues reported on the statement of revenues,expenditures and changes in fund balances -governmental funds 3,365,673 33,475

Uses/outflows of resourcesActual amounts (budgetary basis) "total outflows" from the

budgetary comparison schedule 3,386,458 32,500

Differences - budget to GAAP:Encumbrances for supplies and equipment ordered butnot received are reported in the year the order is placedfor budgetary purposes, but in the year the suppliesare received for financial reporting purposes

Prior year 975 Current year

Total expenditures as reported on the statement of revenues,expenditures, and changes in fund balances -governmental funds 3,386,458$ 33,475

for the Fiscal Year Ended June 30, 2012

BOROUGH OF STONE HARBOR SCHOOL DISTRICTRequired Supplementary Information

Budgetary Comparison ScheduleNotes to Required Supplementary Information

60

Supplementary Information

SPECIAL REVENUE FUND

Special revenue funds are used to account for the proceeds of specific revenuesources (other than expendable trusts or major capital projects) that arelegally restricted to expenditures for specific purposes.

EX

HIB

IT E

-1B

OR

OU

GH

OF

STO

NE

HA

RB

OR

SC

HO

OL

DIS

TRIC

TS

peci

al R

even

ue F

und

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bini

ng S

ched

ule

of R

even

ues

and

Exp

endi

ture

sB

udge

tary

Bas

isfo

r the

Fis

cal Y

ear e

nded

Jun

e 30

, 201

2

Sm

all R

ural

Edu

catio

nI.D

.E.A

.A

chie

vem

ent

Par

t BI.D

.E.A

.Lo

cal

Gra

n tP

resc

hool

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t BP

rogr

ams

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ls

RE

VE

NU

ES

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dera

l sou

rces

17,5

03

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7

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te s

ourc

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cal S

ourc

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936

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6

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l Rev

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32

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RE

S:

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chni

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00

61

FIDUCIARY FUNDS

Trust funds are used to account for gifts and bequests to the school districtfor a specific purpose.

Unemployment Compensation Insurance Trust Fund -This is an expendable trust fund used to pay unemploymentcompensation insurance claims.

Agency funds are used to account for assets held by the school district as an agent for individuals, private organizations, other governments and/or otherfunds.

Agency Funds - This agency funds areused to account for the payroll transactions of the school districtand student activity funds

Scholarship Fund - This fund is anexpendable trust fund to provide for scholarships for districtstudents

NJ

Une

mpl

oym

ent

Com

pens

atio

nS

chol

arsh

ip

Stu

dent

Insu

ranc

eFu

ndA

ctiv

ityP

ayro

llTo

tal

AS

SE

TS:

Cas

h an

d ca

sh e

quiv

alen

ts39

,228

$

2,10

2

3,32

5

31,3

47

76,0

02

Tota

l Ass

ets

39,2

28

2,10

2

3,

325

31

,347

76,0

02

LIA

BIL

ITIE

S A

ND

N

ET

AS

SE

TS:

Exh

ibit

H-1

Age

ncy

June

30,

201

2C

ombi

ning

Sta

tem

ent o

f Fid

ucia

ry N

et A

sset

sFi

duci

ary

Fund

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Exp

enda

ble

Trus

t

Liab

ilitie

s:D

ue to

stu

dent

gro

ups

3,32

5

3,32

5

Pay

roll

dedu

ctio

ns a

nd w

ithho

ldin

gs30

,814

30

,814

In

terfu

nd p

ayab

le -

gene

ral f

und

533

53

3

Tota

l Lia

bilit

ies

-

-

3,32

5

31,3

47

34,6

72

Net

Ass

ets:

Res

erve

d fo

r fut

ure

unem

ploy

men

t cla

ims

39,2

28

39

,228

Tota

l Net

Ass

ets

39,2

28

2,

102

-

-

41

,330

Tota

l Lia

bilit

ies

and

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ance

s39

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$

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102

3,32

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4776

,002

62

EXHIBIT H-2

UnemploymentCompensation Scholarship

Trust Fund Total

ADDITIONS:Contributions: Plan Members 1,967$ 1,967

Total Contributions 1,967 - 1,967

Investment Earnings Interest 47 3 50

Net investment earnings 47 3 50

Total additions 2,014 3 2,017

BOROUGH OF STONE HARBOR SCHOOL DISTRICT

Fiduciary Fundfor the Fiscal Year ended June 30, 2012

Combining Statement of Changes in Fiduciary Net Assets

DEDUCTIONS:

Unemployment Claims 2,145 2,145

Total deductions 2,145 - 2,145

Change in net assets (131) 3 (128)

Net Assets, July 1 39,359 2,099 41,458

Net Assets, June 30 39,228$ 2,102 41,330

63

Balance Cash Cash BalanceJune 30, 2011 Receipts Disbursements June 30, 2012

Petty Cash Account 2,338$ 469 475 2,332 School fund account 993 696 696 993

Total Liabilities 3,331$ 1,165 1,171 3,325

EXHIBIT H-3BOROUGH OF STONE HARBOR SCHOOL DISTRICT

for the Fiscal Year ended June 30, 2012Schedule of Receipts and Disbursements

Student Activity Agency Fund

64

Balance BalanceJune 30, 2011 Additions Deletions June 30, 2012

ASSETS:Cash and cash equivalents 1,465$ 1,243,823 1,213,941 31,347

Total Assets 1,465 1,243,823 1,213,941 31,347

LIABILITIES:Net Payroll - 674,054 674,054 - Payroll deductions and witholdings 932 569,734 539,852 30,814 Interfunds payable 533 35 35 533

Total Liabilities 1,465$ 1,243,823 1,213,941 31,347

EXHIBIT H-4BOROUGH OF STONE HARBOR SCHOOL DISTRICT

Payroll Agency FundStatement of Changes in Assets and Liabilities

for the Fiscal Year ended June 30, 2012

65

Statistical Section

Governmental Accounting Standards Board (GASB) requires 10 years of statistical information to be included in the CAFR. However, due to the

change in the statistical requirements, information was unavailable for all 10 years.

J-1

2004

2005

2006

2007

2008

2009

2010

2011

2012

Gov

ernm

enta

l act

iviti

esIn

vest

ed in

cap

ital a

sset

s, n

et o

f rel

ated

deb

t1,

738,

591

1,

843,

998

1,

926,

542

2,

011,

094

1,

980,

340

1,

923,

663

1,

854,

129

1,

794,

232

1,

734,

899

R

estri

cted

81,5

05

63,5

49

80,0

40

432,

764

242,

118

365,

814

622,

660

1,04

1,08

6

1,01

5,41

7

Unr

estri

cted

124,

214

193,

426

382,

671

132,

691

269,

229

268,

872

230,

551

135,

851

131,

212

Tota

l gov

ernm

enta

l act

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es n

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944,

310

2,

100,

973

2,38

9,25

32,

576,

549

2,49

1,68

7

2,55

8,34

92,

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340

2,97

1,16

92,

881,

528

Bus

ines

s-ty

pe a

ctiv

ities

Inve

sted

in c

apita

l ass

ets,

net

of r

elat

ed d

ebt

Res

trict

edU

nres

trict

ed56

6

45

1

21

5

(5

6)

24

592

1,42

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690

719

Tota

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566

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71

9

Dis

trict

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vest

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ital a

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738,

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340

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923,

663

1,

854,

129

1,

794,

232

1,

734,

899

R

estri

cted

81,5

05

63,5

49

80,0

40

432,

764

242,

118

365,

814

622,

660

1,04

1,08

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7

Unr

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cted

124,

780

193,

877

382,

886

132,

635

269,

253

269,

464

231,

975

136,

541

131,

931

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trict

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sset

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944

876

210

142

42

389

468

257

649

32

491

711

255

894

12

708

764

297

185

92

882

247

BO

RO

UG

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ON

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AR

BO

R S

CH

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2,88

2,24

7

Sou

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CA

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cehd

ule

A-1

66

J-2

2004

2005

2006

2007

2008

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2010

2011

2012

Expe

nses

Gov

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stru

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egul

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5,12

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67

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2004

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pend

iture

s(2

11,9

97)

(3

96,8

65)

56

,399

214,

482

105,

753

3,

453

118,

468

26

8,11

2

256,

898

(23,

062)

Oth

er F

inan

cing

sou

rces

(use

s)Tr

ansf

er in

19

,305

16,8

77

Tr

ansf

ers

out

(19,

305)

(16,

877)

To

tal o

ther

fina

ncin

g so

urce

s (u

ses)

-

-

-

-

-

-

-

-

-

-

Net

cha

nge

in fu

nd b

alan

ces

(211

,997

)

(396

,865

)

56,3

99

21

4,48

2

10

5,75

3

3,45

3

11

8,46

8

268,

112

25

6,89

8

(2

3,06

2)

Sou

rce:

CA

FR S

ched

ule

B-2

70

J-5BOROUGH OF STONE HARBOR SCHOOL DISTRICT

General Fund Other Local Revenue by SourceLast Ten Fiscal Years

Unaudited

Fiscal Year Interest onEnded June 30, Investments Misc. Total

2003 8,385 15,482 23,867 2004 3,140 4,342 7,482 2005 5,506 3,165 8,671 2006 19,664 2,501 22,165 2007 28,037 1,647 29,684 2008 10,374 614 10,988 2009 8,778 2,992 11,770 2010 - 5,740 5,740 2011 100 12,662 12,762 2012 200 8,091 8,291

Source: District Records

71

J-6

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Ass

esse

d Va

lue

and

Act

ual V

alue

of T

axab

le P

rope

rty,

Last

Ten

Fis

cal Y

ears

Una

udite

d

Fis

cal

Yea

r E

nded

Ju

ne 3

0,

Vac

ant L

and

Res

iden

tial

Far

m

Reg

. Q

farm

C

omm

erci

al

Indu

stria

l A

partm

ent

Tot

al A

sses

sed

Val

ue

Les

s: T

ax-E

xem

pt

Pro

perty

P

ublic

Util

ities

a

Net

Val

uatio

n Ta

xabl

e

Tota

l Dire

ct

Sch

ool T

ax

Rat

e b

Est

imat

ed A

ctua

l (C

ount

y E

qual

ized

V

alue

)

2003

1,80

1,88

8,96

3

1,80

1,88

8,96

3

1,

801,

888,

963

2,18

5,28

4,48

4

2004

1,81

6,53

5,99

3

1,81

6,53

5,99

3

1,

816,

535,

993

2,48

3,63

0,86

4

2005

*3,

567,

039,

533

3,

567,

039,

533

3,56

7,03

9,53

3

2,

927,

465,

846

20

063,

584,

546,

474

3,

584,

546,

474

3,58

4,54

6,47

4

3,

878,

062,

153

20

073,

607,

791,

890

3,

607,

791,

890

3,60

7,79

1,89

0

4,

645,

963,

491

20

083,

626,

262,

310

3,

626,

262,

310

3,62

6,26

2,31

0

4,

799,

805,

585

20

0970

,404

,000

4,

472,

084,

700

16

1,78

2,80

0

4,37

0,20

0

4,70

8,64

1,70

0

29

5,26

8,50

0

55

7,25

9

4,41

3,93

0,45

9

4,

856,

819,

777

20

1068

,696

,300

4,

482,

120,

600

16

1,78

2,80

0

4,37

0,20

0

4,71

6,96

9,90

0

29

5,26

8,50

0

55

7,70

3

4,42

2,25

9,10

3

4,

619,

894,

891

20

1167

,064

,000

4,

490,

125,

700

16

1,48

9,80

0

4,37

0,20

0

4,72

3,04

9,70

0

29

5,26

8,50

0

48

9,02

7

4,42

8,27

0,22

7

4,

498,

890,

590

20

1275

,408

,100

4,

490,

726,

300

15

9,44

9,90

0

4,37

0,20

0

4,72

9,95

4,50

0

29

5,26

8,50

0

47

3,99

1

4,43

5,15

9,99

1

4,

449,

303,

435

Sou

rce:

Dis

trict

reco

rds

Tax

list s

umm

ary

& M

unic

ipal

Tax

Ass

esso

r

Not

e:

*R

eass

essm

ent p

erfo

rmed

dur

ing

the

year

.

aTa

xabl

e V

alue

of M

achi

nery

, Im

plem

ents

and

Equ

ipm

ent o

f Tel

epho

ne, T

eleg

raph

and

Mes

seng

er S

yste

m C

ompa

nies

bTa

x ra

tes

are

per $

100

Rea

l pro

perty

is re

quire

d to

be

asse

ssed

at s

ome

perc

enta

ge o

f tru

e va

lue

(fair

or m

arke

t val

ue) e

stab

lishe

d by

eac

h co

unty

boa

rd o

f tax

atio

n.

72


Direct and Overlapping Property Tax RatesRate per $100 of Assessed Value

Last Ten Fiscal YearsUnaudited

Overlapping Rates

Basic Rate a

General Obligation Debt

Service b Total Direct

Borough of Stone Harbor

Cape May County

Total Direct and Overlapping Tax

Rate Fiscal Year

Ended June 30,

2003 0.087 0.008 0.095 0.277 0.408 0.780 2004 0.089 0.009 0.098 0.293 0.399 0.790 2005 0.053 0.005 0.058 0.186 0.206 0.450 2006 0.053 0.004 0.057 0.186 0.227 0.470 2007 0.053 0.002 0.055 0.206 0.249 0.510 2008 0.057 - 0.057 0.218 0.254 0.529 2009 0.049 - 0.049 0.190 0.224 0.463 2010 0.052 - 0.052 0.198 0.223 0.473 2011 0.051 - 0.051 0.202 0.226 0.479 2012 0.051 - 0.051 0.216 0.235 0.502

Source: District Records and Municipal Tax Collector

Note: NJSA 18A:7F-5d limits the amount that the district can submit for a general fund tax levy . The levy when added to other componentsof the district's net budget may not exceed the prebudget year net budget by more than the spending growth limitation calculation.

a The district's basic tax rate is calculated from the A4F form which is submitted with the budget and the Net valuation taxable.

b Rates for debt service are based on each year's requirements.

BOROUGH OF STONE HARBOR SCHOOL DISTRICT

73

J-8

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Prin

cipa

l Pro

pert

y Ta

x Pa

yers

,C

urre

nt Y

ear a

nd N

ine

Year

s A

goU

naud

ited

Taxa

ble

% o

f Tot

alTa

xabl

e%

of T

otal

Ass

esse

dR

ank

Dis

trict

Net

A

sses

sed

Ran

kD

istri

ct N

et

Taxp

ayer

Val

ue[O

ptio

nal]

Ass

esse

d V

alue

Val

ue[O

ptio

nal]

Ass

esse

d V

alue

Imm

acul

ate

Hea

rt of

Mar

y co

nven

t21

,375

,600

1

0.48

%0.

00%

Imm

acul

ate

Hea

rt of

Mar

y8,

568,

000

2

0.

19%

0.00

%Ta

xpay

er #

17,

183,

700

3

0.

16%

0.00

%Ta

xpay

er #

26,

276,

800

4

0.

14%

0.00

%N

AC

L A

ssoc

iate

s6,

182,

700

5

0.

14%

0.00

%Ta

xpay

er #

36,

072,

300

6

0.

14%

0.00

%Ta

xpay

er #

46,

068,

500

7

0.

14%

0.00

%Ta

xpay

er #

56,

036,

100

8

0.

14%

0.00

%S

tone

Har

bor Y

acht

Clu

b6,

005,

000

9

0.

14%

0.00

%D

ove

Hol

ding

s, L

LC5,

935,

700

10

0.13

%0.

00%

Tota

l79

,704

,400

1.80

%-

0.00

%

2012

2003

2003

Info

rmat

ion

not a

vaila

ble

Sou

rce:

Dis

trict

CA

FR &

Mun

icip

al T

ax A

sses

sor

74


Property Tax Levies and CollectionsLast Ten Fiscal Years

Unaudited

AmountPercentage

of Levy

2002 1,949,023 1,949,023 100%2003 1,785,718 1,785,718 100%2004 1,695,691 1,695,691 100%2005 1,746,515 1,746,515 100%2006 2,016,076 2,016,076 100%2007 2,025,910 2,025,910 100%2008 1,969,219 1,969,219 100%2009 2,047,988 2,047,988 100%2010 2,129,907 2,129,907 100%2011 2,215,103 2,215,103 100%2012 2,215,104 2,215,104 100%

Source: District records including the Certificate and Report of School Taxes (A4F form

Note: School taxes are collected by the Municipal Tax Collector. Under New Jersey State Statuta municipality is required to remit to the school district the entire property tax balance, in thamount voted upon or certified prior to the end of the school yea

Fiscal Year

Ended June 30,

Taxes Levied for the Fiscal

Year

Collected within the Fiscal Year of the Levy

Collections in

Subsequent Years

75

J-10

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Rat

ios

of O

utst

andi

ng D

ebt b

y Ty

peLa

st T

en F

isca

l Yea

rsU

naud

ited

Bus

ines

s-Ty

pe

Act

iviti

es

Fis

cal

Yea

r E

nded

Ju

ne 3

0,

Gen

eral

O

blig

atio

n B

onds

Cer

tific

ates

of

P

artic

ipat

ion

Cap

ital

Leas

es

Bon

d A

ntic

ipat

ion

Not

es

(BA

Ns)

Cap

ital L

ease

sTo

tal D

istri

ct

Per

cent

age

of

Per

sona

l In

com

e a

Per

Cap

ita a

2003

529,

000

529,

000

0.

024%

2004

404,

000

404,

000

0.

016%

2005

274,

000

274,

000

0.

009%

2006

139,

000

139,

000

0.

004%

2007

-

-

0.

000%

2008

-

-

0.

000%

2009

-

-

0.

000%

2010

-

-

0.

000%

2011

-

-

0.

000%

2012

-

-

0.

000%

No

Deb

t for

pas

t 6 Y

ears

Sou

rce:

Dis

trict

CA

FR S

ched

ules

I-1,

I-2

Not

e: D

etai

ls re

gard

ing

the

dist

rict's

out

stan

ding

deb

t can

be

foun

d in

the

note

s to

the

finan

cial

sta

tem

ents

.

aS

ee E

xhib

it N

J J-

13 fo

r per

sona

l inc

ome

and

popu

latio

n da

ta.

Thes

e ra

tios

are

calc

ulat

ed u

sing

per

sona

l inc

ome

and

popu

latio

n fo

r the

prio

r cal

enda

r yea

r.

Gov

ernm

enta

l Act

iviti

es

76


Ratios of Net General Bonded Debt OutstandingLast Ten Fiscal Years

Unaudited

Fiscal Year

Ended June 30,

General Obligation

Bonds Deductions

Net General Bonded Debt Outstanding

Percentage of Actual Taxable

Value a of Property Per Capita b

2003 529,000 529,000 0.024% 477 2004 404,000 404,000 0.016% 367 2005 274,000 274,000 0.009% 254 2006 139,000 139,000 0.004% 132 2007 - - 0.000%2008 - - 0.000%2009 - - 0.000%2010 - - 0.000%2011 - - 0.000%2012 - - 0.000%

No Debt for past 4 Years

Note: Details regarding the district's outstanding debt can be found in the notes to the financial statements.a See Exhibit NJ J-6 for property tax data. b Population data can be found in Exhibit NJ J-13.

General Bonded Debt Outstanding

77

J-12

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Rat

ios

of O

verla

ppin

g G

over

nmen

tal A

ctiv

ities

Deb

tA

s of

Jun

e 30

,201

2U

naud

ited

Gov

ernm

enta

l Uni

t D

ebt

Out

stan

ding

Est

imat

ed

Per

cent

age

App

licab

le a

Est

imat

ed

Sha

re o

f O

verla

ppin

g D

ebt

Deb

t rep

aid

with

pro

pert

y ta

xes

Bor

ough

of S

tone

Har

bor

25,5

40,3

62

10

0.00

%25

,540

,362

Cou

nty

of C

ape

May

- B

orou

gh's

sha

re (8

.72%

)13

3,81

2,53

7

8.72

%11

,664

,508

Sub

tota

l, ov

erla

ppin

g de

bt37

,204

,870

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Dire

ct D

ebt

-

Tt

ldi

td

li

dbt

3720

487

0To

tal d

irect

and

ove

rlapp

ing

debt

37,2

04,8

70

Sour

ces:

Bor

ough

of S

tone

Har

bor F

inan

ce O

ffice

r

Not

e:

Ove

rlapp

ing

gove

rnm

ents

are

thos

e th

at c

oinc

ide,

at l

east

in p

art,

with

the

geog

raph

ic b

ound

arie

s of

the

Dis

trict

. Th

is s

ched

ule

estim

ates

the

porti

on o

f the

out

stan

ding

deb

t of t

hose

ove

rlapp

ing

gove

rnm

ents

that

is b

orne

by

the

resi

dent

s an

d bu

sine

sses

of t

he B

orou

gh o

f Sto

ne H

arbo

r. T

his

proc

ess

reco

gniz

es th

at, w

hen

cons

ider

ing

the

Dis

trict

's a

bilit

y to

issu

e an

d re

pay

long

-term

deb

t, th

e en

tire

debt

bur

den

born

e by

the

resi

dent

s an

d bu

sine

sses

sho

uld

be ta

ken

into

acc

ount

. H

owev

er th

is d

oes

not

impl

y th

at e

very

taxp

ayer

is a

resi

dent

, and

ther

efor

e re

spon

sibl

e fo

r rep

ayin

g th

e de

bt, o

f eac

h ov

erla

ppin

g pa

ymen

t.

aFo

r deb

t rep

aid

with

pro

perty

taxe

s, th

e pe

rcen

tage

of o

verla

ppin

g de

bt a

pplic

able

is e

stim

ated

usi

ng ta

xabl

e as

sess

ed p

rope

rty v

alue

s.A

pplic

able

per

cent

ages

wer

e es

timat

ed b

y de

term

inin

g th

e po

rtion

of a

noth

er g

over

nmen

tal u

nit's

taxa

ble

valu

e th

at is

with

in th

e di

stric

t's b

ound

arie

s an

d di

vidi

ng it

by

each

uni

t's to

tal t

axab

le v

alue

.

78

J-13

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Lega

l Deb

t Mar

gin

Info

rmat

ion,

Last

Ten

Fis

cal Y

ears

Una

udite

d

Lega

l Deb

t Mar

gin

Cal

cula

tion

for F

isca

l Yea

r 201

2

Equ

aliz

ed v

alua

tion

basi

s20

114,

437,

543,

796

20

104,

487,

670,

151

20

094,

611,

172,

500

13,5

36,3

86,4

47

Ave

rage

equ

aliz

ed v

alua

tion

of ta

xabl

e pr

oper

ty4,

512,

128,

816

Deb

t lim

it (2

.5%

of a

vera

ge e

qual

ized

val

ue)

a11

2,80

3,22

0

N

et b

onde

d sc

hool

deb

t-

Le

gal d

ebt m

argi

n11

2,80

3,22

0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Deb

t lim

it56

,174

,030

65

,218

,137

75

,302

,948

92,2

23,0

78

113,

733,

642

13

2,35

5,19

3

142,

106,

623

14

2,10

9,12

4

139,

288,

030

11

2,80

3,22

0

Tota

l net

deb

t app

licab

le to

lim

it52

9,00

0

404,

000

27

4,00

0

139,

000

-

-

-

-

-

-

Lega

l deb

t mar

gin

55,6

45,0

30

64,8

14,1

37

75,0

28,9

48

92,0

84,0

78

11

3,73

3,64

2

132,

355,

193

14

2,10

6,62

3

142,

109,

124

13

9,28

8,03

011

2,80

3,22

0

Tota

l net

deb

t app

licab

le to

the

limit

as a

per

cent

age

of d

ebt l

imit

0.94

%0.

62%

0.36

%0.

15%

0.00

%0.

00%

0.00

%0.

00%

0.00

%0.

00%

Sou

rce:

Abs

tract

of R

atab

les

and

Dis

trict

Rec

ords

CA

FR S

ched

ule

J-7

aLi

mit

set b

y N

JSA

18A

:24-

19 fo

r a K

thro

ugh

5 di

stric

t; ot

her %

lim

its w

ould

be

appl

icab

le fo

r oth

er d

istri

cts

79


Demographic and Economic StatisticsLast Ten Fiscal Years

Unaudited

Year Population a

Personal Income

(thousands of dollars) b

Per Capita Personal Income c

Unemployment Rate d

2003 1,110 40,343 36,345 6.10%2004 1,101 42,400 38,510 4.10%2005 1,077 43,097 40,016 3.30%2006 1,053 44,150 41,928 5.10%2007 1,039 46,090 44,360 4.90%2008 1,023 47,822 46,747 6.00%2009 1,017 46,787 46,005 8.70%2010 1,016 48,258 47,498 8.70%2011 866 41,133 47,498 9.10%2012 860 40,848 47,498 9.50%

Source: a Population information provided by the NJ Dept of Labor and Workforce Developmentb Personal income provided by the US Dept. of Commerce, Bureau of Economic Analysis.c Per Capita information provided by the US Dept of Commerce Bureau of Economic Analysisc Per Capita information provided by the US Dept. of Commerce, Bureau of Economic Analysis.d Unemployment data provided by the NJ Dept of Labor and Workforce Development

80

J-15

BO

RO

UG

H O

F ST

ON

E H

AR

BO

R S

CH

OO

L D

ISTR

ICT

Prin

cipa

l Em

ploy

ers,

Cur

rent

Yea

r and

Nin

e Ye

ars

Ag o

Una

udite

d

Empl

oyer

Empl

oyee

s R

ank

(Opt

iona

l)

Per

cent

age

of T

otal

Em

ploy

men

t Em

ploy

ees

Ran

k (O

ptio

nal)

Per

cent

age

of T

otal

Em

ploy

men

t

-

0.

00%

-

0.

00%

-

0.

00%

-

0.

00%

-

0.

00%

-

0.

00%

-

0.

00%

-

0.

00%

-0

00%

2012

2003

-

0.

00%

-

0.

00%

0.00

%0.

00%

0.00

%

-

-

-

-

Sour

ce:

Info

rmat

ion

was

not

ava

ilabl

e fro

m a

ny s

ourc

e

81

J-16

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85

J-20BOROUGH OF STONE HARBOR BOARD OF EDUCATION

Insurance ScheduleJune 30, 2012Unaudited

Coverage a DeductibleSchool package Policy - New Jersey School Board Association Insurance Group

Property- Blanket Building & Contents 5,000,000$ 1,000 Comprehensive General Liability 11,000,000 Comprehensive Automobile Liability 11,000,000 Comprehensive Crime Coverage 50,000 500 Electronic Data Processing Equipment 267,730 1,000 Blanket Extra Expense 50,000,000 1,000 Blanket Valuable Papers and Records 10,000,000 1,000 Employee Benefits Liability 11,000,000 1,000 Workers' Compensation - New Jersey School Board Association Insurance Group 1,194,142

School Board Legal Liability - New Jersey School Board Association Insurance Group Errors and Omissions Policy 11,000,000

Flood Insurance - New Jersey School Board

B ildi 1 000 000 500 000 Building 1,000,000 500,000 Contents 1,000,000 500,000

Source: District Records

a - Coverage includes all schools covered by the New Jersey School BoardInsurance Group.

86

Single Audit Section

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Honorable President and Members of the Board of Education Borough of Stone Harbor School District County of Cape May, New Jersey We have audited the financial statements of the Board of Education of the Borough of Stone Harbor School District in the County of Cape May, State of New Jersey, as of and for the year ended June 30, 2012, and have issued our report thereon dated September 21, 2012. 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, and audit requirements prescribed by the Division of Finance, Department of Education, State of New Jersey. Internal Control Over Financial Reporting Management of the Borough of Stone Harbor School District is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Borough of Stone Harbor School District’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Borough of Stone Harbor School District’s internal control over financial reporting. According, we do not express an opinion on the effectiveness of the Borough of Stone Harbor School District’s internal control over financial reporting. 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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District’s financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be deficiencies, significant deficiencies or

87

material weaknesses. We did not identify any deficiencies in internal control overfinancial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Borough of Stone HarborSchool District’s financial statements are free of material misstatement, we performedtests of its compliance with certain provisions of laws regulations, contracts and grantagreements, noncompliance with which could have a direct and material effect on thedetermination of financial statement amounts. However, providing an opinion oncompliance with those provisions was not an objective of our audit and, accordingly, wedo not express such an opinion. The results of our tests disclosed no instances ofnoncompliance or other matters that are required to be reported under GovernmentAuditing Standards or the requirements of the Division Finance, Department ofEducation, State of New Jersey.

We noted certain matters that were required to be reported to the Board of Education ofthe Borough of Stone Harbor in the separate Auditor’s Management Report onAdministrative Findings — Financial, Compliance and Performance dated September 21,2012.

This report is intended solely for the information and use of the audit committee,management, and the State of New Jersey, Department of Education (the cognizantaudit agency) and other state and federal awarding agencies and is not intended to beand should not be used by anyone other than these specified parties.

~E~~PALicensed Public School AccountantNo. CS00667

,444o~te4, .i-~eFord Scott & Associates, LLCCertified Public Accountants

September 21, 2012

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90

Borough of Stone Harbor School District Notes to the Schedules of Financial Assistance June 30, 2012

NOTE 1. GENERAL The accompanying schedules of expenditures of federal awards and state financial assistance include federal and state award activity of the Board of Education, Borough of Stone Harbor School District. The Board of Education is defined in Note 1(A) to the Board's basic financial statements. All federal and state awards received directly from federal and state agencies, as well as federal awards and state financial assistance passed through other government agencies is included on the schedule of expenditures of federal awards and state financial assistance. NOTE 2. BASIS OF ACCOUNTING The accompanying schedules of expenditures of awards and financial assistance are presented on the budgetary basis of accounting. This basis of accounting is described in Note 1 to the Board's basic financial statements. NOTE 3. RELATIONSHIP TO GENERAL PURPOSE FINANCIAL STATEMENTS The basic financial statements present the general fund and special revenue fund on a GAAP basis. Budgetary comparison statements or schedules (RSI) are presented for the general fund and special revenue fund to demonstrate finance-related legal compliance in which certain revenue is permitted by law or grant agreement to be recognized in the audit year, whereas for GAAP reporting, revenue is not recognized until the subsequent year or when expenditures have been made. The general fund is presented in the accompanying schedules on the modified accrual basis with the exception of the revenue recognition of the last two state aid payments in the current budget year, which is mandated pursuant to P.L. 2003, c.97 (A3521). For GAAP purposes that payment is not recognized until the subsequent budget year due to the state deferral and recording of the last state aid payment in the subsequent year. The special revenue fund is presented in the accompanying schedules on the grant accounting budgetary basis which recognizes encumbrances as expenditures and also recognizes the related revenues, whereas the GAAP basis does not. The net adjustment to reconcile from budgetary basis to GAAP basis is $98,805 for the general fund and $975 for the special revenue fund. See the following schedule and Schedule C-3 for a reconciliation of the budgetary basis to the modified accrual basis of accounting for the general and special revenue funds. Awards and financial assistance revenues are reported in the Board's basic financial statements on a GAAP basis as follows:

91


General fund Total

State Assistance:

Actual amounts (budgetary) “revenues” from the Schedule of Expenditures of State Financial Assistance 120,427$ 120,427

Difference – budget to “GAAP”

State aid payment recognized for GAAP statements in the current year, previously recognized for budgetary purposes - -

State aid payment recognized for budgetary purposes, not recognized for GAAP statements until the subsequent year. (1,939) (1,939)

On Behalf TPAF paymentsrecognized for GAAP statementsnot included in the Schedule of Expenditures of State FinancialAssistance 100,744 100,744

Total State revenue as reported on the statement of revenues, expenditures and changes in fund balances 219,232$ 219,232$

92


General Special RevenueFund Fund Total

Federal Assistance:Actual amounts (budgetary)"revenues" from the Schedule of Expenditures of Federal Awards 2,277$ 29,564 31,841

Difference - budget to "GAAP" Grant accounting budgetarybasis differs from GAAP in that encumbrances are recognized as expenditures, and the relatedrevenue is recognized. - - -

Total Federal revenue as reportedon the statement of revenue,expenditures, and changes in fundbalances 2,277$ 29,564 31,841

NOTE 4. RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS Amounts reported in the accompanying schedules agree with the amounts reported in the related federal and state financial reports. NOTE 5. OTHER The amounts reported as TPAF Pension Contributions represents the amount paid by the State on behalf of the district for the year ended June 30, 2012. TPAF Social Security Contributions represents the amount reimbursed by the State for the employer’s share of social security contributions for TPAF members for the year ended June 30, 2012.

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BOROUGH OF STONE HARBOR SCHOOL DISTRICT SCHEDULE OF FINDINGS AND RESPONSES

FOR THE YEAR ENDING JUNE 30, 2012

Part 2 – Schedule of Financial Statement Findings

NONE

Part 3 – Schedule of State Award Findings and Questioned Costs

NONE

STATUS OF PRIOR YEAR FINDINGS

NONE

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SCHOOL DISTRICT OF BOROUGH OF STONE HARBOR · SCHOOL DISTRICT OF BOROUGH OF STONE HARBOR ... B-6...

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