WEST CARROLL SPECIAL SCHOOL DISTRICT FINANCIAL … Carroll... · FINANCIAL STATEMENTS AND...

WEST CARROLL SPECIAL SCHOOL DISTRICT

FINANCIAL STATEMENTSAND SUPPLEMENTARY INFORMATION

FOR THE FISCAL YEAR ENDED JUNE 30, 2016

WEST CARROLL SPECIAL SCHOOL DISTRICTTABLE OF CONTENTS

Introductory SectionDirectory 1

Financial SectionIndependent Auditor’s Report 2Management’s Discussion and Analysis 5Basic Financial Statements:

District-wide Financial Statements:Statement of Net Position 13Statement of Activities 14

Fund Financial Statements:Balance Sheet - Governmental Funds 15Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 16Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 17Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances

of Governmental Funds to the Statement of Activities 18Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and

Actual - General Purpose Fund 19Notes to the Financial Statements 30

Required Supplementary Information SectionSchedule of the District’s Proportionate Share of the Net Pension Asset —

Teacher Legacy Pension Plan of TCRS 56Schedule of the District’s Contributions — Teacher Legacy Pension Plan of TCRS 57Schedule of the District’s Proportionate Share of the Net Pension Asset —

Teacher Legacy Pension Plan of TCRS 58Schedule of the District’s Contributions — Teacher Retirement Plan of TCRS 59Schedule of Changes in West Carroll Special School District’s Net Position Liability (Asset) and

Related Ratios Based on Participation in the Public Employee Pension Plan of TCRS 60Schedule of West Carroll Special School District’s Contributions Based on Participation

in the Public Employee Pension Plan of TCRS 61Schedules of Funding Progress — Post Employment Healthcare Plan 62

Supplementary and Other Information SectionSchedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and

Actual - Debt Service Fund 63Combining Balance Sheet - Other Governmental Funds 64Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Other

Governmental Funds 65Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and

Actual — Federal Projects Fund 66Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and

Actual - Centralized Cafeteria Fund 69Schedule of Revenues, Expenditures, and Changes in Fund Balances - Endowment Fund 71Schedule of Changes in Property Tax Rates and Assessments - Last Ten Years 72Schedule of Long-term Debt 73Schedule of lnterfund Transfers 74Schedule of Salaries and Bonds 75Schedule of Expenditures of Federal Awards 76Schedule of State Financial Assistance 77

Internal Control and Compliance SectionIndependent Auditor’s Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial Statements Performed inAccordance With Government Auditing Standards 78

Independent Auditor’s Report on Compliance for Each Major Federal Programand Report on Internal Control Over Compliance Required by Uniform Guidance 80

Schedule of Findings and Questioned Costs 82Schedule of Prior Year Findings and Questioned Costs 84Corrective Action Plan 85

INTRODUCTORY SECTION

WEST CARROLL SPECIAL SCHOOL DISTRICTDIRECTORYJune 30, 2016

ELECTED OFFICIALS

Jimmy Halford, ChairmanMike Foster, Vice Chairman

Kyle Foster, TreasurerPatrick Lindsey, Member

William Robinson, MemberMisty Mitchell, Member

APPOINTED OFFICIALS

Eric Williams, Director of SchoolsShan DePriest, Bookkeeper - General Purpose, Federal Projects, Debt Service, and Endowment

Janet Winchester, Bookkeeper - Food ServiceLisa Newbill — Payroll and Capital Assets

COUNSEL

The King Law OfficeHuntingdon, Tennessee

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Alexander Thompson Arnold PLLCJackson, Tennessee

—1-

FINANCIAL SECTION

ALEXANDER

Members of: THOMPSON

American Institute of Certified Public Accountants ARNOLD 227 Oil Well Rd.AICPA Center for Public Company Audit Firms PLLC Jackson, TN 38305AICPA Governmental Audit Quality Center ________________________________

AICPA Employee Benefit Plan Audit Quality Center Phone 731 .427.8571Tennessee Society of Certified Public Accountants Certified Public Accountants Fax 731 .424.5701Kentucky Society of Certified Public Accountants Offices in Tennessee & Kentucky www.atacpa.net

Independent Auditor’s Report

Board of EducationWest Carroll Special School DistrictAtwood, Tennessee

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each majorfund, and the aggregate remaining fund information of West Carroll Special School District (the District)as of and for the year ended June 30, 2016, and the related notes to the financial statements, whichcollectively comprise the District’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

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

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

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

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, each major fund, and the aggregateremaining fund information of the West Carroll Special School District, as of June 30, 2016, and therespective changes in financial position thereof and the respective budgetary comparisons for thegeneral purpose fund for the year then ended in accordance with accounting principles generallyaccepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that themanagement’s discussion and analysis on pages 5 through 12 and the required supplementaryinformation on pages 56 through 62 be presented to supplement the basic financial statements. Suchinformation, although not a part of the basic financial statements, is required by the GovernmentalAccounting Standards Board, who considers it to be an essential part of financial reporting for placingthe basic financial statements in an appropriate operational, economic, or historical context. We haveapplied certain limited procedures to the required supplementary information in accordance withauditing standards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information forconsistency with management’s responses to our inquiries, the basic financial statements, and otherknowledge we obtained during our audit of the basic financial statements. We do not express anopinion or provide any assurance on the information because the limited procedures do not provide uswith sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the West Carroll Special School District’s basic financial statements. Theintroductory section and supplementary and other information section, including the schedule ofexpenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200,Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards,are presented for purposes of additional analysis and are not a required part of the basic financialstatements.

The supplementary and other information section is the responsibility of management and was derivedfrom and relates directly to the underlying accounting and other records used to prepare the basicfinancial statements. Such information has been subjected to the auditing procedures applied in theaudit of the basic financial statements and certain additional procedures, including comparing andreconciling such information directly to the underlying accounting and other records used to prepare thebasic financial statements or to the basic financial statements themselves, and other additionalprocedures in accordance with auditing standards generally accepted in the United States of America.In our opinion, the supplementary and other information section is fairly stated in all material respects inrelation to the basic financial statements as a whole.

The introductory section has not been subjected to the auditing procedures applied in the audit of thebasic financial statements and, accordingly, we do not express an opinion or provide any assurance onit.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated January 6,

-3-

2017, on our consideration of the West Carroll Special School District’s internal control over financialreporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements and other matters. The purpose of that report is to describe the scope of our testingof internal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards in consideringWest Carroll Special School District’s internal control over financial reporting and compliance.

Jackson, TennesseeJanuary 6, 2017

-4-

Management’s Discussion and Analysis

As management of the West Carroll Special School District (the District), we offer readers of thefinancial statements for the District this narrative overview and analysis of the financial activities for theyear ended June 30, 2016. We encourage readers to consider the information here in conjunction withthe Independent Auditor’s Report and the District’s financial statements. Professional standards requirethe inclusion of certain comparative information in the Management’s Discussion and Analysis (MD&A).

Financial Highlights

• The assets and deferred inflows of resources of the District exceeded its liabilities and deferredinflows of resources at June 30, 2016 by $4,017,402. Of this amount, $3,277,044 (unrestrictednet position) may be used to meet the District’s ongoing obligations to citizens and creditors.

• As of the close of the current fiscal year, the District reported combined ending fund balance of$4,446,602. Approximately 89.1% of this total amount, $3,960,717, is unassigned in the generalpurpose fund. Approximately 5.5% represents funds restricted in the centralized cafeteria fund,0.3% represents funds that are committed in the debt service fund, and 5.1% represents fundsthat are nonspendable in the centralized cafeteria fund and the endowment fund.

• At the end of the current fiscal year, unassigned fund balance for the general purpose fund was$3,960,717 or 59.5% of total general purpose fund expenditures.

• The District’s total bonded debt decreased by $280,000.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the District’s basic financialstatements. The District’s basic financial statements comprise three components: 1) district-widefinancial statements, 2) fund financial statements, and 3) notes to the financial statements. This reportalso contains required supplementary information and supplementary and other information in additionto the basic financial statements themselves.

District-wide financial statements The district-wide financial statements are designed to providereaders with a broad overview of the District’s finances, in a manner similar to a private-sectorbusiness.

The statement of net position presents all the assets, liabilities and deferred oufflows/inflows ofresources for the District, with differences reported as net position. Over time, increases or decreasesin net position may serve as a useful indicator of whether the financial position of the District isimproving or deteriorating.

The statement of activities presents information showing how the government’s net position changedduring the most recent fiscal year. All changes in net position are reported as soon as the underlyingevent giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenuesand expenses are reported in this statement for some items that will only result in cash flows in futurefiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the district-wide financial statements distinguish functions of the District that are principallysupported by taxes and intergovernmental revenues (governmental activities) from other functions thatare intended to recover all or a significant portion of their costs. The District’s governmental activitiesinclude general administration, finance and education. The District has no business-type activities toreport.

Please refer to the Table of Contents to locate the district-wide financial statements.

-5-

Fund financial statements A fund is a grouping of related accounts that is used to maintain controlover resources that have been segregated for specific activities or objectives. The District, like otherstate and local governments, uses fund accounting to ensure and demonstrate compliance withfinance-related legal requirements. All of the funds of the District can be grouped into one category:governmental funds.

Governmental funds Governmental funds are used to account for essentially the same functionsreported as governmental activities in the district-wide financial statements. However, unlike the district-wide financial statements, governmental fund financial statements focus on near-term inflows andoutflows of spendable resources as well as on balances of spendable resources available at the end ofthe fiscal year. Such information may be useful in evaluating a government’s near-term financialrequirements.

Because the focus of governmental funds is narrower than that of the district-wide financial statements,it is useful to compare the information presented for governmental funds with similar informationpresented for governmental activities in the district-wide financial statements. By doing so, readersmay better understand the long-term impact of the government’s near-term financing decisions. Boththe governmental fund balance sheet and the governmental fund statement of revenues, expenditures,and changes in fund balances provide a reconciliation to facilitate this comparison betweengovernmental funds and governmental activities.

The District maintains five individual governmental funds. Information is presented separately in thegovernmental fund balance sheet and in the governmental fund statement of revenues, expenditures,and changes in fund balances for the general purpose fund, and the debt service fund and the non-major funds. The general purpose and the debt service funds are considered major funds, and thefederal projects, centralized cafeteria and the endowment funds are considered non-major funds.

The District adopts an annual appropriated budget for its general purpose, debt service, federalprojects, and cafeteria funds. The District adopts a federal projects program, and the budgets for thefederal projects fund are determined by the grantor of each grant. A budgetary comparison statementhas been provided as basic financial statements for the general purpose fund to demonstratecompliance with this budget. A budgetary comparison is presented as supplementary information forthe debt service fund. In addition, a budgetary comparison is provided for the federal projects fund andcentralized cafeteria fund as non-major funds.

Please refer to the Table of Contents to locate the basic governmental fund financial statements.

Notes to the financial statements The notes provide additional information that is essential to a fullunderstanding of the data provided in the district-wide and fund financial statements. Please refer to theTable of Contents to locate the notes to the financial statements.

Other information In addition to the basic financial statements and accompanying notes, this reportalso presents certain required supplementary information. This required supplementary information hasbeen presented in the required supplementary information section of this report. The debt servicefund’s and non-major funds’ statements of revenues, expenditures, and changes in fund balances arepresented as supplementary information as well as other additional information.

District-wide Financial AnalysisAs noted earlier, net position may serve over time as a useful indicator of a government’s financialposition. In the case of the District, assets and deferred oufflows of resources exceeded liabilities anddeferred inflows of resources by $4,014,402 at the close of the fiscal year ended June 30, 2016.

A portion of the District’s net position reflects its investment in capital assets (e.g., buildings, and

-6-

equipment) less any related debt used to acquire those assets that is still outstanding. The District usesthese capital assets to provide services to citizens; consequently, these assets are not available forfuture spending. Although the District’s investment in its capital assets is reported net of related debt, itshould be noted that the resources needed to repay this debt must be provided from other sources, sincethe capital assets themselves cannot be used to liquidate these liabilities.

The District’s Net Position

June 30, 2016 June 30, 2015Assets

Current and other $ 5,890,119 $ 5,825,416Capital assets - net of accumulated depreciation 4,798,108 5,107,236

Total assets 10,688,227 10,932,652

Deferred outflows of resources:Pension related deferred outflows 526,824 438,268

LiabilitiesLong-term liabilities 4,787,155 5,024,561Other liabilities 84,239 277,608

Total liabilities 4,871,394 5,302,169

Deferred inflows of resourcesPension related deferred inflows 1,061,949 1,615,127Una~ailabIe re~nue - property taxes 1,264,306 1,246,532

Total deferred inflows of resources 2,326,255 2,861,659

Net positionNet in~stment in capital asset 147,229 161,674Restricted 593,129 711,280Unrestricted 3,277,044 2,334,138

Total net position $ 4,017,402 $ 3,207,092

The above provides a summary of the District’s net position for 2016 and 2015.

An additional portion of the District’s net position, $593,129, represents resources that are subject toexternal restrictions on how they may be used. The balance of unrestricted net position, $3,277,044,may be used to meet the government’s ongoing obligations to citizens and creditors.

During the current fiscal year, the District’s total net position increased by $810,310.

The following summary shows the changes in net position for fiscal years 2016 and 2015.

-7-

The District’s Changes in Net Position

June 30, 2016 June 30, 2015Revenues

Program re~nuesCharges for seRices $ 165,526 $ 143,406Operating grants and contributions 1,472,133 1,409,559

General revenuesProperty taxes 1,288,692 1,235,642Sales taxes 563,128 533,067Alcoholic be~rage tax 187 293Grants and contributions not restricted to specific programs:

Basic Education Program 5,093,000 5,036,000Interest 13,400 15,237Gain on sale of capital assets - 2,064Insurance reco~ry 400 -

Other miscellaneous re~enues 64,772 75,572Total re~enues 8,661,238 8,450,840

ExpensesInstruction 4,371,861 4,450,410Support services 2,446,773 2,309,602Non-instructional serAces 1,032,294 1,487,932

Total expense 7,850,928 8,247,944

Change in net position 810,310 202,896

Net position, beginning 3,207,092 4,349,987Restatement - GASB Statements No. 68 and 71 implementation - (1,345,791)Net position, beginning restated 3,207,092 3,004,196

Net position, ending $ 4,017,402 $ 3,207,092

Governmental activities Governmental activities increased the District’s net position $810,310.

Total governmental activities’ revenue for the fiscal year was $8,661,238. The largest single revenuesource was state revenues in the form of Basic Education Program payments.

Expense and Program Revenues - Governmental Activities

Certain revenues are generated that are specific to governmental program activities.

Among major funds, the general purpose fund had $7,136,671 in revenues and $6,782,398 inexpenditures (including a transfer out in the amount of $121,901). The debt service fund had $416,647in revenues (including a transfer in in the amount of $121,901) and $420,307 in expenditures. Majorfunding for these funds was provided by federal and state funds. In the non-major funds, the federalprojects fund had $576,254 in revenues and $576,254 in expenditures, the cafeteria fund had $650,368in revenues and $616,095 in expenditures. The endowment fund had $3,200 in revenues and $6,000 inexpenditures.

-8-

Revenue by Source - Governmental Funds

Total governmental revenues allocated by each revenue type.

June 30, 2016 June 30, 2015Amount Percent Amount Percent

RevenuesProgram re~nues

Charges for ser~ices $ 165,526 2% $ 143,406 2%Operating grants and contributions 1,472,133 17% 1,409,559 17%

General re~nuesProperty taxes 1,288,692 15% 1,235,642 15%Sales taxes 563,128 7% 533,067 6%Alcoholic be~rage tax 187 0% 293 0%Grants and contributions not restricted to specific programs:

Basic Education Program 5,093,000 59% 5,036,000 60%Interest 13,400 0% 15,237 0%Gain on sale of capital assets - 0% 2,064 0%Insurance reco’~ery 400 0% - 0%Other miscellaneous re~nues 64,772 !~ 75,572 1%

Total re’~nues 8,661,238 100% 8,450,840 100%

Financial Analysis of the Government’s Funds

As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirement.

Governmental funds The focus of the District’s governmental funds is to provide information on near-term inflows, oufflows, and balances of spendable resources. Such information is useful in assessingthe District’s financing requirements. In particular, unassigned fund balance may serve as a usefulmeasure of a government’s net resources available for discretionary use as they represent the portionof fund balance which has not yet been limited to use for a particular purpose by either an externalparty, the District itself, or a group or individual that has been delegated authority to assign resourcesfor use for particular purposes by the District’s Board.

At June 30, 2016, the District’s governmental funds reported combined fund balances of $4,446,602,an increase of $373,304 in comparison with the prior year. Approximately 89% of this amount$3,960,717 constitutes unassigned fund balance, which is available for spending at the District’sdiscretion. The remainder of the fund balance is either nonspendable, restricted, committed, orassigned to indicate that it is 1) not in spendable form $25,074, 2) legally required to be maintainedintact $200,000, 3) restricted for particular purposes $245,907, 4) committed for particular purposes$14,904, or 5) assigned for particular purposes $0.

The general purpose fund is the chief operating fund of the District. At the end of the current fiscal year,unassigned fund balance was $3,960,717.

As a measure of the general purpose fund’s liquidity, it may be useful to compare both unassigned fundbalance and total fund balance to total fund expenditures. Unassigned fund balance represents 60% ofthe total general purpose fund expenditures, while total fund balances represent 67% of that sameamount.

-9-

The fund balance of the District’s general purpose fund increased by $354,273 during the current fiscalyear. A key factor in this growth was the District’s ability to remain within the budget adopted.

General Purpose Fund Budgetary Highlights

Differences between the original budget and the final amended budget are briefly summarized asfollows:

June 30, 2016General Purpose FundRevenues Original Final Difference

Taxes $1,390,107 $1,390,107 $ -

Intergo~emmental 5,476,560 5,498,560 22,000Miscellaneous 27,200 27,200 -

Total re~enues 6,893,867 6,915,867 22,000

ExpensesInstruction 4,047,224 4,094,624 47,400Support serAces 2,473,807 2,444,882 (28,925)Non-instructional senAces 239,037 291,446 52,409

Total expenditures 6,760,068 6,830,952 70,884Excess (deficiency) of revenues

over (under) expenditures $ 133,799 $ 84,915 $ (48,884)

In 2016, the District increased the budget revenue for unexpected funds from the State. The Districtincreased the budget expenses for capital outlay and building improvement projects.

June 30, 2015General Purpose FundRevenues Original Final Difference

Taxes $1,389,442 $1,389,442 $ -

Intergo~rnmental 5,421,472 5,421,472 -

Miscellaneous 27,200 52,814 25,614Total re~nues 6,838,114 6,863,728 25,614

ExpensesInstruction 4,029,672 4,004,842 (24,830)Support sen~ces 2,290,202 2,259,397 (30,805)Non-instructional serAces 327,037 477,496 150,459

Total expenditures 6,646,911 6,741,735 94,824Excess (deficiency) of revenues

over (under) expenditures $ 191,203 $ 121,993 $ (69,210)

In 2015, the District increased the budget revenue for unexpected sale of equipment and othermiscellaneous revenues. The District increased the budget expenses for capital outlay and buildingimprovement projects.

Capital Asset and Debt Administration

Capital Assets. The District’s net investment in capital assets for its governmental funds as of June 30,2016 amounts to $147,229 (net of accumulated depreciation and related debt). This net investment in

-10-

capital assets includes buildings and improvements and other capital assets (including equipment).Additions to current year’s capital assets include a gas steamer for a cafeteria, paving of new parking lot,and new security system.

6/30/15 Additions Reductions 6/30/16Capital assets not being depreciated:Land $ 232,960 $ - $ 232,960Work in progress ___________ ___________ ___________ ___________

Total 232,960 - - 232,960

Capital assets being depreciated:Buildings and impro~ements 12,149,913 63,022 - 12,212,935Other capital assets 494,231 2,788 - 497,019

Total 12,644,144 65,810 - 12,709,954Accumulated depreciation (7,769,868) (374,938) - (8,144,806)Capital assets net of accumulated

depreciation 5,107,236 (309,128) - 4,798,108Long-term debt related to

capital assets (including bondpremium and discount) (4,945,562) - (294,683) (4,650,879)

Capital assets net of accumulateddepreciation and related debt $ 161,674 $ (309,128) $ (294,683) $ 147,229

Additions to capital assets in 2015 included the parking lot project, which was maintained in work inprogress at the end in 2014, a play ground set, an awning, and two HVAC units.

6/30/14 Additions Reductions 6/30/15Capital assets not being depreciated:Land $ 232,960 $ - $ 232,960Work in progress 18,000 - 18,000 -

Total 250,960 - 18,000 232,960

Capital assets being depreciated:Buildings and improvements 11,954,661 195,252 - 12,149,913Other capital assets 480,800 13,431 494,231

Total 12,435,461 208,683 - 12,644,144Accumulated depreciation (7,380,515) (389,353) (7,769,868)Capital assets net of accumulated

depreciation 5,305,906 (180,670) 18,000 5,107,236Long-term debt related to

capital assets (including bondpremium and discount) (5,117,550) (4,945,562) (5,117,550) (4,945,562)

Capital assets net of accumulateddepreciation and related debt $ 188,356 $(5,126,232) $(5,099,550) $ 161,674

Long-term debt. As of June 30, 2016 and 2015, the District had total bonded debt outstanding of$4,650,879 and $4,945,562, respectively. All debt is backed by the full faith and credit of thegovernment.

During 2005, the School Bonds issued in 1999 for the construction, furnishings, fixtures, and equippingthe West Carroll High School building was defeased. The remaining School Bonds, Series 1999,

-11-

totaled $660,000. The principal of the School Bonds, Series 2005 was $6,535,000.

During 2015, the School Bonds, series 2005 was refunded with School Refunding Bonds, Series 2015.The remaining School Bonds, Series 2005 totaled $4,880,000. The principal of the School RefundingBonds, Series 2015 was $4,740,000.

The District maintains an “AA” rating by Standards and Poor’s Rating Services, a Division of McGraw-HillCompanies (S&P).

Economic Factors and Next year’s Budget and Rates

The unemployment rate for Carroll County is 6.9%. The state’s average unemployment rate is 4.6%.The national average unemployment rate is 4.9%. All of the rates are from labor statistics released inSeptember 2016.

All of these factors were considered in preparing the District’s budget for the 2016-2017 fiscal year.

The District’s unassigned fund balance in the general purpose fund was $3,960,717 for the fiscal yearending June 30, 2016. It is intended that this use of available fund balance will avoid the need to raisetaxes during the 2016-2017 fiscal year.

Request for Information

This financial report is designed to provide a general overview of the District’s finances for all those withan interest in the government’s finances. Questions concerning any of the information provided in thisreport or requests for additional financial information should be addressed to the West Carroll SpecialSchool District, P.O. Box 279, Trezevant, TN 38258.

-12-

BASIC FINANCIAL STATEMENTS

WEST CARROLL SPECIAL SCHOOL DISTRICTDISTRICT-WIDE STATEMENT OF NET POSITION

June 30, 2016

Assets:Cash and cash equivalents $ 4,144,515Investments 200,000Due from other governments - nongrant 1,379,714Due from other governments - grants 16,121Interest receivable 2,547Inventory 25,074Net pension asset 122,148Capital assets, not being depreciated:

Land 232,960Capital assets, being depreciated (net of accumulated depreciation):

Buildings and improvements 4,472,047Other capital assets 93,101

Total assets 10,688,227

Deferred outflows of resources:Pension related deferred outflows 526,824

Total deferred outflows of resources 526,824

Liabilities:Accrued expenses 54,516Accrued interest payable 29,723Long-term liabilities:

Portion due or payable within one year:Bonds payable 300,000

Portion due or payable after one year:Bonds payable 4,350,879Net pension liability 40,630OPEB liability 95,646

Total liabilities 4,871,394

Deferred inflows of resources:Pension related deferred inflows 1,061,949Unavailable revenue - property taxes 1,264,306

Total deferred inflows of resources 2,326,255

Net position:Net investment in capital assets 147,229Restricted for:

Pension 122,148Operation of non-instructional services 270,981Endowment Fund Principal - nonexpendable 200,000

Unrestricted 3,277,044Total net position $ 4,017,402

The accompanying notes are an integral part of the financial statements.-13-

WEST CARROLL SPECIAL SCHOOL DISTRICTDISTRICT-WIDE STATEMENT OF ACTIVITIES

For the Year Then Ended June 30, 2016

Program RevenuesNet (Expenses)

Operating Capital Revenues andCharges for Grants and Grants and Changes in

Functions/Programs Expenses Services Contributions Contributions Net PositionGovernmental activities:

Instruction:Regulareducation $ 3,571,893 $ - $ 240,044 $ - $ (3,331,849)Alternate education 15,400 - - - (15,400)Special education 597,527 - 218,163 - (379,364)Vocational education 187,041 - 7,477 - (179,564)

Support Services:Attendance 30,760 - - (30,760)Health services 81,497 - - (81,497)Other student support 200,003 - 139,729 (60,274)Regular education 395,199 - 135,721 - (259,478)Special education 59,886 - 30,605 - (29,281)Vocational education 1,452 - 1,452 - -

Board of Education 129,879 - - - (129,879)Office of Director of Schools 154,632 - 1,150 - (153,482)Office of Principals 428,145 1,726 - (426,419)Fiscal Services 77,387 - - (77,387)Operation and

maintenance of plant 628,350 - - (628,350)Studenttransportation 6,019 5,000 - (1,019)Central and other 253,564 - - (253,564)

Noninstructional ServicesFood service 614,313 165,526 484,029 - 35,242EarlyChildhood 198,925 - 207,037 - 8,112Capital outlay 101,268 - - - (101,268)Debtservice 117,788 - - - (117,788)

$ 7,850,928 $ 165,526 $ 1,472,133 $ - (6,213,269)

General Revenues:Property taxes including interest and penalties 1,288,692Sales taxes 563,128Alcoholic beverage tax 187Grants and contributions not restricted to specific programs

Basic Education Program 5,093,000Interest 13,400Insurance recovery 400Other miscellaneous revenues 64,772

Total general revenues 7,023,579

Change in net position 810,310

Net position, beginning 3,207,092

Net position, ending $ 4,017,402


WEST CARROLL SPECIAL SCHOOL DISTRICTBALANCE SHEET

GOVERNMENTAL FUNDSJune 30, 2016

General Debt Other TotalPurpose Service Governmental Governmental

Assets Fund Fund Funds FundsCash and cash equivalents $ 3,868,622 $ 12,583 $ 263,310 $ 4,144,515Investments - 200,000 200,000Due from other governments - nongrant 1,075,469 304,245 - 1,379,714Due from other governments - grants 8,525 - 7,596 16,121Due from other funds 24,999 - - 24,999Inventory __________ - 25,074 25,074

Total assets $ 4,977,615 $ 316,828 $ 495,980 $ 5,790,423

Liabilities, deferred inflows of resources and fund balancesLiabilities:

Accrued expenses $ 54,516 $ - $ - $ 54,516Due to other funds - 24,999 24,999

Total liabilities 54,516 - 24,999 79,515

Deferred inflows of resources:Unavailable revenue - property taxes 962,382 301,924 - 1,264,306

Total deferred inflows of resources 962,382 301,924 - 1,264,306

Fund balances:Nonspendable

Inventory - 25,074 25,074Endowment Fund Principal - 200,000 200,000

RestrictedOperation of non-instructional services - 245,907 245,907

CommittedDebt Service - 14,904 - 14,904

Unassigned 3,960,717 - - 3,960,717Total fund balances 3,960,717 14,904 470,981 4,446,602

Total liabilities, deferred inflows ofresources, and fund balances $ 4,977,615 $ 316,828 $ 495,980 $ 5,790,423


WEST CARROLL SPECIAL SCHOOL DISTRICTRECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL

FUNDS TO THE STATEMENT OF NET POSITIONJune 30, 2016

Amounts reported for the governmental activities in the statement of net position (Page 13) aredifferent because:

Fund balance - total governmental funds (Page 15) $ 4,446,602

Capital assets used in governmental funds are not financial resources and, therefore,are not reported as assets in governmental funds. 4,798,108

Asset reported in the statement of net position that do not provide current resourcesare not reported as assets in the funds.

Accrued interest 2,547

Net pension asset (liability) is not a financial resource (use) in the current period and,therefore, are not reported an asset (liability) in governmental funds.

Net pension asset 122,148Net pension liability (40,630)

Deferred outflows of resources related to pensions in which the consumption of netposition will occur in future periods, therefore, it is not reported in the funds 526,824

Deferred inflows of resources related to pensions in which the acquisition of netposition will occur in future periods, therefore, it is not reported in the funds (1,061,949)

Other liabilities in governmental funds are not financial uses in the current periodand, therefore, are not reported as liabilities in governmental funds.

Accrued interest payable (29,723)

Long-term liabilities, including bonds, bond premiums, notes payable, OPEB, andleases payable, are not due in the current period and, therefore, are notreported in the funds. (4,746,525)

Net position of governmental activities (Page 13) $ 4,017,402


WEST CARROLL SPECIAL SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS


Expenditures:Current:

InstructionSupport servicesNoninstructional

Total expenditures

3,998,3242,372,716

289,4576,660,497

420,307420,307

398,894177,360622,095

1,198,349

4,397,2182,550,0761,331,8598,279,153

Excess (deficiency) of revenuesover (under) expenditures 476,174 (125,561) 31,473 382,086

- 121,901(121,901) -

(121,901) 121,901

121,901(121,901)

Net changes in fund balance

Fund balance - ending

354,273 (3,660) 31,473 382,086

4,073,298____________ ____________ ____________ (8,782)____________ ____________ ____________ 4,064,516

$ 3,960,717 $ 14,904 $ 470,981 $ 4,446,602

General Debt Other TotalPurpose Service Governmental Governmental

Revenues: Fund Fund Funds FundsTaxes $ 1,557,074 $ 294,746 - $ 1,851,820Federal revenue - 1,054,866 1,054,866Intergovernmental 5,524,088 - - 5,524,088Miscellaneous 45,819 - - 45,819lnterestearned 9,690 - 3,711 13,401Food services - - 171,245 171,245

Total revenues 7,136,671 294,746 1,229,822 8,661,239

Other financing sources (uses)Transfers inTransfers (out)

Fund balance - beginning 3,606,444 18,564 448,290Inventory adjustment - - (8,782)

Fund balance - beginning - restated 3,606,444 18,564 439,508


WEST CARROLL SPECIAL SCHOOL DISTRICTRECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTALFUNDS TO THE STATEMENT OF ACTIVITIES


Amounts reported for the governmental activities in the statement of activities (Page 14) aredifferent because:

Net change in fund balance - total governmental funds (Page 17) $ 382,086

Expenses on the statement of activities that are not current financial usesare not reported as expenses in governmental funds:

Accrued interest payable 7,836Change in inventory (8,782)

The change in OPEB is an expenditure in the governmental funds, but thechange reduces or increases the liability on the statement of activities. (16,648)

Governmental funds report the effect of premiums, discounts and similar itemswhen debt is first issued, whereas these amounts are unavailable in the fundsand amortized in the statement of activities. This amount is the net effect ofthese differences in the treatment of long-term debt and related items.

Bond discount (3,574)Bond premium 18,257

Revenues in the statement of activities that do not provide current financial resourcesare not reported as current revenues in the funds.

Unavailable revenue (80)

The payment of pension contributions consumes current financial resources inthe governmental funds. These transactions do not have any effect on the netposition, but are considered deferred outflows of resources. 414,534

The actuarially determined negative pension expense (expense) does not consume (use)current financial resources and, therefore, is not reported in the governmental funds.It is reported as negative expense (expense) in the statement of activities.Negative pension expense 47,500Pension expense (1,691)

The repayment of the principal of long-term debt is an expenditure in thegovernmental funds, but the repayment reduces long-term liabilities on thestatement of activities. 280,000

Capital outlays are reported in the governmental funds as expenditures. However,in the statement of activities, the cost of those assets is allocated over their estimateduseful lives as depreciation expense:

Capital outlays 65,810Depreciation (374,938)

Change in net position of governmental activities (Page 14) $ 810,310

The accompanying notes are an integral part of the financial statements.- 18-

WEST CARROLL SPECIAL SCHOOL DISTRICTGENERAL PURPOSE FUND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGET AND ACTUAL


Variance-Budgeted Amounts Over

Revenues: Original Final Actual (Under)Local Taxes:

County Taxes:Clerk and Master collections - prior year $ 10,000 $ 10,000 $ 26,146 $ 16,146Sales tax 450,000 450,000 536,438 86,438Interstate telecommunications 300 300 544 244

460,300 460,300 563,128 102,828

Special School District Taxes:Property taxes 882,388 882,388 912,761 30,373Property taxes - prior year 27,919 27,919 56,374 28,455Interest and penalty 5,500 5,500 8,734 3,234In lieu of tax payments 14,000 14,000 16,077 2,077

929,807 929,807 993,946 64,139

Total local taxes 1,390,107 1,390,107 1,557,074 166,967

Intergovernmental Revenues:State Education Funds:

Basic Education Program 5,093,000 5,093,000 5,093,000 -

Early Childhood Education 207,037 207,037 207,037 -

Otherstateeducationfunds 117,623 117,623 125,942 8,319Career Ladder 48,500 48,500 46,016 (2,484)

5,466,160 5,466,160 5,471,995 5,835

Other State Funds:Mixed drinktax 400 400 187 (213)

Federal Through State:Special Education Preschool Grants - 22,000 - (22,000)Education of handicapped 10,000 10,000 32,854 22,854

10,000 32,000 32,854 854

Total intergovernmental revenues 5,476,560 5,498,560 5,505,036 6,476






Original Final Actual (Under)Miscellaneous Revenues:

Marriage licenses $ 200 $ 200 $ 300 $ 100Interest earned 7,000 7,000 9,690 2,690Miscellaneous refunds - - 10,665 10,665Insurance recovery - - 400 400Other 20,000 20,000 34,454 14,454

Total miscellaneous revenues 27,200 27,200 55,509 28,309

Total revenues 6,893,867 6,915,867 7,117,619 201,752

ExpendituresCurrent:Instruction:

Regular Instruction Program:Teachers 2,418,557 2,448,557 2,451,172 2,615Career Ladder Program 28,000 28,000 27,500 (500)Career Ladder extended contract 15,000 15,000 12,561 (2,439)Homebound teachers 4,000 6,500 6,396 (104)Aides 37,653 41,653 39,793 (1,860)Other salaries and wagers 15,000 15,000 9,000 (6,000)Substitute teachers 3,000 3,000 2,251 (749)Noncertified substitute teachers 34,000 34,000 32,588 (1,412)Social Security 143,532 143,532 146,125 2,593State retirement 225,034 225,034 228,360 3,326Medical insurance 219,876 219,876 220,806 930Medicare 33,570 33,570 34,231 661Maintenance and repair services 1,000 1,000 - (1,000)Tuition 3,000 3,000 1,192 (1,808)Instructional materials and supplies 43,000 38,000 23,116 (14,884)Textbooks 80,000 80,000 8,988 (71,012)Feewaivers 11,000 11,000 9,465 (1,535)Capital outlay - equipment 53,000 53,000 53,682 682

3,368,222 3,399,722 3,307,226 (92,496)

Alternate Instruction Program:Other contracted services 15,000 15,400 15,400






Original Final Actual (Under)Special Education Program:

Teachers $ 231,029 $ 234,029 $ 233,559 $ (470)Career Ladder 1,500 1,500 1,000 (500)Homebound teachers 1,700 1,700 1,409 (291)Aides 44,325 47,925 47,865 (60)Speech pathologist - 400 375 (25)Substitute teachers 700 700 - (700)Non-certified substitutes 2,300 4,400 4,373 (27)Social Security 14,972 14,972 16,278 1,306State retirement 24,192 24,192 24,862 670Medical insurance 33,876 33,876 26,057 (7,819)Medicare 3,502 3,502 3,814 312Contracts with other schools 72,300 72,300 73,170 870Other contracted services 13,000 13,000 10,214 (2,786)Instructional supplies and materials 4,000 4,000 2,168 (1,832)Capital outlay - equipment 5,000 1,000 3,247 2,247

452,396 457,496 448,391 (9,105)

Vocational Education Program:Teachers 147,716 159,216 150,707 (8,509)Career Ladder Program 1,000 1,000 1,000 -

Non-certified substitutes 2,700 2,700 1,760 (940)Social Security 8,491 8,491 8,678 187State retirement 13,444 13,444 13,714 270Medical insurance 14,268 14,268 14,344 76Medicare 1,987 1,987 2,032 45Instructional supplies and materials 11,000 9,000 8,500 (500)Other supplies and materials - 900 20 (880)Capital outlay - equipment 11,000 11,000 7,500 (3,500)

211,606 222,006 208,255 (13,751)

Total instruction $ 4,047,224 $ 4,094,624 $ 3,979,272 $ (115,352)






Original Final Actual (Under)

Support Services:Attendance:

Medical personnel $ 25,923 $ 26,323 $ 26,278 $ (45)Social Security 1,533 1,533 1,582 49State retirement 2,344 2,344 2,376 32Medical insurance 1,212 1,212 940 (272)Medicare 359 359 370 11Postal charges 500 500 235 (265)Travel 2,500 2,500 1,355 (1,145)Attendance Equipment 1,000 - - -

35,371 34,771 33,136 (1,635)

Health Services:Medical personnel 63,843 64,293 64,291 (2)Social security 3,383 3,383 3,296 (87)State retirement 5,620 5,620 5,399 (221)Medical insurance 9,288 9,288 11,006 1,718Medicare 792 792 771 (21)Travel 1,500 1,500 (1,500)Other supplies and materials 1,500 1,500 633 (867)Other charges 1,000Health equipment 1,500 1,500 1,500 -

88,426 87,876 86,896 (980)

Other Student Support:Career Ladder 4,000 4,000 4,000 -

Guidance personnel 142,378 142,528 142,488 (40)Career Ladder extended contract - 1,000 1,820 820Clerical Personnel 10,000 10,000 9,653 (347)Social Security 9,474 9,474 9,554 80State retirement 13,979 13,979 13,407 (572)Medical insurance 3,576 3,576 3,569 (7)Medicare 2,216 2,216 2,234 18Evaluation and testing 4,000 3,700 1,900 (1,800)Travel 2,000 2,000 529 (1,471)Other contracted services 14,000 14,000 14,000 -

Other supplies and materials 1,100 1,100 1,020 (80)Other equipment 1,000 150 150 -

207,723 207,723 204,324 (3,399)

The accompanying notes are integral part of the financial statements.-22-






Regular Education ProgramSupervisor $ 59000 $ 59,500 $ 59,510 $ 10Career Ladder Program 4,000 4,000 4,000 -

Career Ladder extended contract 600 600 - (600)Librarians 134,932 123,932 123,412 (520)Other salaries and wages - 4,500 4,506 6Non-certified substitute teachers 300 300 - (300)Social Security 11,447 11,447 10,196 (1,251)State retirement 18,346 18,346 17,001 (1,345)Medical insurance 18,000 18,000 26,358 8,358Medicare 2,678 2,678 2,385 (293)Maintenance and repair service - equipment 21,000 21,000 22,340 1,340Travel 4,000 4,000 1,684 (2,316)Other contracted services 8,000 8,000 8,309 309Library books/media 9,000 9,000 9,000 -

Other supplies and materials 1,500 1,500 - (1,500)In-service/staff development 3,500 2,500 855 (1,645)Otherequipment 1,000 1,000 - (1,000)

297,303 290,303 289,556 (747)

Special Education Program:Supervisor 10,300 10,400 10,327 (73)Clerical personnel 9,380 9,680 10,817 1,137Social Security 840 840 1,079 239State retirement 1,601 1,601 1,741 140Medical insurance 6,192 6,192 3,794 (2,398)Medicare 200 200 252 52Travel 2,500 2,500 691 (1,809)In-service/staff development 2,500 2,500 1,722 (778)Otherequipment 1,000 600 1,000 400

34,513 34,513 31,423 (3,090)



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCE - BUDGETAND ACTUAL



Original Final Actual (Under)Board of Education:

Unemployment compensation $ 10,000 $ 10,000 $ 8,285 $ (1,715)Audit services 25,000 25,000 24,700 (300)Dues and memberships 7,000 7,000 5,966 (1,034)Legal services 1,000 1,000 3,426 2,426Travel 1,500 1,500 1,273 (227)Liability insurance 3,000 3,000 3,073 73Trustee commissions 31,000 31,000 31,726 726Workmen’s compensation 42,802 42,802 43,583 781Refund to applicants 750 750 456 (294)Other charges 6,000 6,000 7,391 1,391

128,052 128,052 129,879 1,827

Director of Schools:County official/administrative officer 88,003 88,503 96,626 8,123Career Ladder program 1,000 1,000 1,000 -

Clerical personnel 11,256 11,256 10,317 (939)Social Security 5,605 5,605 6,159 554State retirement 8,756 8,756 9,595 839Medical insurance 10,000 10,000 9,454 (546)Medicare 1,293 1,293 1,440 147Communication 9,000 9,000 7,708 (1,292)Dues and memberships 2,500 2,500 1,675 (825)Maintenance and repair service - equipment 2,000 1,000 800 (200)Postal charges 1,200 1,200 1,008 (192)Travel 4,000 4,000 3,949 (51)Office supplies 1,500 1,500 1,853 353Capital outlay - equipment 2,000 300 273 (27)

148,113 145,913 151,857 5,944






Original Final Actual (Under)Office of Principals:

Principals $ 202,524 $ 199,524 $ 200,274 $ 750Career Ladder 2,000 2,000 1,500 (500)Accountants/bookkeepers 11,257 11,757 11,750 (7)Career Ladder Ext. Contract - 975 975Assistant principal(s) 58,000 55,000 54,256 (744)Secretary(s) 57,024 59,524 59,286 (238)Clerical personnel 18,994 19,994 19,494 (500)In service / staff development 7,500 7,500 6,000 (1,500)Social Security 20,200 20,200 19,990 (210)State retirement 30,170 30,170 29,987 (183)Medical insUrance 27,372 27,372 25,273 (2,099)Medicare 4,650 4,650 4,675 25Communication 12,000 12,000 11,172 (828)Postal charges 1,500 1,500 1,500 -

Other supplies and materials 6,000 6,000 6,000 -

Administration equipment 6,000 6,000 6,000 -

465,191 463,191 458,132 (5,059)

Fiscal Services:Accountants/bookkeepers 57,184 57,684 58,184 500Social Security 3,161 3,161 3,168 7State retirement 4,266 4,266 4,340 74Medical insurance 6,204 6,204 5,564 (640)Medicare 740 740 740 -

Travel 500 500 105 (395)Other contracted services 8,200 8,200 9,456 1,256Data processing supplies 500 500 - (500)Office supplies 2,000 -

Other charges 725 725 170 (555)Capital outlay - equipment 7,800 300 - (300)

91,280 82,280 81,727 (553)







Operation of Plant:Custodial personnel $ 131,000 $ 134,500 $ 135,050 $ 550Social Security 7,149 7,149 7,590 441State retirement 9,698 9,698 10,013 315Employee health insurance 10,860 10,860 10,651 (209)Medicare 1,728 1,728 1,775 47Maintenance and repair - equipment 11,000 11,000 6,255 (4,745)Custodial supplies 29,000 29,000 27,940 (1,060)Electricity 170,300 170,300 163,481 (6,819)Gas 47,000 36,000 31,930 (4,070)Water and sewer 25,000 25,000 25,036 36Building and contents insurance 85,398 85,398 85,398 -

528,133 520,633 505,119 (15,514)

Maintenance of Plant:Supervisor 37,643 38,168 38,143 (25)Maintenance personnel 21,799 22,324 22,299 (25)Othersalariesandwages 3,500 3,500 1,979 (1,521)Social Security 3,518 3,518 3,562 44State retirement 4,696 4,696 4,509 (187)Medical insurance 6,204 6,204 6,070 (134)Medicare 823 823 833 10Maintenance and repair - buildings 7,000 5,000 2,532 (2,468)Maintenance and repair- equipment 24,000 24,000 22,057 (1,943)Maintenance and repair-vehicles 2,500 2,500 1,190 (1,310)Travel 2,000 2,000 1,133 (867)Other contracted services 10,500 10,500 10,050 (450)Gasoline 3,700 3,700 2,256 (1,444)Other supplies and materials 19,544 19,544 18,702 (842)Capital outlay - equipment 7,000 7,000 5,570 (1,430)

154,427 153,477 140,885 (12,592)

TransportationOthercontracted services 11,000 11,000 1,019 (9,981)






Original Final Actual (Under)Central and Other:

Supervisor $ 51,074 $ 51,599 $ 51,574 $ (25)Data processing personnel 17,000 17,350 18,111 761Social Security 4,000 4,000 4,058 58State retirement 5,500 5,500 5,199 (301)Medical insurance 3,744 3,744 3,734 (10)Medicare 957 957 949 (8)Data processing services 130,000 130,000 105,936 (24,064)Maintenance and repair - equipment 3,000 3,000 4,698 1,698Postal Charges 500 500 - (500)Travel 3,500 3,500 3,262 (238)Other contracted services 30,000 30,000 30,000 -

Other equipment 35,000 35,000 31,242 (3,758)284,275 285,150 258,763 (26,387)

Total support services 2,473,807 2,444,882 2,372,716 (72,166)

Non-Instructional Services:Food service

Cafeteria personnel - 6,500 6,500Social Security - 403 403State Retirement - 411 410 (1)Employer Medicare - 95 94 (1)

- 7,409 7,407 (2)

Early Childhood Education:Supervisor! Director 6,500 6,500 6,445 (55)Teachers 80,000 76,000 75,878 (122)Aides 46,000 50,000 47,590 (2,410)Non-certified substitute teachers 4,000 4,000 1,650 (2,350)Social Security 7,800 7,800 7,424 (376)State Retirement 10,500 10,500 10,992 492Medical insurance 12,500 12,500 9,844 (2,656)Unemployment Compensation 1,800 1,800 250 (1,550)Employer Medicare 2,000 2,000 1,736 (264)Travel 2,200 2,200 755 (1,445)Instructional supplies 13,737 13,737 21,810 8,073






Original Final Actual (Under)In-service/staff development $ 4,000 $ 4,000 $ 3,815 $ (185)Other equipment 16,000 16,000 18,848 2,848

207,037 207,037 207,037 -

Capital Outlay:Building improvements 10,000 55,000 57,518 2,518Other capital outlay 22,000 22,000 17,495 (4,505)

32,000 77,000 75,013 (1,987)

Total non-instructional services 239,037 291,446 289,457 (1,989)

Total expenditures 6,760,068 6,830,952 6,641,445 (189,507)

Excess (deficiency) of revenues over (under)expenditures 133,799 84,915 476,174 391,259

Other financing sources (uses):Transfers out (143,480) (125,596) (121,901) 3,695

Net changes in fund balance $ (9,681) $ (40,681) 354,273 $ 394,954

Fund balance - beginning 3,606,444

Fund balance - ending $ 3,960,717





Explanation of differences between budgetary inflows and outflows and GAAP revenues andexpenditures

Inflows/revenues:Actual amounts (budgetary basis) $ 7,117,619Differences - budget to GAAP:

Fringe benefits - noncash 19,052Total Revenues as Reported on Statement of Revenues,

Expenditures and Changes in Fund Balances - Governmental Funds 7,136,671

Outflows/expenditures:Actual amounts (budgetary basis) 6,641,445Differences - budget to GAAP:

Fringe expense - noncash 19,052Total Expenditures as Reported on Statement of Revenues,

Expenditures and Changes in Fund Balances - Governmental Funds 6,660,497

Other financing sources (uses) (121,901)

Net changes in fund balance $ 354,273


WEST CARROLL SPECIAL SCHOOL DISTRICTNOTES TO FINANCIAL STATEMENTS

June 30, 2016

NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity:

The West Carroll Special School District (District) was created by an act to amend Chapter 504 of thePrivate Acts of 1945 as amended by Chapter 82 of the Private Acts of 1981. This act was passed bythe General Assembly of the State of Tennessee on July 23, 1981. The purpose of the West CarrollSpecial School District is to operate and administer the area of West Carroll County’s publicschools.

The six-member school board, which is the governing authority, is elected by the public, approvesits own budgets and controls surpluses and deficits, has the authority to issue debt and to levytaxes, and has control over hiring and firing employees.

As required by generally accepted accounting principles, these financial statements present allfunds, which comprise the District. These financial statements present the District as “The PrimaryGovernment”, and there are no other component units, or entities for which the District isconsidered financially accountable, which should be included.

The financial statements of the West Carroll Special School District have been prepared inconformity with generally accepted accounting principles (GAAP) as applied to governmental units.The Governmental Accounting Standards Board (GASB) is the accepted standard setting body forestablishing governmental accounting and financial reporting principles. The more significantpolicies of the District are described below.

B. District-wide and Fund Financial Statements

The district-wide financial statements (i.e., the statements of net position and the statement ofactivities) report information on all of the nonfiduciary activities of the primary government. For themost part, the effect of the interfund activity has been removed from these statements.Governmental activities, which normally are supported by taxes and intergovernmental revenues,are the only activities of the District. The District does not maintain any business-type activities.

The statement of activities demonstrates the degree to which the direct expenses of the givenfunction or segment are offset by program revenues. Direct expenses are those that are clearlyidentifiable with a specific function or segment. Program revenues include 1) charges to customersor applicants who purchase, use, or directly benefit from goods, services, or privileges provided by agiven function or segment, 2) operating grants and contributions restricted to meeting the operationalrequirements of a particular function or segment, and 3) capital grants and contributions that arerestricted to meeting the capital requirements of a particular function or segment. Taxes and otheritems not properly included among program revenues are reported instead as general revenues.

C. Measurement Focus, Basis of Accounting, and Financial Statements Presentation

The district-wide financial statements are reported using the economic resources measurementfocus and the accrual basis of accounting. Revenues are recorded when earned, and expenses arerecorded when a liability is incurred, regardless of the timing of related cash flows. Grants andsimilar items are recognized as revenue as soon as all eligibility requirements imposed by the

-30-


June 30, 2016

provider have been met.

Governmental fund financial statements are reported using the current financial resourcesmeasurement focus and the modified accrual basis of accounting. Revenues are recognized assoon as they are both measurable and available. Revenues are considered available when theyare collectible within the current period or soon enough thereafter to pay liabilities of the currentperiod. For this purpose, the government considers revenues available if they are collected withinsixty days of the end of the current fiscal period. Expenditures generally are recorded when aliability is incurred, as under accrual accounting. However, debt service expenditures and claimsand judgments, are recorded only when payment is due.

Property taxes, sales taxes, grants, and interest associated with the current fiscal period are allconsidered to be susceptible to accrual and have been recognized as revenues of the current fiscalperiod. All other revenue items are considered measurable and available only when cash isreceived by the government.

The District reports the following major governmental funds:

The general purpose fund is the government’s primary operating fund. It accounts for allfinancial resources of the general government, except those required to be accounted for inanother fund.

The debt service fund is the fund used to account for all financial resources and expendituresrelated to repayment of debt.

As a general rule, the effect of interfund activity has been eliminated from the district-wide financialstatements.

Amounts reported as program revenues include 1) charges to customers or applicants for goods,services, or privileges provided, 2) operating grants and contributions, and 3) capital grants andcontributions, including special assessments. Internally dedicated resources are reported asgeneral revenues rather than as program revenues. Likewise, general revenues include all taxes.

When both restricted and unrestricted resources are available for use, it is the District’s policy touse the restricted resources first, then unrestricted resources as they are needed.

D. Assets, Liabilities, and Net Position or Equity

Deposits and InvestmentsThe District’s cash and cash equivalents are considered to be cash on hand, demand deposits, andshort-term investments with maturities of three months or less from the date of acquisition. Statestatutes authorize the District to invest in certificates of deposit, obligations of the U.S. Treasury,agencies and instrumentalities, obligations guaranteed by the U.S. government or its agencies,repurchase agreements and the State’s investment pool.

Receivables and PayablesActivity between funds that are representative of lending/borrowing arrangements outstanding atthe end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of

-31-


June 30, 2016

interfund loans) or ~advances to/from other funds” (i.e., the non-current portion of interfund loans).

All other outstanding balances between funds are reported as “due to/from other funds”.

Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied andmailed on October 1. The payment due dates are October 1 through February 28 and becomedelinquent on March 1. The property taxes are collected by the Trustee of Carroll County and remittedto the District. District property tax revenues are recognized in the period for which they were levied.

Non-current portions of long-term receivables due to governmental funds are reported on theirbalance sheets, in spite of their spending measurement focus. Special reporting treatments areused to indicate, however, that they should not be considered “available spendable resources”,since they do not represent net current assets. Recognition of governmental fund type revenuesrepresented by non-current receivables is reported as unavailable in the governmental fundstatements until they become current receivables.

For the purpose of operating and maintaining the District, the private act creating the Districtauthorized an annual property tax on every one hundred ($100) assessment of real and personalproperty located within the District. The current property tax is $1.34 on every $100 of real andpersonal property located within the District.

InventoriesThe Cafeteria Fund maintains an inventory consisting of food supplies using the purchases methodand expenses inventory when purchased throughout the year. At year-end, the actual cost of theitems in inventory is used to capitalize the inventory, with a corresponding entry to nonspendablefund balance in the Cafeteria Fund. The costs of governmental fund type inventories are recordedas expenditures when purchased.

Capital AssetsCapital assets, which include buildings and improvements and other capital assets, are reported inthe applicable district-wide financial statements. Capital assets are defined by the government asassets with an initial, individual cost of $5,000 (amount not rounded) or more and an estimateduseful life in excess of two years.

The costs of normal maintenance and repairs that do not add to the value of the assets or materiallyextend assets’ lives are not capitalized. Major outlays for capital assets and improvements arecapitalized as projects are constructed.

Property, plant, and equipment of the District are depreciated using the straight-line method overthe following useful lives:

Buildings and impro~ements 30 yearsMachinery and equipment 5-15 years

Compensated AbsencesAll employees, except food service personnel, accumulate sick leave at the rate of one day permonth of service. All professional employees and non-professional employees, except food servicepersonnel, hired prior to July 1, 1980, may accumulate an unlimited amount of sick leave to build

-32-


June3O,2016

retirement. Non-professional employees, except food service personnel, hired after July 1, 1980,may accumulate up to 120 days of sick leave to build retirement. Full time non-professional foodservice employees, effective September 1, 1983, accumulate sick leave at the rate of one day forevery 20 days employed. Half-day food service personnel accumulate sick leave at the rate of one-half day for every 20 days employed. Full time and half-day food service personnel may accumulateup to 50 days of sick leave. Food service managers may accumulate a maximum of 120 days ofsick leave. Sick leave is not vested; therefore, no accrual is recorded.

All employees of the District, except custodial employees, receive two weeks paid vacation peryear, which is not accumulated. All employees, except custodial employees, also receive two daysof personal or professional leave per year. Since balances may not be accumulated, no liability isrecorded.

Long-term LiabilitiesIn the district-wide financial statements, long-term debt and other long-term obligations are reportedas liabilities in the applicable governmental activities statement of net position. Bond premiums anddiscounts are deferred and amortized over the life of the bonds using the effective interest method.Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costsare expensed in the year incurred.

In the fund financial statements, governmental fund types recognize bond premiums and discounts,as well as bond issuance costs, during the current period. The face amount of debt issued isreported as other financing sources while discounts on debt issuances are reported as otherfinancing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, arereported as debt service expenditures.

Deferred Outflows/Inflows of ResourcesIn addition to assets, the statement of net position will sometimes report a separate section fordeferred outflows of resources. This separate financial statement element, deferred outflows ofresources, represents a consumption of net position that applies to a future period and so will notbe recognized as an outflow of resources (expense/expenditure) until then. The items that qualifyfor reporting as deferred outflows of resources are disclosed on page 13.

In addition to liabilities, the statement of financial position will sometimes report a separate sectionfor deferred inflows of resources. This separate financial statement element, deferred inflows ofresources, represents acquisition of net position that applies to a future period and so will not berecognized as an inflow of resources (revenue) until that time. The items that qualify for reporting asdeferred inflows of resources are disclosed on page 13 and 15.

Summary of Significant Accounting PoliciesPensions. For purposes of measuring the net pension liability, deferred outflows of resources anddeferred inflows of resources related to pensions, and pension expense, information about thefiduciary net position of the Teacher Legacy Pension Plan, Teacher Retirement Plan, and theDistrict’s participation in the Public Employee Retirement Plan in the Tennessee ConsolidatedRetirement System (TCRS) and additions to/deductions from the plans’ fiduciary net position havebeen determined on the same basis as they are reported by the TCRS. For this purpose, benefits(including refunds of employee contributions) are recognized when due and payable in accordancewith the benefit terms of the Teacher Legacy Pension Plan, Teacher Retirement Plan, and the

-33-


June 30, 2016

District’s participation in the Public Employee Retirement Plan, respectively. Investments arereported at fair value.

Net position flow assumptionSometimes the government will fund outlays for a particular purpose from both restricted (e.g.restricted fund or grant proceeds) and unrestricted resources. In order to calculate the amounts toreport as restricted — net position and unrestricted — net position in the District-wide financialstatements, a flow assumption must be made about the order in which the resources areconsidered to be applied. It is the Districts’ policy to consider restricted — net position to have beendepleted before unrestricted - net position is applied.

Fund EquityAs prescribed by GASB Statement No. 54, governmental funds report fund balance inclassifications based primarily on the extent to which the District is bound to honor constraints onthe specific purposes for which amounts in the funds can be spent. Fund balance for governmentalfunds can consist of the following:

Nonspendable fund balanceThis classification includes amounts that are (a) not in spendable form, or (b) legally or contractuallyrequired to be maintained intact. The “not in spendable form” criterion includes items that are notexpected to be converted to cash, for example: inventories, prepaid amounts, and long-term notesreceivable.

Restricted fund balanceThis classification includes amounts that are restricted for specific purposes stipulated by externalresource providers, constitutionally or through enabling legislation. Restrictions may effectively bechanged or lifted with the consent of resource providers.

Committed fund balanceThis classification includes amounts that can only be used for the specific purposes determined bya formal action of the District’s highest level of decision-making authority, the Board of Education ofthe West Carroll Special School District. Commitments may be changed or lifted only by the Districttaking the same formal action that imposed the constraint originally (for example: resolution).

Assigned fund balanceThis classification includes amounts intended to be used by the District for specific purposes thatare neither restricted nor committed. The Board and its designees (of which there are none) havethe authority to assign amounts to be used for specific purposes. Assigned amounts also includeall residual amounts in governmental funds (except negative amounts) that are not classified asnonspendable, restricted, or committed.

Unassigned fund balanceThis fund balance is the residual classification for the General Fund. It is also used to reportnegative fund balances in other governmental funds.

Fund balance flow assumptionsSometimes the government will fund outlays for a particular purpose from both restricted andunrestricted resources (the total of committed, assigned and unassigned fund balance). In order to

-34-


June 30, 2016

calculate the amounts to report as restricted, committed, assigned and unassigned fund balance inthe governmental fund financial statements a flow assumption must be made about the order inwhich the resources are considered to be applied. It is the government’s policy to considerrestricted fund balance to have been depleted before using any of the components of unrestrictedfund balance. Further, when the components of unrestricted fund balance can be used for the samepurpose, committed fund balance is depleted first, followed by assigned fund balance. Unassignedfund balance is applied last.

NOTE 2- RECONCILIATION OF DISTRICT-WIDE AND FUND FINANCIAL STATEMENTS

Explanation of Certain Differences Between the Governmental Fund Balance Sheet and theDistrict-wide Statement of Net Position

The governmental fund balance sheet includes a reconciliation between fund balance - totalgovernmental funds and net position - governmental activities as reported in the district-widestatement of net position. One element of that reconciliation explains that “long-term liabilities,including bonds, notes and capital leases payable, and OPEB are not due and payable in thecurrent period and therefore, are not reported in the funds.” The details of this ($4,746,525) and($29,723) are as follows:

School Refunding Bonds Payable, Series 2015 $ (4,460,000)Bond premium related to the school refunding bonds, series 2015 (237,339)Bond discount related to the school refunding bonds, series 2015 46,460OPEB liability (95,646)

$ (4,746,525)

Accrued interest payable $ (29,723)

Another element of that reconciliation explains that “capital assets used in governmental funds arenot financial resources and, therefore, are not reported as assets in the governmental funds.” Thedetails of this $4,798,108 are as follows:

Land $ 232,960Buildings and impro’~ments 12,212,935Other capital assets 497,019

12,942,914Less accumulated depreciation (8,144,806)Total capital assets, net of accumulated depreciation $ 4,798,108

NOTE 3- STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

Budgetary Information

Annual budgets are adopted on a basis consistent with generally accepted accounting principles forall governmental funds except for the on-behalf payments paid by the State of Tennessee. Theseinclude the general purpose, federal projects, cafeteria, and debt service funds. The Board ofEducation approves and appropriates the budgets for these funds annually. All annual

-35-


June 30, 2016

appropriations lapse at fiscal year-end. Each budget is presented on the modified accrual basis ofaccounting, which is consistent with generally accepted accounting principles.

As an extension of the formal budgetary process, the Board of Education may transfer orappropriate additional funds for expenditures not anticipated at the time of budget adoption. TheDistrict’s policy is to not allow expenditures to exceed budgetary amounts at the function levelwithout obtaining additional appropriation approval from the Board of Education. Function level isdefined as Regular Instruction Program which is the next level below the category level, Instruction.The District had two functions that were not in compliance with the policy as of June 30, 2016.Under the general fund, the category level of instruction, and the function levels board of educationand director of schools, expenditures exceeded the budget by $1,827, and $5,944, respectively.

NOTE 4- DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments

As of June 30, 2016, the District had the following investments:

lrn.estments Fair Value Cost Maturity (Years)Certificate of deposit $ 200,000 4

Custodial Credit RiskThe District’s policies limit deposits and investments to those instruments allowed by applicablestate laws and described in Note 1. State statute requires that all deposits with financial institutionsmust be collateralized by securities whose market value is equal to 105% of the value of uninsureddeposits. The deposits must be collateralized by federal depository insurance, by the TennesseeBank Collateral Pool, by collateral held by the District’s agent in the District’s name, or by theFederal Reserve Banks acting as third party agents. State statutes also authorize the District toinvest in bonds, notes or treasury bills of the United States or any of its agencies, certificates ofdeposit at Tennessee state chartered banks and savings and loan associations and federallychartered banks and savings and loan associations, repurchase agreements utilizing obligations ofthe United States or its agencies as the underlying securities, and the state pooled investment fund.Statutes also require that securities underlying repurchase agreements must have a market value ofat least equal to the amount of funds invested in the repurchase transaction. As of June 30, 2016, thebank accounts were uninsured by $263,758.

GASB 31, Accounting and Financial Reporting for Certain Investments and External InvestmentPools, requires investments with a remaining maturity of one year or more to be reported at fairvalue. The District had investments of $200,000 as of June 30, 2016. This investment consists of acertificate of deposit at a local financial institution.

-36-


June 30, 2016

The following isa summary of cash and cash equivalents and investments as of June 30, 2016:

Cash and cash equi~lents:Cash in bank $ 4,126,512Local Go~ernment ln~estment Pool 18,003

4,144,515ln~stments:

Certificate of deposit 200,000

Total deposits $ 4,344,515

B. Receivables

Receivables as of the year-end for the government’s individual major funds and non-major funds inthe aggregate, including the applicable allowances for uncollectible accounts ($0) are as follows:

General Debt OtherPurpose Ser’.~ice Go”~ernmental

Fund Fund Funds TotalReceh~bles:

Due from other go~rnments - nongrant $ 1,075,469 $304,245 $ - $ 1,379,714Due from other go~rnments - grants 8,525 - 7,596 16,121

Total recei’~bles $ 1,083,994 $304,245 $ 7,596 $ 1,395,835

Amounts in the general purpose fund called due from other governmental agencies represent thenormal amounts due from state and county governments for shared revenues and tax allocations.

The following revenues are unavailable because they were not received within sixty days after year-end.

Una~ilableProperty Taxes

General Purpose FundProperty Taxes $ 962,382

Debt SerAce FundProperty Taxes 301,924

$ 1,264,306

-37-


June 30, 2016

C. Capital Assets

Capital asset activity for the year ended June 30, 2016, was as follows:

6/30/15 Additions Reductions 6/30/16Capital assets not being depreciated:

Land $ 232,960 $ - $ 232,960Work in Progress - -

232,960 - - 232,960

Capital assets being depreciated:Buildings and impro~ements 12,149,913 63,022 - 12,212,935Other capital assets 494,231 2,788 - 497,019

12,644,144 65,810 - 12,709,954Accumulated depreciation:

Buildings and impro~ements 7,386,205 354,683 - 7,740,888Other capital assets 383,663 20,255 - 403,918

7,769,868 374,938 - 8,144,806Capital assets net of accumulated

depreciation 5,107,236 (309,128) - 4,798,108Long-term debt related to

capital assets (including bondpremium and discount) (4,945,562) - (294,683) (4,650,879)

Capital assets net of accumulateddepreciation and related debt $ 161,674 $ (309,128) $ (294,683) $ 147,229

Depreciation expense was charged to functions/programs of the primary government as follows:

Instruction:Regular education $ 346,602

Support senAces:Office of the Director of Schools 12,643Operation and maintenance of plant 2,438Food SenAces 13,255

Total depreciation $ 374,938

-38-


June 30, 2016

D. Long-term Debt

The annual requirements to amortize all long-term debt and obligations outstanding as of June 30,2016, are as follows:

Years Ending BondsJune 30, Principal Interest Total

2017 $ 300,000 $ 120,875 $ 420,8752018 310,000 113,375 423,3752019 315,000 105,625 420,6252020 320,000 97,750 417,7502021 325,000 89,750 414,750

2022-2026 1,735,000 321,725 2,056,7252027-2029 1,155,000 69,900 1,224,900

$ 4,460,000 $ 919,000 $ 5,379,000

The following is a summary of long-term debt transactions for the year ended June 30, 2016:

Beginning Ending Due WithinBalance Additions Retirements Balance One Year

Bonds Payable:School Refunding Bonds, Series 2015, 2.5% to

3.0% interest, payable seriallythrough 2029 $4,740,000 $ - $ 280,000 $4,460,000 $ 300,000

Bond Discount (50,034) - (3,574) (46,460)Bond Premium 255,596 - 18,257 237,339

Net Bonds Payable $4,945,562 $ - $ 294,683 $4,650,879

The District issued school bonds for the purpose of providing funds for the acquisition andconstruction of a new building. During the year ended June 30, 2005, additional school bonds wereissued to refund a portion of the School Bonds, Series 1999.

During the year ended June 30, 2015, the District issued $4,740,000 of school refunding bonds forthe purpose of providing funds to refund the District’s School Bonds, Series 2005 and to pay costsof issuance on the bonds. The refunded bonds are considered defeased and the liability has beenremoved from the statement of net position. The amount of the discounts and premiums associatingwith the new debt is being amortized over the life of the new debt. The advance refunding wasundertaken to reduce the total debt service payments over the next fifteen years by $996,250.

-39-


June 30, 2016

E. Internal Balances

The following is a summary of due to and due from other funds as of June 30, 2016:

General Federal CentralizedPurpose Projects Cafeteria

Fund Fund Fund TotalDue to other funds $ - $ (24,999) $ - $ (24,999)Due from other funds 24,999 - - 24,999

$ 24,999 $ (24,999) $ - $ -

The above internal balance is to provide cash flow to the Federal Projects Funds untilreimbursement for grant expenditures are received from the State of Tennessee.

The following is a summary of transfers during the year ended June 30, 2016:

Transfers From Transfers To AmountGeneral Purpose Fund Debt Ser~ce Fund $ 121,901

Transfers are used to transfer debt payments.

NOTE 5-OTHER INFORMATION

A. Pensions

Teacher Legacy Pension Plan of Tennessee Consolidated Retirement System

Plan descriptionTeachers with membership in the Tennessee Consolidated Retirement System (TCRS) before July1, 2014 of West Carroll Special School District are provided with pensions through the TeacherLegacy Pension Plan, a cost sharing multiple-employer pension plan administered by the TCRS.The Teacher Legacy Pension Plan closed to new membership on June 30, 2014, but will continueproviding benefits to existing members and retirees. Beginning July 1, 2014, the TeacherRetirement Plan became effective for teachers employed by Local Education Agencies (LEA5) afterJune 30, 2014. The Teacher Retirement Plan is a separate cost sharing, multiple-employer definedbenefit plan. The TCRS was created by state statute under Tennessee Code Annotated Title 8,Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation andadministration of all employer pension plans in the TCRS. The Tennessee Treasury Department, anagency in the legislative branch of state government, administers the plans of the TCRS. The TCRSissues a publically available financial report that can be obtained at www.treasurv.tn.gov/tcrs.

Benefits providedTennessee Code Annotated Title 8, Chapters 34-37 establishes the benefit terms and can beamended only by the Tennessee General Assembly. Members of the Teacher Legacy Pension Planare eligible to retire with an unreduced benefit at age 60 with 5 years of service credit or after 30years of service credit regardless of age. Benefits are determined by a formula using the member’shighest five consecutive year average compensation and the member’s years of service credit. A

-40-


June 30, 2016

reduced early retirement benefit is available at age 55 and vested. Members are vested with fiveyears of service credit. Service related disability benefits are provided regardless of length ofservice. Five years of service is required for non-service related disability eligibility. The servicerelated and non-service related disability benefits are determined in the same manner as a serviceretirement benefit but are reduced 10 percent and include projected service credits. A variety ofdeath benefits are available under various eligibility criteria. Member and beneficiary annuitants areentitled to automatic cost of living adjustments (COLAs) after retirement. A COLA is granted eachJuly for annuitants retired prior to the 2nd of July of the previous year. The COLA is based on thechange in the consumer price index (CPI) during the prior calendar year, capped at 3 percent, andapplied to the current benefit. No COLA is granted if the change in the CPI is less than one-halfpercent. A one percent COLA is granted if the CPI change is between one-half percent and onepercent. A member who leaves employment may withdraw their employee contributions, plus anyaccumulated interest.

ContributionsContributions for teachers are established in the statutes governing the TCRS and may only bechanged by the Tennessee General Assembly. Teachers contribute 5 percent of salary. The LocalEducation Agencies (LEA5) make employer contributions at the rate set by the Board of Trusteesas determined by an actuarial valuation. By law, employer contributions for the Teacher LegacyPension Plan are required to be paid. The TCRS may intercept the state shared taxes of thesponsoring governmental entity of the LEA if the required employer contributions are not remitted.Employer contributions by West Carroll Special School District for the year ended June 30, 2016 tothe Teacher Legacy Pension Plan were $347,775 which is 9.04 percent of covered payroll. Theemployer rate, when combined with member contributions, is expected to finance the costs ofbenefits earned by members during the year, the cost of administration, as well as an amortizedportion of any unfunded liability.

Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources andDeferred Inflows of Resources Related to Pensions

Pension liabilityAt June 30, 2016, the West Carroll Special School District reported a liability of $40,630 for itsproportionate share of net pension liability. The net pension asset was measured as of June 30,2015, and the total pension liability used to calculate the net pension liability was determined by anactuarial valuation as of that date. West Carroll Special School District’s proportion of the netpension liability was based on West Carroll Special School District’s share of contributions to thepension plan relative to the contributions of all participating LEAs. At the measurement date of June30, 2015, West Carroll Special School District’s proportion was 0.099187 percent. The proportionmeasured as of June 30, 2015 was 0.097421 percent.

Negative pension expenseFor the year ended June 30, 2016, West Carroll Special School District recognized a pensionincome of $37,831.

Deferred outflows of resources and deferred inflows of resourcesFor the year ended June 30, 2016, West Carroll Special School District reported deferred outflowsof resources and deferred inflows of resources related to pensions from the following sources:

-41-


June 30, 2016

$ 1,664,924

(733,657)

$ 931,267

West Carroll Special School District employer contributions of $347,775, reported as pensionrelated deferred outflows of resources, subsequent to the measurement date, will be recognized asan increase in net pension asset in the year ended June 30, 2017. Other amounts reported asdeferred outflows of resources and deferred inflows of resources related to pensions will berecognized in pension expense as follows:

Year Ended June 30:$ (272,070)

2018 (272,070)2019 (272,070)2020 59,9232021 (123,491)Thereafter

In the table above, positive amounts will increase pension expense, while negative amounts willdecrease pension expense.

Actuarial assumptionsThe total pension liability in the June 30, 2015 actuarial valuation was determined using thefollowing actuarial assumptions, applied to all periods included in the measurement:

Deferred DeferredOutflows of Inflows of

ResourcesDifferences between expected and

actual experienceNet difference between projected and

acutal earnings on pension planinvestments

Changes in proportion of Net PensionLiability (Asset)

Contributions subsequent to themeasurement date of June 30, 2015

Total

To net the difference between projectedand actual earnings on pension planinvestments

Total per statement of net position

$ 632,417

995,979

36,528

Resources

$ 32,608

733,657

18,882

347,775

$ 1,132,922

(733,657)

$ 399,265

2017

-42-


June 30, 2016

Infaltion 3.0 percentSalary increases Graded salary ranges from 8.97 to 3.71 percent based

on age, including inflation, averaging 4.25 percentInvestment rate of return 7.5 percent, net of pension plan investment expenses,

including inflationCost-of-Living Adjustment 2.5 percent

Mortality rates are customized based on the June 30, 2012 actuarial experience study and includedsome adjustment for expected future improvement in life expectancy.

The actuarial assumptions used in the June 30, 2015 actuarial valuation were based on the resultsof an actuarial experience study performed for the period July 1, 2008 through June 30, 2012. Thedemographic assumptions were adjusted to more closely reflect actual and expected futureexperience.

The long-term expected rate of return on pension plan investments was established by the TCRSBoard of Trustees in conjunction with the June 30, 2012 actuarial experience study by consideringthe following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2)the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policyasset allocation, and (3) capital market projections that were utilized as a building-block method inwhich best-estimate ranges of expected future real rates of return (expected returns, net of pensionplan investment expense and inflation) are developed for each major asset class. Four sources ofcapital market projections were blended and utilized in the third technique. The blended capitalmarket projection established the long-term expected rate of return by weighting the expectedfuture real rates of return by the target asset allocation percentage and by adding inflation of 3percent. The target allocation and best estimates of arithmetic real rates of return for each majorasset class are summarized in the following table:

Long Term ExpectedAsset Class Real Rate of Return Target AllocationU.S. Equity 6.46% 33%Developed market international equity 6.26% 17%Emerging market internaltional equitity 6.40% 5%Private equity and strategic lending 4.61% 8%U.S. fixed income 0.98% 29%Real estate 4.73% 7%Short-term securities 0.00% 1%

100%

The long-term expected rate of return on pension plan investments was established by the TCRSBoard of Trustees as 7.5 percent based on a blending of the three factors described above.

Discount rateThe discount rate used to measure the total pension liability was 7.5 percent. The projection of cashflows used to determine the discount rate assumed that employee contributions will be made at the

-43-


June 30, 2016

current rate and that contributions from the all LEAs will be made at the actuarially determinedcontribution rate pursuant to an actuarial valuation in accordance with the funding policy of theTCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions,the pension plan’s fiduciary net position was projected to be available to make projected futurebenefit payments of current active and inactive members. Therefore, the long-term expected rate ofreturn on pension plan investments was applied to all periods of projected benefit payments todetermine the total pension liability.

Sensitivity of the proportionate share of net pension liability (asset) to changes in thediscount rateThe following presents West Carroll Special School District’s proportionate share of the net pensionliability (asset) calculated using the discount rate of 7.5 percent, as well as what West CarrollSpecial School District’s proportionate share of the net pension liability (asset) would be if it werecalculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage-pointhigher (8.5 percent) than the current rate:

Current1% Decrease Discount Rate 1% Increase

(6.5%) (7.5%) (8.5%)West Carroll Special School District’sproportionate share of the netpension liability (asset) $ 2,770,039 $ 40,630 $ (2,218,998)

Pension plan fiduciary net positionDetailed information about the pension plan’s fiduciary net position is available in a separatelyissued TCRS financial report.

Payable to the Pension PlanAt June 30, 2016, West Carroll Special School District reported a payable of $0 for the outstandingamount of contributions to the pension plan required at the year ended June 30, 2016.

Teacher Retirement Plan of Tennessee Consolidated Retirement System

Plan descriptionTeachers with membership in the Tennessee Consolidated Retirement System (TCRS) before July1, 2014 of West Carroll Special School District are provided with pensions through the TeacherLegacy Pension Plan, a cost sharing multiple-employer pension plan administered by the TCRS.The Teacher Legacy Pension Plan is closed to new membership. Teachers with membership in theTCRS after June 30, 2014 are provided with pensions through a legally separate plan referred to asthe Teacher Retirement Plan, a cost sharing multipleemployer pension plan administered by theTCRS. The TCRS was created by state statute under Tennessee Code Annotated Title 8, Chapters34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of allemployer pension plans in the TCRS. The Tennessee Treasury Department, an agency in thelegislative branch of state government, administers the plans of the TCRS. The TCRS issues apublically available financial report that can be obtained at www.treasurv.tn.gov/tcrs.

Benefits providedTennessee Code Annotated Title 8, Chapters 34-37 establishes the benefit terms and can beamended only by the Tennessee General Assembly. Members of the Teacher Retirement Plan are

-44-


June 30, 2016

eligible to retire at age 65 with 5 years of service credit or pursuant to the rule of 90 in which themember’s age and service credit total 90. Members are entitled to receive unreduced serviceretirement benefits, which are determined by a formula using the member’s highest five consecutiveyear average compensation and the member’s years of service credit. Service related disabilitybenefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits aredetermined in the same manner as a service retirement benefit but are reduced 10 percent andinclude projected service credits. A variety of death benefits are available under various eligibilitycriteria. Member and beneficiary annuitants are entitled to automatic cost of living adjustments(COLAs) after retirement. A COLA is granted each July for annuitants retired prior to the 2nd of Julyof the previous year. The COLA is based on the change in the consumer price index (CPI) duringthe prior calendar year, capped at 3 percent, and applied to the current benefit. No COLA is grantedif the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPIchange is between one-half percent and one percent. A member who leaves employment maywithdraw their employee contributions, plus any accumulated interest. Under the TeacherRetirement Plan, benefit terms and conditions, including COLA, can be adjusted on a prospectivebasis. Moreover, there are defined cost controls and unfunded liability controls that provide for theadjustment of benefit terms and conditions on an automatic basis.

ContributionsContributions for teachers are established in the statutes governing the TCRS and may only bechanged by the Tennessee General Assembly. Teachers contribute 5 percent of salary. The LocalEducation Agencies (LEAs) make employer contributions at the rate set by the Board of Trusteesas determined by an actuarial valuation. Per the statutory provisions governing the TCRS, theemployer contribution rate cannot be less than 4 percent, except for in years when the maximumfunded level, approved by the TCRS Board of Trustees, is reached. By law, employer contributionsfor the Teacher Retirement Plan are required to be paid. The TCRS may intercept the state sharedtaxes of the sponsoring governmental entity of the LEA if the required employer contributions arenot remitted. Employer contributions for the year ended June 30, 2016 to the Teacher RetirementPlan were $4,387 which is 4 percent of covered payroll. The employer rate, when combined withmember contributions, is expected to finance the costs of benefits earned by members during theyear, the cost of administration, as well as an amortized portion of any unfunded liability.

Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources andDeferred Inflows of Resources Related to Pensions

Pension liabilitiesAt June 30, 2016, West Carroll Special School District reported an asset of $1,290 for itsproportionate share of the net pension asset. The net pension asset was measured as of June 30,2015, and the total pension asset used to calculate the net pension asset was determined by anactuarial value as of that date. West Carroll Special School District’s proportion of the net pensionasset was based on West Carroll Special School District’s share of contributions to the pension planrelative to the contributions of all participating LEAs. At the measurement date of June 30, 2015West Carroll Special School District’s proportion was 0.032070 percent.

Pension ExpenseFor the year ended June 30, 2016, West Carroll Special School District recognized a pensionexpense at $1,691.

-45-


June 30, 2016

Deferred outflows of resources and deferred inflows of resourcesFor the year ended June 30, 2016, West Carroll Special School District reported deferred oufflowsof resources related to pensions from the following sources:

Differences between expected andactual experience

Net difference between projected andacutal earnings on pension planinvestments

Contributions subsequent to themeasurement date of June 30, 2015 _____________

_______________ $ 420

West Carroll Special School District’s employer contributions of $4,387 reported as pension relateddeferred outflows of resources, subsequent to the measurement date, will be recognized as areduction in net pension liability in the year ended June 30, 2017. Other amouts reported asdeferred outflows of resources and deferred inflows of resources related to pensions will berecognized in pension expense as follows:

Year Ended June 30:2017 $ (9)2018 (9)2019 (9)2020 (9)2021 (35)Thereafter (245)

In the table above, positive amounts will increase pension expense, while negative amounts willdecrease pension expense.

Actuarial assumptionsThe total pension liability in the June 30, 2015 actuarial valuation was determined using thefollowing actuarial assumptions, applied to all periods included in the measurement:

Deferred DeferredOutflows of Inflows ofResources Resources

$

104

4,387

$ 4,491

$ 420

Total

-46-


June 30, 2016




Mortality rates are customized based on the June 30, 2012 actuarial experience study and includedsome adjustment for expected future improvement in life expectancy.



Long Term ExpectedAsset Class Real Rate of Return Target ~JlocationU.S. Equity 6.46% 33%Developed market international equity 6.26% 17%Emerging market internaltional equitity 6.40% 5%Private equity and strategic lending 4.61% 8%U.S. fixed income 0.98% 29%Real estate 4.73% 7%Short-term securities 0.00% 1%

100%


Discount rateThe discount rate used to measure the total pension liability was 7.5 percent. The projection of cashflows used to determine the discount rate assumed that employee contributions will be made at the

-47-


June 30, 2016

current rate and that contributions from the all LEAs will be made at the actuarially determinedcontribution rate pursuant to an actuarial valuation in accordance with the funding policy of theTCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions,the pension plan’s fiduciary net position was projected to be available to make projected futurebenefit payments of current active and inactive members. Therefore, the long-term expected rate ofreturn on pension plan investments was applied to all periods of projected benefit payments todetermine the total pension liability.

Sensitivity of the proportionate share of net pension liability (asset) to changes in thediscount rateThe following presents West Carroll Special School District’s proportionate share of the net pensionliability (asset) calculated using the discount rate of 7.5 percent, as well as what West CarrollSpecial School District’s proportionate share of the net pension liability (asset) would be if it werecalculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage-pointhigher (8.5 percent) than the current rate:

Current1% Decrease Discount Rate 1% Increase

(6.5%) (7.5%) (8.5%)West Carroll Special School District’sproportionate share of the netpension liability (asset) $ 229 $ (1,290) $ (2,404)

Pension plan fiduciary net positionDetailed information about the pension plan’s fiduciary net position is available in a separatelyissued TCRS financial report.

Payable to the Pension PlanAt June 30, 2016, West Carroll Special School District reported a payable of $0 for the outstandingamount of contributions to the pension plan required at the year ended June 30, 2016.

Political Subdivision Pension Plan

Plan descriptionEmployees of West Carroll County Special School District are provided a defined benefit pensionplan through the Public Employee Retirement Plan, an agent multiple employer pension planadministered by the TCRS. The TCRS was created by state statute under Tennessee CodeAnnotated Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the properoperation and administration of the TCRS. The Tennessee Treasury Department, an agency in thelegislative branch of state government, administers the plans of the TCRS. The TCRS issues apublically available financial report that can be obtained at www.treasurv.tn.qov/tcrs.

Benefits providedTennessee Code Annotated Title 8, Chapters 34-37 establishes the benefit terms and can beamended only by the Tennessee General Assembly. The chief legislative body may adopt thebenefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age60 with 5 years of service credit or after 30 years of service credit regardless of age. Benefits aredetermined by a formula using the member’s highest five consecutive year average compensationand the member’s years of service credit. Reduced benefits for early retirement are available at age

-48-


June 30, 2016

55 and vested. Members vest with five years of service credit. Service related disability benefits areprovided regardless of length of service. Five years of service is required for non-service relateddisability eligibility. The service related and non-service related disability benefits are determined inthe same manner as a service retirement benefit but are reduced 10 percent and include projectedservice credits. A variety of death benefits are available under various eligibility criteria.

Member and beneficiary annuitants are entitled to automatic cost of living adjustments (COLAs)after retirement. A COLA is granted each July for annuitants retired prior to the 2~ of July of theprevious year. The COLA is based on the change in the consumer price index (CPI) during the priorcalendar year, capped at 3 percent, and applied to the current benefit. No COLA is granted if thechange in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change isbetween one-half percent and one percent. A member who leaves employment may withdraw theiremployee contributions, plus any accumulated interest.

Employees covered by benefit termsAt the measurement date of June 30, 2015, the following employees were covered by the benefitterms:

lnacitve employees or beneficiaries currently receiving benefits 19Inactive employess entitled to but not yet receiving benefits 31Active employees 41

91

ContributionsContributions for employees are established in the statutes governing the TCRS and may only bechanged by the Tennessee General Assembly. Employees contribute 5 percent of salary. WestCarroll County Special School District makes employer contributions at the rate set by the Board ofTrustees as determined by an actuarial valuation. For the year ended June 30, 2015, employercontributions for West Carroll County Special School District were $61,428 based on a rate of7.46% percent of covered payroll. By law, employer contributions are required to be paid. TheTCRS may intercept West Carroll County Special School District’s state shared taxes if requiredemployer contributions are not remitted. The employer’s actuarially determined contribution (ADC)and member contributions are expected to finance the costs of benefits earned by members duringthe year, the cost of administration, as well as an amortized portion of any unfunded liability.

Net Pension Liability (Asset)West Carroll County Special School District’s net pension liability (asset) was measured as of June30, 2015, and the total pension liability used to calculate net pension liability (asset) wasdetermined by an actuarial valuation as of that date.

Actuarial AssumptionsThe total pension liability as of June 30, 2015 actuarial valuation was determined using thefollowing actuarial assumptions, applied to all periods included in the measurement:

-49-


June 30, 2016




Mortality rates were based on actual experience from the June 30, 2012 actuarial experience studyadjusted for some of the expected future improvement in life expectancy.



Long TermExpected

Real Rate ofAsset Class Return Target ~JIocationU.S. Equity 6.46% 33%Developed market international equity 6.26% 17%Emerging market internaltional equitity 6.40% 5%Private equity and strategic lending 4.61% 8%U.S. fixed income 0.98% 29%Real estate 4.73% 7%Short-term securities 0.00% 1%

100%


-50-


June 30, 2016

Discount RateThe discount rate used to measure the total pension liability was 7.5 percent. The projection of cashflows used to determine the discount rate assumed that employee contributions will be made at thecurrent rate and that contributions from West Carroll County Special School District will be made atthe actuarially determined contribution rate pursuant to an actuarial valuation in accordance with thefunding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based onthose assumptions, the pension plan’s fiduciary net position was projected to be available to makeprojected future benefit payments of current active and inactive members. Therefore, the long-termexpected rate of return on pension plan investments was applied to all periods of projected benefitpayments to determine the total pension liability.

Changes in the Net Pension Liability (Asset)

Increase (Decrease)Total Net Pension

Pension Plan Fiduciary Net LiabilityLiability Position (Asset)

(a) (b) (a) - (b)

Balance at 6130114 $ 1,907,301 $ 2,154,461 $ (247,160)Changes for the year:Service cost 74,649 - 74,649Interest 145,857 - 145,857Differences between

expected and actualexperience 72,835 - 72,835

Contributions-employer 61,428 (61,428)

Contributions-employees 41,171 (41,171)

Net investment income 66,755 (66,755)Benefit payments,

including refundsof employee contrubutions (74,369) (74,369) -

Administrative expense - (2,315) 2,315

Net changes 218,972 92,670 126,302

$ 2,247,131

Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount RateThe following presents the net pension liability (asset) of West Carroll County Special SchoolDistrict calculated using the discount rate of 7.5 percent, as well as what the net pension liability(asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.5

Balance at 6130115 $ 2,126,273 $ (120,858)

-51-


June 30, 2016

percent) or 1-percentage-point higher (8.5 percent) than the current rate:

Current

Pension Expense (Negative Pension Expense) and Deferred Outflows of Resources andDeferred Inflows of Resources Related to Pensions

Negative pension expenseFor the year ended June 30, 2016, West Carroll County Special School District recognized negativepension expense of $9,669.

Deferred outflows of resources and deferred inflows of resourcesFor the year ended June 30, 2016, West Carroll County Special School District reported deferredoufflows of resources and deferred inflows of resources related to pensions from the followingsources:

Differences between expected andactual experience

Net difference between projected andacutal earnings on pension planinvestments

Contributions subsequent to themeasurement date of June 30, 2015

$ 206,903

The amount shown above for “Contributions subsequent to the measurement date of June 30,2015.” Will be recognized as a reduction (increase) to net pension liability (asset) in the followingmeasurement period.

Amounts reported as deferred oufflows of resources and deferred inflows of resources related topensions will be recognized in pension expense as follows:

West Carroll Special School District’snet pension liability (asset)

1% Decrease(6.5%)

Discount Rate(7.5%)

1% Increase(8.5%)

$ 175,744 $ (120,858) $ (367,809)

DeferredOutflows of

DeferredInflows of

Resources Resources

$ 106,861

100,042

$ 60,696

76,641

62,372

$ 199,709

(76,641)

$ 123,068

Total

To net the difference between projectedand actual earnings on pension planinvestments

Total per statement of net position(76,641)

$ 130,262

-52-


June 30, 2016

Year Ended June 30:2017 $ (28,763)2018 (28,763)2019 (28,763)2020 4,5842021 12,139Thereafter -

Payable to the Pension PlanAt June 30, 2016, West Carroll County Special School District reported a payable of $0 for theoutstanding amount of contributions to the pension plan required at the year ended June 30, 2016.

B. Postemployment Healthcare Plan

Plan DescriptionThe District participates in the state-administered Teacher Group Insurance Plan and the MedicareSupplement Plan for eligible retired employees’ for healthcare benefits. For accounting purposes,the plans are agent multiple-employer defined benefit OPEB plans. Benefits are established andamended by an insurance committee created by Tennessee Code Annotated (TCA) 8-27-302.Prior to reaching the age of 65, all members have the option of choosing a standard or partnershippreferred provider organization (PPO) plan for healthcare benefits. Subsequent to age 65,members who are also in the state’s retirement system may participate in a state-administeredmedicare supplement plan. The plan does not include pharmacy. State or higher educationemployee hired on or after July 1, 2015 are not eligible to continue insurance coverage atretirement in either the employee group plan or Medicare supplement plan.

Funding PolicyThe premium requirements of plan members are established and may be amended by theinsurance committee. The plans are self-insured and financed on a pay-as-you-go basis with therisk shared equally among the participants. Claims liabilities of the plan are periodically computedusing actuarial and statistical techniques to establish premium rates. The employers in each plandevelop their own contribution policy in terms of subsidizing active employees or retired employees’premiums since the committee is not prescriptive on that issue. The District pays all of its retiree’spremiums.

ARC $ 52,000Interest on NPO 2,962Adjustment to the ARC (2,974)Annual OPEB cost 51,988Amount of contribution (35,340)Increase/decrease in NPO 16,648Net OPEB obligation - beginning of year 78,998Net OPEB obligation - end of year $ 95,646

-53-


June 30, 2016

% ofAnnual Net OPEB

Annual OPEB Cost Obligation atYear End Plan OPEB Cost Contributed Year End6/30/2016 Teacher Group Plan $ 51,988 67.98% $ 95,646

Funded Status and Funding ProgressThe funded status of the plan as of June 30, 2016, was as follows:

TeacherGroup Plan

Actuarial valuation date 7/1/2015Actuarial accrued liability (AAL) $ 533,000Actuarial value of plan assets -

Unfunded actuarial accrued liability (UAAL) 533,000Actuarial Value of Assets as a % of the AAL -

Covared payroll (activa plan members) $ 4,792,817UAAL as a percentage of covared payroll 11.12%

Actuarial valuations involve estimates of the value of reported amounts and assumptions about theprobability of events far into the future, and actuarially determined amounts are subject to continualrevision as actual results are compared to past expectations and new estimates are made about thefuture. The schedule of funding progress, presented as RSI following the notes to the financialstatements, presents multiyear trend information about whether the actuarial value of plan assets isincreasing or decreasing over time relative to the actuarial accrued liability for benefits.

Actuarial Methods and AssumptionsCalculations are based on the types of benefits provided under the terms of the substantive plan atthe time of each valuation and on the pattern of sharing of costs between the employer and planmembers to that point. Actuarial calculations reflect a long-term perspective. Consistent with thatperspective, actuarial methods and assumptions used include techniques that are designed toreduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.

In the July 1, 2015, actuarial valuation for the Local Education plan, the Projected Unit Creditactuarial cost method was used and the actuarial assumptions included a 3.75 percent investmentrate of return (net of administrative expenses) and an annual healthcare cost trend rate of 6.5percent initially. The rate decreased to 6 percent in fiscal year 2016 and then will be reduced bydecrements to an ultimate rate of 4.7 percent by fiscal year 2050. All rates include a 2.5 percentinflation assumption. Premium subsidies in the Medicare Supplement plan are projected to remainunchanged and, consequently, trend rates are not applicable. The unfunded actuarial accruedliability is being amortized as a level percentage of payroll on a closed basis over a 30 year periodbeginning with July 1, 2007. Payroll is assumed to grow at a rate of 3 percent.

C. On-Behalf Payments for Fringe Benefits and Salaries

The District recognizes as revenues and expenses contributions made by the State of Tennesseeto the Teacher Group Plan and the Medicare Supplement Plan on behalf of the District’s

-54-


June 30, 2016

employees. In fiscal year 2016 the State made contributions allocated to the General Purpose fundfor $19,052.

D. Contingent Liabilities and Losses

Amounts received or receivable from grantor agencies are subject to audit and adjustment bygrantor agencies, principally the federal and state governments. Any disallowed claims, includingamounts already collected, may constitute a liability of the applicable funds. The amount, if any, ofexpenditures, which may be disallowed by the grantors, cannot be determined at this time althoughthe District’s management expects such amounts, if any, to be immaterial.

E. Risk Management

The District is exposed to various risks related to workers’ compensation, general liability,automobile liability, and property. The District felt it was more economically feasible to join publicentity risk pools as opposed to purchasing commercial insurance for these areas. The District is amember of the Tennessee Risk Management Trust (TNRMT), which is a public entity risk pool. TheDistrict pays an annual premium to these pools for coverage under the above areas. The Poolprovides the specified coverage and pays all claims from its member premiums charged or throughits reinsurance policies. TNRMT reinsures through commercial insurance companies for claims inexcess of $100,000 for each uninsured event. The District’s premiums are calculated based on itsclaims history. The District continues to carry commercial insurance for all other risks of loss,including public officials’ bonds. Settled claims from these losses have not exceeded commercialinsurance coverage in any of the past three fiscal years.

F. Endowment

During the year ended June 30, 2005, a certificate of deposit in the amount of $100,130 wascontributed to the District. Another contribution was made during year ended June 30, 2008 in theamount of $99,870 which brought the balance of the certificate of deposit to $200,000. The revenuefrom the certificate of deposit is to be used for scholarships for deserving seniors. The revenue inthe endowment fund for the year ended June 30, 2016 was $3,200. Scholarships paid as of June30, 2016 totaled $6,000.

-55-

REQUIRED SUPPLEMENTARY INFORMATION

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION ASSET

TEACHER LEGACY PENSION PLAN OF TCRSFiscal Year Ended June 30*

2015 2016West Carroll Special School Districts proportion of the net pension asset 0.097421% 0.099187%West Carroll Special School Districts proportionate share of the net pension liability (asset) $ (15,830) $ 40,630

West Carroll Special School District’s covered employee payroll $ 3,823,766 $ 3,713,061West Carroll Special School District’s proportionate share of the netpension asset as a percentage of its covered-employee payroll -0.4140% 1.0942%Plan fiduciary net position as a percentage of the total pension liability 100.08% 99.81%

* The amounts presented were determined as of June 30 of the prior fiscal year.

This is a 10-year schedule. However, the information in this schedule is not required to be presented retroactively. Years will beadded to this schedule in future fiscal years until 10 years of information is available.

See independent auditor~s report.-56-

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF THE DISTRICVS CONTRIBUTIONS

TEACHER LEGACY PENSION PLAN OF TCRSFiscal Year Ended June 30

2014 2015 2016Actuarially determined contribution (ADC) $ 339,550 $ 335,661 $ 347,775

Contributions in relation to the actuarially determined contributions 339,550 335,661 347,775

Contribution deficiency (excess) $ - $ - $ -

Covered-employee payroll $ 3,823,766 $ 3,713,061 $3,847,064

Contributions as a percentage covered-employee payroll 8.88% 9.04% 9.04%

This is a 10-year schedule; however, the information in this schedule is not required to be presentedretroactively. Years will be added to this schedule in future fiscal years until 10 years of information isavailable.


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION ASSET

TEACHER RETIREMENT PLAN OF TCRSFiscal Year Ended June 30*

2016

West Carroll Special School District’s proportion of the net pension asset 0.032070%West Carroll Special School District’s proportionate share of the net pension liability (asset) $ (1,290)

West Carroll Special School District’s covered employee payroll $ 66,632West Carroll Special School District’s proportionate share of the netpension asset as a percentage of its covered-employee payroll -1 .94%Plan fiduciary net position as a percentage of the total pension liability 127.46%

* The amounts presented were determined as of June 30 of the prior fiscal year.

This is a 10-year schedule. However, the information in this schedule is not required to be presentedretroactively. Years will be added to this schedule in future fiscal years until 10 years of information isavailable.


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF THE DISTRICT’S CONTRIBUTIONS

TEACHER RETIREMENT PLAN OF TCRSFiscal Year Ending June 30

2015 2016

Actuarially determined contribution (ADC) $ 1,666 $ 2,742

Contributions in relation to the actuarially determined contributions 2,665 4,387

Contribution deficiency (excess) $ (999) $ (1,645)

Covered-employee payroll $ 66,632 $ 109,671

Contributions as a percentage covered-employee payroll 4.00% 4.00%



WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF CHANGES IN WEST CARROLL SPECIAL SCHOOL DISTRICT’S

NET PENSION LIABILITY (ASSET) AND RELATED RATIOSBASED ON PARTICIPATION IN THE PUBLIC EMPLOYEE PENSION PLAN OF TCRS

Last Fiscal Year Ending June 30

2014 2015

Total pension liabilityService cost $ 77,876 $ 74,649Interest 147,195 145,857Changes in benefit terms -

Difference between actual & expected experience (160,291) 72,835Change of assumptions -

Benefit payments, including refunds of employee contributions (84,404) (74,369)Net change in total pension liability (19,624) 218,972Total pension liability - beginning 1,926,925 1,907,301Total pension liability-ending (a) $1,907,301 $ 2,126,273

Plan fiduciary net positionContributions - employer $ 68,253 $ 61,428Contributions - employee 39,861 41,171Net investment income 304,642 66,755Benefit payments, including refunds of employee contributions (84,404) (74,369)Administrative expense (1,554) (2,315)Net change in plan fiduciary net position 326,798 92,670Plan fiduciary net position - beginning 1,827,663 2,154,461Plan fiduciary net position - ending (b) $ 2,154,461 $ 2,247,131

Net Pension Liability (Asset) - ending (a) - (b) $ (247,160) $ (120,858)

Plan fiduciary net position as a percentage of total pension liability 112.96% 105.68%

Covered - employee payroll $ 797,218 $ 823,422

Net pension liability (asset) as a percentage of covered-employee payroll -31.00% -14.68%

This is a 10-year schedule; however the information in this schedule is not required to be presented retroactively.Years will be added to this schedule in future fiscal years until 10 years of information is available.


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF WEST CARROLL SPECIAL SCHOOL DISTRICT’S CONTRIBUTIONSBASED ON PARTICIPATION IN THE PUBLIC EMPLOYEE PENSION PLAN OF TCRS

Last Fiscal Year Ending June 30

2014 2015 2016Actuarially determined contribution $ 68,253 $ 61,428 $ 62,372

Contributions in relation to the actuarially determined contributions 68,253 61,428 62,372

Contribution deficiency (excess) $ -

Covered-employee payroll $ 797,218 $ 823,422 $ 836,082

Contributions as a percentage covered-employee payroll 8.56% 7.46% 7.46%


Notes to Schedule:Valuation Date: Actuarially determined contribution rates for 2015 were calculated based on the July 1,2013 actuarial valuation.

Methods and assumptions used to determine contribution rates:Actuarial cost method Frozen initial liabilityAmortization method Level dollar, closed (not to exceed 20 years)Remaining amortization period 4 yearsAsset valuation 10-year smoothed within a 20 percent corridor to market valueInflation 3.0 percentSalary increases Graded salary ranges from 8.97 to 3.71 percent based on age,

including inflation, averaging 4.25 percentInvestment rate of return 7.5 percent, net of investment expense, including inflationRetirement age Pattern of retirement determined by experience studyMortality Customized table based on actual experience including an

adjustment for some anticipated improvementCost of living adjustments 2.5 percent


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULES OF FUNDING PROGRESS - POST EMPLOYMENT HEALTHCARE PLAN

June 30, 2016

Schedule of Funding Progress

Actuarial UAAL as aActuarial Accrued Unfunded Percentage

Actuarial Value of Liability AAL Funded Covered of CoveredValuation Assets (AAL) (UAAL) Ratio Payroll Payroll

Date Plan (a) (b) (b) - (a) (a/b) (c) ((b-a)/c)

7/1/2015 TeacherGroup $ - $ 533000 533,000 0.00% $ 4,792,817 11.12%7/1/2013 TeacherGroup - 381000 381,000 0.00% 4,603,115 8.28%7/1/2011 TeacherGroup - 641,000 641,000 0.00% 4,702,368 13.63%

The above schedule is designed to show the extent to which a post employment healthcare plan has been successfulover time in setting aside assets sufficient to cover its actuarial accrued liability.


SUPPLEMENTARY AND OTHER INFORMATION

WEST CARROLL SPECIAL SCHOOL DISTRICTDEBT SERVICE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUNDBALANCES - BUDGET AND ACTUAL



Revenues: Original Final Actual (Under)County Tax Revenues:

PropertyTaxes $ 276,828 $ 276,828 $ 294,746 $ 17,918Total revenues 276,828 276,828 294,746 17,918

Expenditures:Debt Service

Principal on bonds 280,000 280,000 280,000 -

Interest on bonds 140,308 140,308 140,307 (1)Total expenditures 420,308 420,308 420,307 (1)

Excess (deficiency) of revenues over(under) expenditures $ (143,480) $ (143,480) (125,561) $ 17,919

Other financing sources (uses)Transfers in 143,480 143,480 121,901 (21,579)

Total other financing sources (uses) 143,480 143,480 121,901 (21,579)

Net changes in fund balance $ - $ - (3,660) $ (3,660)

Fund balance - beginning 18,564

Fund balance - ending $ 14,904

See independent auditor’s report.-63-

WEST CARROLL SPECIAL SCHOOL DISTRICTOTHER GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETFor the Year Then Ended June 30, 2016

Special PermanentRevenue Funds Fund

Federal Centralized Total OtherProjects Cafeteria Endowment Governmental

Fund Fund Fund FundsAssets:

Cash and cash equivalents $ 17,403 $ 240,874 $ 5,033 $ 263,310Investments - - 200,000 200,000Due from other governments - grants 7,596 - - 7,596Inventory - 25,074 - 25,074

Total assets $ 24,999 $ 265,948 $ 205,033 $ 495,980

Liabilities, deferred inflows of resources and fund balancesLiabilities:

Due to other funds $ 24,999 $ - $ - $ 24,999Total liabilities 24,999 - - 24,999

Fund balances:Nonspendable

Inventory - 25,074 25,074Endowment Fund Principal - - 200,000 200,000

RestrictedNon-instructional services - 240,874 5,033 245,907Total fund balances - 265,948 205,033 470,981

Total liabilities, deferred inflows ofresources and fund balances $ 24,999 $ 265,948 $ 205,033 $ 495,980


WEST CARROLL SPECIAL SCHOOL DISTRICTOTHER GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES, ANDCOMBININGCHANGES IN FUND BALANCES


Revenues:Federal revenueInterest earnedFood service

Total revenues

SpecialRevenue Funds

Federal CentralizedProjects Cafeteria

Fund Fund

$ 576,254 $ 478,612 $- 511

PermanentFund

Total OtherGovernmental

Funds

- $ 1,054,8663,200 3,711

171,2451,229,822

Excess (deficiency) of revenues over(under) expenditures 34,273 (2,800) 31,473

Fund balances - beginningInventory adjustmentFund balances - beginning restated

- 240,457(8,782)

231,675

207,833

207,833

448,290(8,782)

439,508

Fund balances - ending $ - $ 265,948 $ 205,033 $ 470,981


EndowmentFund

Expenditures:InstructionSupport servicesNoninstructional services

Total expenditures

- 171,245 -

576,254 650,368 3,200

398,894177,360

576,254616,095616,095

6,0006,000

398,894177,360622,095

1,198,349

WEST CARROLL SPECIAL SCHOOL DISTRICTFEDERAL PROJECTS FUND

SCHEDULE OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCE - BUDGET AND ACTUAL



Revenues: Original Final Actual (Under)Federal through the State:

Vocational education - basic grants to states $ 16,901 $ 16,901 $ 16,900 $ (1)Title I 294,218 361,460 272,190 (89,270)Special education - grants to states 246,536 261,365 211,928 (49,437)Special education - preschool - - 7,836 7,836Rural education 17,849 23,359 20,090 (3,269)Eisenhower Professional Development 45,072 74,224 47,310 (26,914)

620,576 737,309 576,254 (161,05~

Total revenues 620,576 737,309 576,254 (161,055)

Expenditures:Instruction:

Regular Instruction Program:Teachers 77,000 80,000 76,378 (3,622)Educational assistants 22,500 25,000 22,591 (2,409)Substitute teachers 1,000 1,000 - (1,000)Non certified substitue teachers 2,500 3,550 1,403 (2,147)Social Security 5,850 8,100 5,384 (2,716)State retirement 9,500 10,000 8,590 (1,410)Medical insurance 9,500 14,000 12,318 (1,682)Unemployment compensation 1,500 2,000 190 (1,810)Medicare 1,400 2,030 1,260 (770)Maintenance and repair - equipment 5,000 6,500 430 (6,070)Other contracted services 42,056 49,956 36,433 (13,523)Instructional supplies 18,518 36,960 9,478 (27,482)Instructional Equipment 18,793 42,288 33,953 (8,335)

215,117 281,384 208,408 (72,976)

Special Education Program:Teachers 38,936 39,436 39,168 (268)Educational assistants 44,655 44,655 44,985 330Speech pathologist 11,242 11,242 11,034 (208)Other salaries and wages 2,765 2,155 189 (1,966)Certified substitute teachers 100 100 55 (45)Non certified substitue teachers 500 1,000 248 (752)Social Security 6,000 6,000 4,715 (1,285)State retirement 6,000 6,500 6,914 414Medical insurance 21,332 20,332 9,914 (10,418)Unemployment compensation 540 540 181 (359)






Original Final Actual (Under)Special Education Program (Cont.):

Medicare $ 1,400 $ 1,400 $ 1,263 $ (137)Contracts with other school systems 29,836 37,275 21,134 (16,141)Other contracted services 25,000 26,000 25,578 (422)Instructional supplies 2,745 3,745 1,289 (2,456)Special education equipment 18,000 20,500 17,492 (3,008)

209,051 220,880 184,159 (36,721)

Vocational Education Program:Capital outlay - equipment 6,001 6,001 6,327 326

6,001 6,001 6,327 326

Total instruction 430,169 508,265 398,894 (109,371)

Support Services:Other Student Support:

Bus drivers 300 300 300Other salaries and wages 1,000 1,000 1,100 100Social security 74 74 68 (6)State retirement 109 109 99 (10)Employer medicare 17 17 16 (1)Travel 3,500 3,500 3,073 (427)Other supplies and materials 2,000 2,000 - (2,000)In-service/staff development 4,300 4,300 4,463 163Othercharges 1,000 1,000 66 (934)

12,300 12,300 9,185 (3,115)

Regular Instruction Program:Supervisor/director 32,500 35,000 32,223 (2,777)Othersalariesandwages 62,300 64,413 61,521 (2,892)Non-certified substitute teachers 550 - (550)Social Security 7,400 6,100 5,438 (662)State retirement 11,100 9,000 8,475 (525)Medical insurance 7,324 10,620 7,015 (3,605)Unemployment compensation 1,170 1,270 183 (1,087)Employer Medicare 1,678 1,600 1,272 (328)Travel 3,500 4,000 2,025 (1,975)Library books 2,000 3,000 - (3,000)In-service/staff development 10,050 39,106 12,967 (26,139)

139,022 174,659 131,119 (43,540)







Special Education Program:Supervisor $ 4,409 $ 4,609 $ 4,426 $ (183)Social Security 274 274 246 (28)State retirement 400 400 400 -

Medical insurance 564 564 557 (7)Unemployment compensation 10 10 8 (2)Medicare 65 65 57 (8)Travel 1,000 1,800 (1,800)Other contracted services 23,263 23,263 21,922 (1,341)In-service/staff development 2,500 4,500 2,988 (1,512)

32,485 35,485 30,604 (4,881)

Vocational Education Program:Travel 600 600 600 -

In-service/staff development 1,000 1,000 852 (148)1,600 1,600 1,452 (14~)

Transportation:Contracts with other school systems 5,000 5,000 5,000

Total support services 190,407 229,044 177,360 (51,684)

Total expenditures 620,576 737,309 576,254 (161,055)

Excess (deficiency) of revenues over(under) expenditures - - -

Net changes in fund balance $ - $ -

Fund balance - beginning

Fund balance - ending $ -


WEST CARROLL SPECIAL SCHOOL DISTRICTCENTRALIZED CAFETERIA FUND

SCHEDULE OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCES - BUDGET AND ACTUAL



Original Final Actual (Under)Revenues:

Lunch payments - students $ 72,000 $ 76,300 $ 76,463 $ 163Lunch payments - adults 20,000 20,000 17,039 (2,961)Breakfast-students 18,337 21,087 21,147 60A-la-carte 42,000 42,000 48,120 6,120USDA Breakfast Reimbursement 142,000 142,000 143,250 1,250USDA commodities - 30,000 33,176 3,176USDA reimbursements 290,000 290,000 299,212 9,212USDA- Other - 2,950 2,974 24Miscellaneous refunds - - 302 302Interestearnings - - 511 511School food service 6,243 6,243 5,417 (826)Other charges for services - - 2,757 2,757

Total revenues 590,580 630,580 650,368 19,788

Expenditures:Food services:

Supervisor 25,000 25,100 25,007 (93)Accountants/bookkeepers 5,199 5,199 - (5,199)Clerical personnel 1,876 6,876 7,075 199Cafeteria personnel 157,207 163,507 156,474 (7,033)Other salaries and wages 1,500 1,500 - (1,500)Social Security 10,690 10,690 10,693 3State retirement 14,212 14,212 12,471 (1,741)Medical insurance 18,096 18,096 13,469 (4,627)Unemployment compensation - - 374 374Medicare 2,500 2,500 2,501 1Maintenance & repair service - equipment 12,000 12,000 9,101 (2,899)Travel 3,000 3,000 2,640 (360)Other contracted services 11,000 11,000 10,756 (244)Food preparation supplies 12,000 12,000 14,046 2,046Food supplies 304,000 304,000 292,845 (11,155)Uniforms 1,300 1,300 1,293 (7)USDA-commodities - 30,000 33,177 3,177Other supplies and materials 2,500 2,500 2,373 (127)In-service/staff development 2,500 2,500 1,360 (1,140)Other charges 2,500 2,500 2,094 (406)Capital outlay-equipment 3,500 20,100 18,346 (1,754)

Total expenditures 590,580 648,580 616,095 (32,485)


WEST CARROLL SPECIAL SCHOOL DISTRICTCENTRALIZED CAFETERIA FUND

SCHEDULE OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCES - BUDGET AND ACTUAL




Net changes in fund balance $ - $ (18,000) $ 34,273 $ 52,273


Inventory adjustment (8,782)

Fund balance - beginning restated 231,675



WEST CARROLL SPECIAL SCHOOL DISTRICTENDOWMENT FUND

SCHEDULE OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCES


Revenues:Interest earnings $ 3,200

Expenditures:Tuition 6,000

Net changes in fund balance (2,800)




WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF PROPERTY TAX RATES AND ASSESSMENTS - LAST TEN YEARS

June 30, 2016

Year EndedJune, 30 Tax Rates Assessments Tax Levy

2016 $ 1.34 $ 93,024,801 $ 1,246,5322015 1.44 86,196,731 1,241,2332014 1.44 85,792,420 1,235,4112013 1.44 85,164,327 1,226,3662012 1.44 83,725,089 1,205,6412011 1.44 83,725,090 1,205,6412010 1.56 76,152,032 1,187,9722009 1.56 75,323,670 1,175,0412008 1.56 71,830,909 1,120,5542007 1.81 61,221,535 1,108,110

The following is the tax levied January 1, 2016:2017 $ 1.34 $ 94,351,175 $ 1,264,306

See independent auditor’á report.-72-

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF LONG-TERM DEBT

June 30, 2016

Year Ending School Bonds, Series 2005June 30, Principal Interest Total

2017 $ 300,000 $ 102,875 $ 402,8752018 310,000 113,375 423,3752019 315,000 105,625 420,6252020 320,000 97,750 417,7502021 325,000 89,750 414,7502022 330,000 81,625 411,6252023 340,000 73,375 413,3752024 345,000 64,875 409,8752025 355,000 56,250 411,2502026 365,000 45,600 410,6002027 375,000 34,650 409,6502028 385,000 23,400 408,4002029 395,000 11,850 406,850

$ 4,460,000 $ 901,000 $ 5,361,000


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF INTERFUND TRANSFERS

June 30, 2016

Transfer Out Transfer InBudget Actual Budget Actual

General Fund $ (125,596) $ (121,901) Debt Service Fund $ 143,480 $ 121,901

Sec independent auditor~s report.-74-

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF SALARIES AND BONDS

June 30, 2016

Bond

Director of Schools $ 150,000 *

Secretary/Treasurer 250,000

*A fidelity bond of $150,000 covers all employees including the Director of Schools for eachoccurrence.


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Federal Agency orCFDA Pass-through

Federal Grantor/Pass-Through Grantor Number Number ExpendituresU.S. Department of Education

Pass-through the State of Tennessee Department of EducationTitle I, Grants to Local Education Agencies 84.010 S010A150042 $ 272,190

Special Education Grants to StatesIDEA Program 84.027 H027A150052 211,928IDEA Program, Additional 84.027 N/A 32,854IDEA Preschool 84.173 N/A 7,836

252,618

Vocational Education - Basic Grants to States 84.048 47131 16,900

Innovative Education Program Strategies - State GrantsTitle VI, CSR 84.358 S358B150042 20,090

Title II, A Training 84.013A SO13A1 50042 47,310

Total U.S. Department of Education 609,108

U.S. Department of Human ServicesPass-through the Tennessee Department of Health and Human Services

Cooperative Agreements to Support ComprehensiveSchool Health Programs to Prevent the Spread ofHIV and Other Important Health Problems 93.938 N/A 2,100

Total U.S. Department of Human Services 2,100

U.S. Department of AgriculturePass-through the Tennessee Department of Agriculture

School Breakfast Program 10.553* N/A 143,250National School Lunch Program 10.555* N/A 299,212Commodities 10.555* N/A 33,176Commodity rebate 10.555* N/A 2,974

478,612

Total Pass-through the U.S. Department of Agriculture 478,612

Total Federal Awards $ 1,089,820

* Major federal assistance programs

Basis of Presentation:

The accompanying Schedule of Federal Awards summarizes the expenditures of the District under programs of the federalgovernment for the year ended June 30, 2016. The schedule is presented using the modified accrual basis of accounting.


WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF STATE FINANCIAL ASSISTANCE


Agency orPass-through

State Grantor Number ExpendituresTennessee Department of Education

Early Childhood Education - Expansion unknown $ 207,037

Child Nutrition State March unknown 5,417

Connect TN unknown 2,456

Safe Schools unknown 5,720

ACT/Explore Testing unknown 1,900

Career Ladder Supplements unknown 46,016

Total State Awards 268,546

Total per Schedule of Expenditures of Federal Awards 1,089,820

Total Grants $ 1,358,366

Basis of Presentation:The accompanying Schedule of Federal Awards and State Financial Assistance summarizes theexpenditures of the District under programs of the federal and state governments for the year endedJune 30, 2016. The schedule is presented using the modified accrual basis of accounting.


INTERNAL CONTROL AND COMPLIANCE SECTION

ALEXAN DER

Members of: THOMPSON

American Society of Certified Public Accountants ARNOLD 227 Oil Well Rd.AICPA Center for Public Company Audit Firms PLLC Jackson, TN 38305AICPA GovernmentalAudit Quality Center ________________________________

AICPA Employee Benefit Plan Audit Quality Center Phone 731 .427.8571Tennessee Society of Certified Public Accountants Certified Public Accountants Fax 731.424.5701Kentucky Society of Certified Public Accountants Offices in Tennessee & Kentucky www. atacpa. net

Independent Auditor’s Report on Internal Control over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards

Members of the Board of EducationWest Carroll Special School DistrictAtwood, Tennessee

We have audited, in accordance with the auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States, the financial statements of the governmentalactivities, each major fund, and the aggregate remaining fund information of West Carroll SpecialSchool District as of and for the year ended June 30, 2016, and the related notes to the financialstatements, which collectively comprise the West Carroll Special School District’s basic financialstatements as listed in the table of contents and have issued our report thereon dated January 6, 2017.

Internal Control Over Financial Reporting

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

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

Our consideration of internal control was for the limited purpose described in the first paragraph andwas not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies and, therefore, material weaknesses or significant deficiencies may exist thatwere not identified. We did identify a certain deficiency in internal control, described in theaccompanying schedule of findings and questioned costs that we consider to be a material weaknessas 2016-001.

-78-

Compliance and Other Matters

As part of obtaining reasonable assurance about whether West Carroll Special School District’sfinancial statements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations, contracts and grant agreements, noncompliance with whichcould have a direct and material effect on the determination of financial statement amounts. However,providing an opinion on compliance with those provisions was not an objective of our audit, andaccordingly, we do not express such an opinion. The results of our tests disclosed an instance ofnoncompliance or other matters that is required to be reported under Governmental Auditing Standardsand which is described in the accompanying schedule of findings and questioned costs as item 2016-001.

In addition, we noted other matters involving the internal control and its operation that we reported tomanagement of the District in a separate letter dated January 6, 2017.

Purpose of this Report

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

tt~L

Jackson, TennesseeJanuary6, 2017

-79-

ALEXANDERMembers of: ~ THOMPSONAmerican Institute of Certified Public Accountants ARNOLD 227 Oil Well Rd.AICPA Center for Public CompanyAudit Firms PLLC Jackson, TN 38305AICPA GovernmentalAudit Quality Center ________________________________AICPA Employee Benefit Plan Audit Quality Center . Phone 731 .427.857 1Tennessee Society of Certified Public Accountants Certified Public Accountants Fax 731.424.5701Kentucky Society of Certified Public Accountants Offices in Tennessee & Kentucky www.atacpa.net

Independent Auditor’s Report on Compliance for Each MajorFederal Program and Report on Internal Control over

Compliance Required by Uniform Guidance

Members of the Board of EducationWest Carroll Special School DistrictAtwood, Tennessee

Report on Compliance for Each Major Federal Program

We have audited West Carroll Special School District’s compliance with the types of compliancerequirements described in the 0MB Compliance Supplement that could have a direct and materialeffect on each of West Carroll Special School District’s major federal programs for the year ended June30, 2016. West Carroll Special School District’s major federal programs are identified in the summaryof auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, andgrants applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the District’s major federalprograms based on our audit of the types of compliance requirements referred to above. Weconducted our audit of compliance in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States; and the audit requirements of Title2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles,and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the UniformGuidance require that we plan and perform the audit to obtain reasonable assurance about whethernoncompliance with the types of compliance requirements referred to above that could have a directand material effect on a major federal program occurred. An audit includes examining, on a test basis,evidence about the System’s compliance with those requirements and performing such otherprocedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each majorfederal program. However, our audit does not provide a legal determination of West Carroll SpecialSchool District’s compliance.

Opinion on Each Major Federal Program

In our opinion, West Carroll Special School District complied, in all material respects, with the types ofcompliance requirements referred to above that could have a direct and material effect on each of its

-80-

major federal programs for the year ended June 30, 2016.

Report on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performingour audit of compliance, we considered the District’s internal control over compliance with the types ofrequirements that could have a direct and material effect on each major federal program to determinethe auditing procedures that are appropriate in the circumstances for the purpose of expressing anopinion on compliance for each major federal program and to test and report on internal control overcompliance in accordance the Uniform Guidance, but not for the purpose of expressing an opinion onthe effectiveness of internal control over compliance. Accordingly, we do not express an opinion on theeffectiveness of the District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing theirassigned functions, to prevent, or detect and correct, noncompliance with a type of compliancerequirement of a federal program on a timely basis. A material weakness in internal control overcompliance is a deficiency, or combination of deficiencies, in internal control over compliance, such thatthere is a reasonable possibility that material noncompliance with a type of compliance requirement of afederal program will not be prevented, or detected and corrected, on a timely basis. A significantdeficiency in internal control over compliance is a deficiency, or a combination of deficiencies, ininternal control over compliance with a type of compliance requirement of a federal program that is lesssevere than a material weakness in internal control over compliance, yet important enough to meritattention by those charged with governance.

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

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

Jackson, TennesseeJanuary 6, 2017

-81-

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF FINDINGS AND QUESTIONED COSTS

June 30, 2016

SECTION I - Summary of Auditor’s Results

Financial StatementsType of auditor’s report issued: UnmodifiedIntenal control o~r financial reporting:

Material weakness(es) identified? X yes __________ noSignificant deficiency(ies) identified? __________ yes __________ none reported

Noncompliance material to financial statements noted? X yes __________ no

Federal AwardsInternal Control o~r major programs:

Material weakness(es) identified? __________ yes X noSignificant deficiency(ies) identified? __________yes X none reported

Type of auditor’s report issued on compliancefor major programs: Unmodified

Any audit findings disclosed that are requiredto be reported in accordance with2 CFR 200.516(a)? yes X no

Identification of major programs:CFDA Number Name of Federal Program or Cluster

Child Nutrition Cluster:10.553 School Breakfast Program10.555 National School Lunch Program

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

Auditee qualified as low-risk auditee? X yes no

SECTION II — Financial Statement Findings

2016-001 — Uncollateralized Deposits (Material Weakness and Noncompliance)

Condition: During our audit, we noticed that the bank balance with Citizens Bank and Trust at June30, 2016, exceeded the market value of collateral pledged by $263,758.

Criteria: State statute requires that all deposits with financial institutions must be collateralized bysecurities whose market value is equal to 105% of the value of uninsured deposits. The depositsmust be collateralized by federal depository insurance, by the Tennessee Bank Collateral Pool, bycollateral held by the District’s agent in the District’s name, or by the Federal Reserve Banks actingas third party agents.

Effect: The District failed to comply with the State statute and were under collateralized and at riskin the amount of $263,758.

-82-

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF FINDINGS AND QUESTIONED COSTS

June 30, 2016

Recommendation: We recommend that the District constantly monitor the bank balance verses thecollateral pledged to ensure that the District is in compliance with the State.

Response: We will monitor the balances of the accounts closer to ensure that we have enoughcollateral pledged to cover the amounts in excess of the FDIC coverage.

SECTION III — Federal Award Findings and Questioned Costs

None reported.

-83-

WEST CARROLL SPECIAL SCHOOL DISTRICTSCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

June 30, 2016

SECTION II — Financial Statement Findings

There were no prior year findings reported.

SECTION III — Federal Award Findings and Questioned Costs

There were no prior year findings reported.

-84-

WEST CARROLL SPECIAL SCHOOL DISTRICTCORRECTIVE ACTION PLAN

June 30, 2016

The West Carroll Special School District respecifully submits the following corrective action plan for theyear ended June 30, 2016.

Name and address of independent public accounting firm:Alexander Thompson Arnold PLLC227 Oil Well RoadJackson, TN 38305

Audit period:June 30, 2016

West Carroll Special School District contact:Eric Williams, Director of Schools 731-662-4200

Cognizant agency:Department of Education

The finding from the June 30, 2016, schedule of findings and questioned costs are discussed below.The finding is numbered consistently with the number assigned in the schedule.

Finding required to be reported in accordance with governmental auditing standards.

2016-001 — Uncollateralized Deposits (Material Weakness and Noncompliance)

Condition: During our audit, we noticed that the bank balance with Citizens Bank and Trust at June30, 2016, exceeded the market value of collateral pledged by $263,758.

Response: We will monitor the balances of the accounts closer to ensure that we have enoughcollateral pledged to cover the amounts in excess of the FDIC coverage.

-85-

WEST CARROLL SPECIAL SCHOOL DISTRICT FINANCIAL … Carroll... · FINANCIAL STATEMENTS AND...

Documents

Transcript of WEST CARROLL SPECIAL SCHOOL DISTRICT FINANCIAL … Carroll... · FINANCIAL STATEMENTS AND...