Little Rock School District of Pulaski County, Arkansas

Combined financial statements and supplemental information with independent auditors' reports by Thomas and Thomas, certified accountants
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THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Financial Statements and Supplemental Information (With Independent Auditors' Reports Thereon) June 30, 1991 CERTIFIEO PV8UC ~Atfl'$ I THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Financial Statements and Supplemental Information (With Independent Auditors' Reports Thereon) June 30, 1991 f LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Table of Contents June 30, 1991 INDEPENDENT AUDITORS' REPORT ON COMBINED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES COMBINED FINANCIAL STATEMENTS Combined Balance Sheet - All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types Combined Statement of Revenues and Expenditures - Budget and Actual - All Budgeted Governmental Fund Types Notes to Combined Financial Statements SUPPLEMENTARY SCHEDULES Combining Schedule of Revenues and Expenditures - Special Revenue Funds Rockefeller Day Care Center - Schedule of Revenues and Expenditures (Cash Basis) - Budget and Actual Revenues of Salary, Operating and Debt Service Funds (Basis of Accounting as prescribed by Handbook II) Expenditures of Salary, Operating and Debt Service Funds (Basis of Accounting as prescribed by Handbook II) Reconciliation of General and Debt Service Fund Balances - Generally Accepted Accounting Principles and Handbook II Basis of Accounting Schedule of Long-Term Debt OTHER REPORTS AND SUPPLEMENTAL INFORMATION Independent Auditors' Report on Internal Control Structure Based on a Study and Evaluation Made as a Part of an Audit of the Basic Financial Statements Performed in Accordance with Government Auditing Standards and the Additional Tests Required by the Single Audit Act 1 4 6 8 12 31 32 33 34 35 36 40 LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Table of Contents (Continued) June 30, 1991 Independent Auditors' Report on Compliance Based on an Audit of the Basic Financial Statements Performed in Accordance with Government Auditing Standards 44 Independent Auditors' Report on Compliance with General Requirements Applicable to Federal Financial Assistance Programs Independent Auditors' Report on Compliance with Specific Requirements Applicable to Major Federal Financial Assistance Programs Independent Auditors' Report on Compliance with Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions Schedule of Findings and Questioned Costs Independent Auditors' Report on Schedule of Federal Financial Assistance Schedule of Federal Financial Assistance 45 46 48 49 52 53 I - ~and~ CERTIFIED PUBLIC ACCOUNTANTS Little Rock Office: 201 E. Markham Suite 500 Little Rock, AR 72201 (501) 375-2025 FAX (501) 375-8704 Texarkana Office: 701 Arkansas Blvd. Texarkana, AR 75502 (501) 773-2168 FAX (501) 774-7244 INDEPENDENT AUDITORS' REPORT ON COMBINED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the combined financial statements of The Little Rock School District of Pulaski County, Arkansas (the School District) as of, and for the year ended, June 30, 1991, as listed in the accompanying table of contents. The financial statements are the responsibility of the School District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, Audits of State and Local Governments. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described more fully in Note l(F) of the combined financial statements, the School District does not record the valuation base of its property, buildings, and equipment at historical cost in the general fixed asset group of accounts ,as required by generally accepted accounting principles. In our opinion, except for the effect of the failure to record the general fixed asset account group at historical cost, as discussed in the preceding paragraph, the combined financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the Little Rock School District of Pulaski County, Arkansas as of June 30, 1991, and the results of its operations for the year then ended in conformity with generally accepted accounting principles . 1 Members American Institute of Certified Public Accountants Private Companies Practice Section and S.E.C. Practice Section The Board of Directors The Little Rock School District of Pulaski County, Arkansas Page Two Our audit was made for the purpose of forming an op1n1on on the combined financial statements taken as a whole. The supplemental information included at pages thirty-one through thirty-eight is presented for purposes of additional analysis and is not a required part of the basic combined financial statements. The information has been subjected to the procedures applied in the audit of the basic combined financial statements of the Little Rock School District of Pulaski County, Arkansas and, in our opinion, is fairly stated in all material respects in relation to the combined financial statements taken as a whole. November 5, 1991 Little Rock, Arkansas 2 ~QA) -r-re...~ Certified Public Accountants I COMBINED FINANCIAL STATEMENTS 3 I Assets and Amounts to be Provided General Cash (Note 10) $ 55,842 Investments (Note 10) 9,907,823 Property taxes receivable (Note 3, 5 and 12) 2,252,877 Accrued interest and other receivables Bl, 110 Due from other governments (Notes 8 and 11) 7,968,755 Due from other funds 9,319 Inventories 400,105 Fixed assets (Notes l(F) and 4) Prepaids and deferred charges 20,991 Total assets 20,696,822 Amount to be provided for retirement of general long-term debt (Note 5) Total assets and amounts to be provided $ 20,696,822 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Balance Sheet - All Fund Types and Account Groups June 30, 1991 Fiduciary Governmental Fund Ty~es Fund Trne Account General Special Debt Capital Fixed Revenue Service Projects Agency Assets $ $ , 851 $ 85,739 $ 168,213 $ 1,550,000 13,780,332 800,000 683,725 12,118 41,936 2,088,298 105,129 40,652 150,454 145,460,826 616,665 3,800,870 1,301,241 14,013,136 1,008,865 145,460,826 $ 3,800,870 $ 1,301,241 $ 14,013,136 $ 1,008,865 $ 145,460,826 The accompanying notes are an integral part of this financial statement. 4 Grou~s General Total Long-term (Memorandum Debt Only) $ $ 310,645 26,038,155 2,936,602 135,164 10,057,053 155,100 550,559 145,460,826 637,656 186,281,760 71,877,108 71,877,108 s 71,877,108 s 258,158,868 (Continued) Liabilities and Fund Equity Liabilities: Bank overdrafts (Note 10) Accounts payable Accrued payroll taxes and withholdings Accrued interest payable (Note 12) Retainage payable (Note 4) Estimated claims liability (Note 14) Deferred revenues Due to school activity groups and other agencies (Notes 2 and 9) Due to other funds Notes payable (Note 12) Long-term debt payable (Note 5) Contracts payable Total liabilities Commitments and contingencies (Notes 4, 5, 6, 7, 8, 11, 13 and 14) Fund Equity: Investment in general fixed assets (Notes l(f) and 4) Fund Balance: Reserved for prepaids and deferred charges Reserved for inventories Unreserved: Designated for debt service Designated for capital projects Undesignated Total fund equity Total liabilities and fund equity LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Balance Sheet - All Fund Types and Account Groups (Continued) June 30, 1991 General $ 57,307 3,296,595 2,554,541 101,000 252,068 35,462 133,628 14,080,000 7 900 20,518,501 20,991 400,105 (242,775) 178,321 Governmental Fund Types Special Debt Revenue Service S 632,824 $ $ 112,575 552,490 21,472 1,319,361 150,454 2,331,055 2,481,509 616,665 684,576 1. 301,241 Capital Projects 785,959 182,214 968,173 13,044,963 13,044,963 Fiduciary Fund Type Agency 1,008,865 1,008,865 Account Groups General General Fixed Long-Term Assets Debt s s 71,877,108 71. 877,108 145,460,826 145,460,826 s Total (Memorandum Only) 690,131 4,195,129 2,554,541 101,000 182,214 252,068 587,952 L 008, 865 155,100 14,080,000 71,877,108 7 900 95,692,008 145,460,826 637,656 550,559 684,576 13,044,963 2,088,280 162,466,860 $ 20,696,822 $ 3,800,870 $1,301,241 $14,013,136 ~ 1,008,865 $145,460,826 $ 71,877,108 $ 258,158,868 The accompanying notes are an integral part of this financial statement. 5 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Statement of Revenues, Expenditures and Changes in Fund Balance All Governmental Fund Types Revenues Local Sources: Property taxes (Notes 3 and 12) Tuition Interest Food sales Food services and other Magnet schools funding (Note 11) Total local sources State Sources: Minimum foundation programs (Note 8) Desegregation settlement (Note 8) Magnet schools funding (Note 11) Handicapped children aid Vocational aid Transportation aid Compensatory education Other Total state sources Federal Sources: Elementary and Secondary Education Act Vocational Education Act Food services Energy conservation Other Total federal sources Total revenues s Year Ended June 30, 1991 General 41,321,190 334,760 805, 768 619,916 43,081,634 22,759,804 10,356,778 602,063 930,950 2,885,960 609,943 1,090,271 39,235,769 28,585 28,585 82,345,988 s Special Revenue 34,416 71,307 1,344,429 882,602 2,693,138 5,025,892 6,285,892 637,358 6,923,250 3,467,391 268,295 3,634,607 514,775 620,812 8,505,880 20,455,022 The accompanying notes are an integral part of this financial statement. 6 s Debt Service 13,465,844 82,624 125,158 13,673,626 13,673,626 s Capital Projects 332,213 68,832 401,045 401,045 s Total (Memorandum Only) 54,787,034 369,176 1,291,912 1,344,429 1,571,350 2,818,296 62,182,197 22,759,804 10,356,778 6,285,892 602,063 930,950 2,885,960 609,943 L 727,629 46,159,019 3,467,391 268,295 3,634,607 514,775 649,397 8,534,465 116,875,681 (Continued) THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Statement of Revenues, Expenditures and Changes in Fund Balance All Governmental Fund Types (Continued) Expenditures Instructional services: Basic programs Exceptional child programs Vocational-technical programs Adult continuing education programs Compensatory education programs Other instructional programs Total instructional services Instructional support services Pupil transportation services Operation and maintenance of plant School administration General administration Capital outlay (Note 4) Principal retirement of long-term debt (Note 5) Interest charges (Notes 5 and 12) Fiscal agent's fees Debt issuance costs Food services Community services Indirect and other (Note 11) Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses) Contributed assets Proceeds of long-term debt (Note 5) Operating transfers in (Notes 3 and 11) Operating transfers out (Notes 3 and 11) Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund equity, beginning of year Fund equity, end of year (Notes 2 and 8) Year Ended June 30, 1991 General $ 39,093,805 4,681,223 3,879,053 14,264 1,636,102 1,088,004 50,392,451 s 8,435,274 5,523,600 10,187,374 5,524,559 7,373,144 3,464,604 155,000 125,000 776,427 18,054 91,975,487 (9,629,499) 53,522 7,648,889 7,596,913 (6,018,306) 9,281,018 (348,481) 526,802 178,321 Special Revenue $ 7,981,805 572,079 932,774 702,381 2,717,955 278,588 13,185,582 1,520,760 1,048,177 1,220,846 911,544 5,410,705 207,934 453,907 23,959,455 (3,504,433) 3,592,755 (59,028) 3,533,727 29,294 2,452,215 $ 2,481,509 The accompanying notes are an integral part of this financial statement. 7 s Debt Service 5,483,830 3,726,121 62,898 9,272,849 4,400,777 3,084,203 (6,955,779) (3,871,576) 529,201 772,040 $ 1,301,241 s Capital Projects 6,887,061 507,889 62,587 7,457,537 (7,056,492) 17,197,450 (1,240,758) 15,956,692 8,900,200 4,144,763 $13,044,963 Total (Memorandum Only) $ 47,075,610 5,253,302 4,811,827 716,645 4,354,057 1,366,592 63,578,033 9,956,034 5,523,600 11,235,551 5,524,559 8,593,990 11,263,209 5,483,830 3,881,121 62,898 632,889 5,410,705 984,361 534,548 132,665,328 (15,789,647) 53,522 24,846,339 14,273,871 (14,273,871) 24,899,861 9,110,214 7,895,820 $ 17,006,034 Revenues Local Sources: Property taxes {Notes 3 and 12) Tuition Interest Food sales Food services and other Magnet schools {Note 11) Total local sources State Sources: Minimum foundation programs {Note 8) Desegregation settlement {Note 8) Magnet schools funding (Note 11) Handicapped children aid Vocational aid Transportation aid Compensatory education Other Total state sources Federal Sources: Elementary and Secondary Education Act Vocational Education Act Food service Energy conservation Other Total federal sources Total revenues THE LITTLE ROCK SCHOOL DISTRIC'f OF PULASKI COUNTY, ARKANSAS Combined Statement of Revenues and Expenditures - Budget and Actual All Budgeted Governmental Fund Types Year Ended June 30, 1991 $ 49,122,429 635,908 100,000 680,165 50,538,502 23,371,654 8,356,778 468,000 890,092 2,400,000 243,243 1,524,480 37,254,247 44,625 44,625 87,837,374 General Fund S 41,321,190 334,760 805,768 619,916 43,081,634 22,759,804 10,356,778 602,063 930,950 2,885,960 609,943 1,090,271 39,235,769 28,585 28,585 82,345,988 Variance - Favorable {Unfavorable) $ (7,801,239) (301,148) 705,768 (60,249) {7,456,868) {611,850) 2,000,000 134,063 40,858 485,960 366,700 (434,209) 1,981,522 (16,040) (16,040) (5,491,386) The accompanying notes are an integral part of this financial statement. 8 s Budget 55,000 1,282,134 1,081,967 2,705,116 5,124,217 6,297,871 6,297,871 2,886,618 340,012 3,169,164 349,233 6,745,027 18,167,115 Special Revenue Funds $ Actual 34,416 71,307 1,344,429 882,602 2,693,138 5,025,892 6,285,892 637,358 6,923,250 3,467,391 268,295 3,634,607 514, 775 620,812 8,505,880 20,455,022 s Variance - Favorable (Unfavorable) 34,416 16,307 62,295 {199,365) {11,978) (98,325) (11,979) 637,358 625,379 580,773 (71,717) 465,443 514,775 271,579 1,760,853 2,287,907 (Continued) THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Statement of Revenues and Expenditures - Budget and Actual All Budgeted Governmental Fund Types (Continued) Year Ended June 30, 1991 General Fund Sl!ecial Revenue Funds Variance - Variance - Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Exl!enditures Instructional services: Basic programs s 39,824,551 s 39,093,805 s 730,746 s 8,109,834 s 7,981,805 s 128,029 Exceptional child programs 4,300,105 4,681,223 (381,118) 342,837 572,079 (229,242) Vocational-technical programs 4,003,153 3,879,053 i24,100 699,334 932,774 (233,440) Adult continuing education programs 655,110 14,264 640,846 63,073 702,381 (639,308) Compensatory education programs 2,143,448 1,636,102 507,346 2,851,680 2,717,955 133,725 Other instructional programs 1,101,272 1,088,004 13,268 258,748 278,588 (19,840) Total instructional services 52,027,639 50,392,451 1,635,188 12,325,506 13,185,582 {860,076) Instructional support services 8,276,060 8,435,274 (159,214) L 207,548 1,520,760 {313,212) Pupil transportation services 5,109,606 5,523,600 (413,994) 2,000 2,000 Operations and maintenance of plant 10,886,626 10,187,374 699,252 L 042, 298 1,048,177 (5,879) School administration 5,421,139 5,524,559 (103,420) General administration 6,648,197 7,373,144 (724,947) L 177,809 1,220,846 {43,037) Capital outlay (Note 4) 3,859,480 3,464,604 394,876 633,168 911,544 (278,376) Principal retirement on long-term debt (Note 5) Interest charges (Notes 5 and 12) 155,000 (155,000) Debt issuance costs 125,000 (125,000) Food service 7,170,539 5,410,705 1,759,834 Community services 1,012,270 776,427 235,843 175,908 207,934 {32,026) Indirect and other (Note 11) 18,054 (18,054) 451,884 453,907 (2,023) Total expenditures 93,241,017 91,975,487 1,265,530 24,186,660 23,959,455 227,205 Excess of revenues over {under) expenditures (5,403,643) (9,629,499) (4 I 225,856) (6,019,545) (3,504,433) 2,515,112 Other Financing Sources (Uses) Contributed assets 53,522 53,522 Proceeds of long-term debt (Note 5) 6,000,000 7,648,889 L 648,889 Operating transfers in (Notes 3 and 11) 590,000 7,596,913 7,006,913 3,592,775 3,592,755 Operating transfers out (Notes 3 and 11) {3,181,520) (6,018,306) (2,836,786) (59,028) (59,028) Total other financing sources (uses) 3,408,480 9,281,018 5,872,538 3,592,755 3,533,727 (59,028) Excess of revenues and other financing sources over (under) expenditures and other financing uses $ 0,995,163) $ (348,481) $ 1,646,682 $ (2,426,790) $ 29,294 $ 2,456,084 {Continued) The accompanying notes are an integral part of this financial statement. 9 Revenues Local sources: Property taxes (Notes 3 and 12) Tuition Interest Food sales Food services and other Magnet schools and other (Note 11) Total local sources State Sources: Minimum foundation programs (Note 8) Desegregation settlement (Note 8) Magnet schools funding (Note 11) Handicapped children aid Vocational aid Transportation aid Compensatory education Other Total state sources Federal Sources: Elementary and Secondary Education Act Vocational Education Act Food service Energy conservation Other Total Federal sources Total revenues THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Statement of Revenues and Expenditures - Budget and Actual All Budgeted Governmental Fund Types (Continued) Year Ended June 30, 1991 Debt Service Fund Variance - Favorable Budget Actual (Unfavorable) $ 7,501,576 ,$ 13,465,844 $ 5,964,268 $ 330,000 82,624 (247,376) 125,158 125,158 7,831,576 13,673,626 5,842,050 7,831,576 13,673,626 5,842,050 The accompanying notes are an integral part of this financial statement. 10 Total (Memorandum Only) Variance - Favorable Budget Actual (Unfavorable) 56,624,005 $ 54,787,034 $ (1,836,971) 635,908 369,176 (266,732) 485,000 959,699 474,699 1,282,134 1,344,429 62,295 1,762,132 1,502,518 (259,614) 2,705,116 2,818,296 113,180 63,494,295 61,781,152 CL 713,143) 23,371,654 22,759,804 (611,850) 8,356,778 10,356,778 2,000,000 6,297,871 6,285,892 (11,979) 468,000 602,063 134,063 890,092 930,950 40,858 2,400,000 2,885,960 485,960 243,243 609,943 366,700 1,524,480 1,727,629 203,149 43,552,118 46,159,019 2,606,901 2,886,618 3,467,391 580,773 340,012 268,295 (71,717) 3,169,164 3,634,607 465,443 514,775 514,775 393,858 649,397 255,539 6,789,652 8,534,465 1,744,813 113,836,065 116,474,636 2,638,571 (Continued) THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combined Statement of Revenues and Expenditures - Budget and Actual All Budgeted Governmental Fund Types (Continued) Year Ended June 30, 1991 Debt Service Fund Total (Memorandum Only) Variance - Variance - Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) ExJ:!enditures Instructional services: Basic programs s s s s 47,934,385 s 47,075,610 s 858, 775 Exceptional child programs 4,642,942 5,253,302 (610,360) Vocational - technical programs 4,702,487 4,811,827 (109,340) Adult continuing education programs 718,183 716,645 1,538 Compensatory education programs 4,995,128 4,354,057 641,071 Other instructional programs 1,360,020 1,366,592 (6,572) Total instructional services 64,353,145 63,578,033 775,112 Instructional support services 9,483,608 9,956,034 (472,426) Pupil transportation services 5,111,606 5,523,600 (411,994) Operations and maintenance of plant 11,928,924 11,235,551 693,373 School administration 5,421,139 5,524,559 (103,420) General administration 7,826,006 8,593,990 (767,984) Capital outlay (Note 4) 4,492,648 4,376,148 116,500 Principal retirement of long-term debt (Note 5) 3,359,093 5,483,830 (2,124,737) 3,359,093 5,483,830 (2,124,737) Int erest charges (Note 5 and 12) 2,466,391 3,726,121 (1,259,730) 2,466,391 3,881,121 (1,414,730) Debt issuance cost 125,000 (125,000) Fiscal agents' fees 6,500 62,898 (56,398) 6,500 62,898 (56,398) Food service 7,170,539 5,410,705 1,759,834 Community services 1,188,178 984,361 203,817 Indirect and other (Note 11) 451,884 471,961 (20,077) Total expenditures 5,831,984 9,272,849 P,440,865) 123,259,661 125,207,791 (1,948,130) Excess of revenues over (under) expenditures 1,999,592 4,400,777 2,401,185 (9,423,596) (8,733,155) 690,441 Other Financing Sources (Uses) Contributed assets 53,522 53,522 Procee~s of long-term debt (Note 5) 6,000,000 7,648,889 1,648,889 Operat7ng transfers in (Notes 3 and 11) 3,084,203 3,084,203 4,182,755 14,273,871 10,091,116 Operating transfers out (Notes 3 and 11) (6,955,779) (6,955,779) (3,181,520) (13,033,113) (9,851,593) Total other financing sources (uses) (3,871,576) (3,871,576) 7,001,235 8,943,169 1,941,934 Excess of revenues and other financing sources over (under) expenditures and other financing uses s 1,999,592 s 529,201 s (1,470,391) s (2,422,361) s 210,014 s 2,632,375 The accompanying notes are an integral part of this financial statement. 11 I I THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements June 30, 1991 Note 1: Summary of Significant Accounting Policies The accounting policies of The Little Rock School District of Pulaski County, Arkansas (the School District) conform to generally accepted accounting principles (GAAP) applicable to governmental units, except for the practice of recording various components of its general fixed assets at appraised values rather than at cost (Note l(F)). The following is a summary of the more significant accounting policies. (A) Fund Accounting The accounts of the School District are organized on the basis of funds or groups of accounts, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets, liabilities, fund equity, revenues and expenditures. The following fund types and account groups are used by the School District: Governmental Fund Types: General Fund - The General Fund is the primary operating fund of the School District. All general tax revenues and other revenues that are not allocated by law or contractual agreement to another fund are accounted for in this fund. The general operating expenditures, the fixed charges, and the capital improvement costs that are not paid through other funds are paid from this fund. Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources, other than major capital projects, requiring separate accounting because of legal or regulatory provisions or administrative action. Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources for the payment of principal, interest, and fees on long-term general obligation debt. Capital Projects Funds - Capital Projects Funds are used to account for financial resources segregated for the acquisition or construction of major capital facilities. Fiduciary Fund Type: Agency Fund - The Agency Fund is used to account for the school activity groups and other agencies. The assets in this fund are held by the School District in a fiduciary capacity. 12 I I I I THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 1: Summary of Significant Accounting Policies (Continued) (A) Fund Accounting (Continued) Account Groups: General Fixed Asset Account Group - This account group is established to account for the fixed assets of the School District. General Long-Term Debt Account Group - This account group is established to account for the long-term debt that is guaranteed by the full faith and credit of the School District. (B) Basis of Accounting The modified accrual basis of accounting is utilized by all funds. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable, except for unmatured interest on general long-term debt which is recognized when the interest is due. Resources from special grants are generally recognized as revenues to the extent of expenditures made under the provisions of the grants. Significant funds received before the revenue recognition criteria have been met are reported as deferred revenue. {C) Budgetary Accounting Certain revenues and expenditures are budgeted in accordance with various legal requirements which govern the School District's operations. The annual budget is submitted to the Arkansas State Department of Education (the State) for approval. Revisions by subsequent budget amendments, if any, are not submitted to the State. Budgeted revenues and expenditures were approved by the Board of Directors at their August 23, 1990 meeting. No amendments were adopted subsequent to this date. The budgets formally approved by the Board of Directors include the General Fund (salary, desegregation and other operating) and the Debt Service Fund, as required by the State (Handbook II) and certain construction and special revenue expenditures. The budgets of the School District utilized in its internal budgetary accounting systems and for financial reporting vary in some regards from those required by applicable state statutes to be formally approved by the Board of Directors. 13 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 1: Summary of Significant Accounting Policies (Continued) (C) Budgetary Accounting (Continued) The budgets approved by the Board of Directors are utilized in the preparation of the Combined Statement of Revenues and Expenditures - Budget and Actual. Certain budgeted items have been reclassified for this financial statement presentation to facilitate comparison to the classifications required in reporting the related actual amounts. Such reclassifications relate primarily to operating transfers and proceeds of long-term debt. In addition, certain amounts (primarily property tax revenues and food service expenditures) are budgeted in accordance with accounting methods required by applicable state regulations with the related actual amounts being reflected in accordance with generally accepted accounting principles. (D) Investments Investments are stated at cost, which approximates market value. Investments consist of certificates of deposit, repurchase agreements, and treasury bills. (E) Inventories Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). Inventories are recorded as expenditures when transferred to schools and departmental offices for utilization. (F) General Fixed Assets In the general fixed asset group of accounts, land is valued at historical cost. Certain other components are stated at costs estimated by independent appraisers and by School District employees at various appraisal dates. Valuations of land improvements and buildings are intended to approximate fair market values at the latest appraisal dates (1965 and 1971, respectively)
furniture and fixtures are stated at appraisal values determined for insurance purposes in 1975. Additions since the date of the last appraisals are recorded at cost. The amount that such valuations vary from historical cost has not been determined. (G) Property Taxes Property taxes are recognized and recorded as current period revenues in accordance with the provisions of Interpretation 3 of the National Council of Governmental Accounting's (NCGA) Statement 1, which states that: (1) Property tax revenues should be recognized when they become available
and (2) available means when due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (generally not to exceed sixty days) to be used to pay liabilities of the current period. 14 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 1: Summary of Significant Accounting Policies (Continued) (H) Interfund Transactions During the course of operations, transactions occur between individual funds for goods provided or services rendered. These related receivables and payables are classified as "due from other funds" or "due to other funds" on the balance sheet. Quasi-external transactions are accounted for as revenues or expenditures. Transactions that constitute reimbursements to a fund for expenditures initially made from it that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. (I) Accumulated Vacation and Sick Leave School District employees do not receive vacation pay as such. Certain employees contracted to work 240 days per year receive additional pay if they work more than 240 days in any particular year. These employees are paid upon termination for any unpaid days accumulated in this manner. Due to the small number of employees contracted for 240 days per year who have accumulated unpaid days in this manner, the School District's liability for this type of compensated absence is not considered material and, therefore, has not been recorded in the accompanying financial statements. Accumulated sick pay or personal leave days are not paid upon termination. Accordingly, the School District has not recorded a liability in the accompanying financial statements since payment is not probable and the amount of ultimate payment if any, is not determinable. (J) Encumbrances Encumbrances for goods or purchased services are documented by purchase orders or contracts. Encumbrances outstanding at year end are not reported as expenditures for financial statement purposes as the related goods have not been received or the services performed. 15 -- THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 1: Summary of Significant Accounting Policies (Continued) (K) Total Columns on Combined Statements Total columns on certain combined statements are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in fund equity in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Certain comparative data have not been presented because inclusion would make certain statements unduly complex and difficult to understand. (L) Tax Exempt Status The School District is a tax exempt organization since its revenues are nontaxable under Section 115 of the Internal Revenue Code. (M) Bond Premiums or Discounts and Other Issuance Costs Generally accepted accounting principles (GAAP) require that bond discounts and additional issuance costs be included in the calculation of proceeds and reported separately as an expenditure on the statement of revenues, expenditures and changes in fund balances. In prior years, the School District capitalized such issuance costs and amortized them over the lives of the related bond issues, in accordance with Handbook II prescribed methods. This accounting method was not considered a material departure from GAAP. Issuance costs related to the September, 1990 bond issue (see Note 5) were recorded in accordance with GAAP as an expenditure of the Capital Projects Fund. Neither the balance of unamortized capitalized issuance costs, nor the change in the method of accounting for 1991, are considered to have a material impact on the financial statements. 16 II II Ii THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 2: Reconciliation of Fund Equity - The School District issued unaudited financial reports (the "State Report") on August 28, 1991 to the Arkansas State Department of Education. Financial information in the State Report was prepared in accordance with accounting methods prescribed in Handbook II, as required by applicable state regulations. In that report, the "Salary, Operating and Debt Service Funds" are generally the equivalent of the combined General and Debt Service Funds used for annual financial statement presentation purposes. The "Federal Grants Fund" corresponds to the Special Revenue Fund, except that it does not include activity in the "Revolving Funds" and the "Food Service Fund". The "Building Fund" per the State Report corresponds to the Capital Projects Fund. Balances and transactions related to the Agency Fund are reflected in the State Report as the "Student Activity Fund." The following is a reconciliation of total fund balances as shown on the State Report and in the accompanying financial statements at June 30, 1991: Fund equity per State Report Current period adjustments, net: Handbook II Other Fund balances not included in State Report: Revolving Funds Food Service Fund KLRE-FM/KUAR-FM Cumulative effect of prior years adjustments Fund equity per financial statements Due to school activity groups and other agencies per financial statements 17 s Governmental Fund Ty12es 14,754,087 (602,727) 85,269 277,703 2,203,806 287,896 $17,006,034 Fiduciary Fund Ty12es s 937,083 71,782 $ 1,008,865 I I THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 3: Property Taxes Pulaski County, Arkansas (the County) levies a property tax each February on the assessed value listed as of January l of the prior year for all real and personal property located in the County. Assessed values are established by the County Assessor's office. All taxes are due from property holders on an installment basis by October 10 and related amounts collected on behalf of the Little Rock School District are receivable from the County as collected. Taxes to be levied upon January 1, 1990 assessment values are as follows: Millage Valuation General Debt {Millions) Fund Service Real Estate $ 1,085 34.0 9.9 Personal property 356 34.0 9.9 Utilities 70 35.8 10.2 $ 1,511 During 1985, a reassessment was completed for all property located in Pulaski County, Arkansas. Based upon the results of this reassessment, the assessed value of all property within the sphere of taxation by the School District at January 1, 1985 increased approximately $400 million, as compared to January 1, 1984. In addition, there was an overall reduction of millage under Amendment 59. The School District is liable for its prorata share of the cost incurred by the State of Arkansas in relation to the reassessment. It is understood that reimbursement of this cost to the State, totaling approximately $513,000, will be made over a five year period beginning in fiscal year 1987 through semi-annual withholdings from the School District's revenues. Property tax revenues are reflected net of such withholdings. Property tax revenues of the Debt Service Fund totaling approximately $6,956,000 (the excess of funds necessary to meet current debt service requirements) have been transferred to the General Fund during the year ended June 30, 1991 as provided for under the statutes of the State of Arkansas. Note 4: Fixed Assets The following is a summary of the major components of fixed assets of the School District as of June 30, 1991: 18 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 4: Fixed Assets (Continued) Balance Balance June 30, 1990 Additions June 30, 1991 Land $ 2,861,085 $ $ 2,861,085 Land improvements 925,255 925,255 Buildings 105,035,846 5,293,409 110,329,255 Furniture and equipment 25,375,431 3,465,966 28,841,397 Construction-in-progress 2,503,834 2,503,834 Totals $ 134,197,617 $ 11,263,209 $ 145,460,826 The School District has entered into contracts for the construction or renovation of various facilities as shown below. Retainage payable in relation to these contracts totaled approximately $182,000 at June 30, 1991. June 30, 1991 Balances Project Expended/ Commitment Authorization Accrued Remaining: Geyer Springs Elementary $ 1,762,784 $ 1,218,437 $ 544,347 Woodruff Elementary 753,328 506,226 247,102 Western Hills Elementary 1,019,459 536,800 482,659 Forrest Heights Elementary 3,442,600 117,439 3, 325,161 Other projects 279,490 124,932 154,558 $ 71257,661 $ 2,5031834 $ 4,753,827 Note 5: Long-Term Debt On September 24, 1990, the School District received $6,000,000 of desegregation loan proceeds from, and executed a promissory note to, the State of Arkansas (see Note 8). The principal will bear interest beginning on the seventh anniversary of the date of the note at the rate of 3% per annum. The Principal of this loan is to be repaid in twenty equal annual installments beginning seven years after the execution of the loan and is secured by liens in favor of the State on certain new and existing millages. Under terms of the desegregation settlement agreements, if at any time between September, 1989 and December 31, 2000, the composite scores of the School District's black students (excluding special education students) on a standardized test agreed upon by the State and the School District are 90% or greater of the composite scores of the School District's white students (excluding special education students), any principal or interest payments Previously paid on the desegregation loan will be repaid to the School District and any outstanding loan balances forgiven. 19 1: THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 5: Long-Term Debt (Continued) A summary of all long-term debt transactions of the School District for the year ended June 30, 1991, is as follows: Balance at July 1, 1990 New debt issued: Construction school bonds - Capital Projects Fund Desegregation loan - General Fund (Note 8) Present value of capital lease obligations related to purchases of equipment and buses - General Fund Total new debt issued Debt retired: School bonds Capital lease obligations Revolving loan Pulaski County, Arkansas Special School District (Note 8) Total debt retired Balance at June 30, 1991 $ 52,514,599 17,197,450 6,000,000 1,648,889 24,846,339 2,180,750 2,124,737 60,000 l I ll8, 343 5,483,830 $ 71,877,108 Long-term debt at June 30, 1991 is comprised of the following: School bonds, construction and refunding issues s Pulask 0 i County Special School District (Note 8) Arkansas State Department of Education Revolving Loan Arkansas State Department of Education Desegregation Loan Capital lease obligations, secured by related buses and computer equipment $ Principal Balance 51,003,550 9,952,323 180,000 6,000,000 4,741,235 71,877,108 20 Interest Rates 3.25% - 7.7% 4.2% - 10% 9% 3% 6.6% - 8.9% Maturities Semiannually
through 2020 Semiannually
through 2003 Semiannually
thro_ugh 1994 Annually
1998-2017 Various
through 1995 1 I I THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 5: Long-Term Debt (Continued) The annual requirements to amortize all long-term debt outstanding at June 30, 1991 are as follows: Year Ending June 30 1992 1993 1994 1995 1996 Thereafter Amount 5,499,5'28 5,232,230 4,428,025 4,260,686 3,460,714 48,995,925 $ 71,877,108 Total interest payable in the future on debt outstanding at June 30, 1991, excluding amounts for the desegregation loan, is approximately $39.5 million. Interest on the desegregation loan, assuming a twenty year amortization beginning in 1998, would approximate $1.7 million. Subsequent to year end, approximately $15 million of construction bonds, dated October 1, 1991, were issued to finance capital expenditures. Note 6: Prior-Year Defeasance of Debt In prior years, the School District defeased certain 1984 and 1985 construction bonds by placing the proceeds of a refunding bond issue in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the def eased bonds are not included in the School District's financial statements. At June 30, 1991, $2.8 million of bonds outstanding are considered defeased. Note 7: Retirement Plans All School District employees are required by law to be covered by the Arkansas Teacher Retirement System (ATRS) except the following: (1) certain bus drivers, cafeteria workers and janitors, who are required by law to be covered by the Arkansas Public Employees Retirement System (APERS) and (2) ~art-time teachers, teacher aides and foreign exchange teachers who may elect in writing to exclude themselves from coverage. Effective July 1, 1991, all new employees of a school district, including part-time employees, must be members of the Arkansas Teacher Retirement System. Both systems are multipleemployer, cost-sharing public employee retirement systems which also provide death and disability benefits. Benefits for both systems are established by state statute. 21 1 I I ! I I ' THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 7: Retirement Plans (Continued) The payroll for employees covered by the ATRS for the year ended June 30, 1991, was approximately $74,000,000 and the payroll for employees covered by APERS for the same period was approximately $6,000,000. The School District's total payroll was approximately $81,000,000. ATRS employees who retire at or after age 60 with 10 years of credited service, or after 30 years of credited service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.85 percent of their final average salary for each contributory year of credited service and 1.17 percent of their final average salary for each non-contributory year of credited service. Final average salary is the average of the member's highest five fiscal years of earnings, regardless of when they occur. Benefits fully vest upon reaching 10 years of service. Vested employees that retire prior to accumulating 30 years of service or reaching age 60 will experience a reduction in benefits for early retirement. APERS contributory employees who retire at or after either (a) age 65 with 10 years service, or (b) age 60 with 20 years service, or (c) 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.8 percent of average pay for each contributory Year of credited service, or a minimum of $150. Average pay is the average of the highest 60 calendar month's of pay. Benefits fully vest upon reaching 10 years of service. Vested contributory employees that retire at or after age 55 but prior to age 65, with 10 years of service, receive reduced retirement benefits. APERS non-contributory employees who retire at or after age 65 with 10 years of service, or 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.8 percent of average Pay for each year of credited service. The retirement benefit is reduced fer applicable Social Security primary benefits for each year of credited service . The APERS benefit cannot be less than .7 percent of average pay times years of non-contributory service, or $150 monthly. Vesting, average pay calculations and early retirement provisions are the same as those of APERS contributory employees. Contribution requirements are established by State statute for each system. For the year ended June 30, 1991, employees covered by ATRS had the option to contribute 6% of full salary or $7,800, whichever applies, and employees covered by APERS had the option to contribute 6% of full salary. Federal funds of the School District were used to provide the 12% matching contribution, for all eligible ATRS employees who are paid through Federal Programs, while the state provided the matching contribution for other ATRS employees. The School District is liable for the 4% match for APERS employees. 22 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 7: Retirement Plans (Continued) For the year ended June 30, 1991, retirement and matching contributions for School District employees, expressed in thousands of dollars and as a percent of covered payroll, are as follows: ATRS APERS Total Employee contributions $ 1,877 2.54% $ 17 .28% $ 1,894 2.82% Matching Contributions: School District 240 4.00 240 4.00 State 8,055 10.88 8,055 10.88 Federal 361 _& 361 _& $ 101293 13.91% $ 257 4.28% $ 101550 18.19% The pension benefit obligation (PBO) is a standard disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and any step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess each system's funding status on a going-concern basis, assess Progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among PERS and employers. The systems do not make separate measurements of assets and PBO for individual employers, thus such information is not available as it relates to the School District individually. The total PBO, net assets available for benefits and funded status at June 30, 1990, the date of the latest actuarial valuation, is shown below for each system: ATRS APERS Total Pension benefit obligation $ 2,380,800 $ 1,054,875 $ 3,435,675 Net assets available for benefits 2,232,810 114111279 316441089 Unfunded (overfunded) pension benefit obligation $ 1471990 $ (356,404) $ (2081414) Ten year historical trend information showing each system's progress in accumulating sufficient assets to pay benefits when due is presented in each system's June 30, 1990 comprehensive annual financial report. Note 8: Desegregation and Related Funding Issues During 1982, the School District brought litigation to consolidate the three school districts in Pulaski County, Arkansas. This was an interdistrict school desegregation case involving complex federal litigation in both trial and appellate courts. 23 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 8: Desegregation and Related Funding Issues (Continued) In relation to the remedy issues of this litigation, the Pulaski County Special School District (PCSSD) and the Little Rock School District entered into agreements, which were approved by the Courts, for the transfers of certain schools, buildings and related personal property between the districts. The Little Rock School District assumed approximately $14. 6 million in long-term debt (see Note 5) related to the properties transferred to them. The transfer of property also resulted in approximately $300 million in property assessment values being transferred to the Little Rock School District effective upon the January 1, 1987 assessments. The litigation also resulted in the courts ordering the School District to initiate certain desegregation programs with the Arkansas Department of Education (the State) being liable for certain aspects of funding the programs. All major financial aspects of this litigation have been settled and accepted by the courts. Under the terms of the settlement agreements, the Arkansas Department of Education agreed to pay the School district a total of $71 million, net of $2 million in legal fees awarded the NAACP Legal Defense and Education Fund, Inc. This amount included approximately $57,130,000 for compensatory education and other desegregation programs and $13,870,000 for cash equivalent Payments in lieu of formula guarantees. In addition, the State agreed to loan the School District up to $20 million between July 1, 1989 and July 1, 1999. The loan proceeds are to be used for desegregation purposes and are secured by liens in favor of the State on certain new and existing millages. As of June 30, 1991, $6,000,000 had been received in regard to the loan provisions of the agreement and is recorded as proceeds from long-term debt in the general fund (see Note 5). During the year ended June 30, 1991, the School District recorded settlement Proceeds of $8,356,778 in the general fund for compensatory education programs and other desegregation expenses. Included in this amount is a receivable of $4,747,528 due the School District on July 1, 1991 for reimbursement of desegregation expenditures made prior to year end. Legal fees advanced by the State, totaling $2,000,000, to be deducted from settlement proceeds in the final years of payment to the School District, are recorded as settlement Proceeds in the general fund. In addition, the School District received and recorded additional cash equivalent payments in lieu of Minimum Foundation Program Aid (MFPA) formula guarantees totaling $2,000,000 which are recorded as MFPA revenue in the general fund. 24 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 8: Desegregation and Related Funding Issues (Continued) Net amounts of future funding under the above described agreements (excluding potential loan proceeds) at June 30, 1991 are as follows: MFPA Year Ending Desegregation Guarantees Total June 30, 1992 s 8,637,482 s 2,000,000 s 10,637,482 June 30, 1993 8,926,606 2,000,000 10,926,606 June 30, 1994 8,094,112 2,000,000 10,094,112 June 30, 1995 6,042,591 2,000,000 8,042,591 June 30, 1996 3,829,942 1,870,114 5,700,056 Future years 6831125 6831125 Total $ 36,213,858 $ 9,870,114 $ 46,083,972 Note 9: Agency Funds As the School District serves only in a fiduciary capacity for the school activity funds and other agency funds, related transactions are not reflected in the combined statement of revenues, expenditures and changes in fund balance. A summary of transactions in these school activity and other agency funds during the year ended June 30, 1991, and the resulting change in amounts due to the school activity groups and other agencies, is as follows: Due to school activity groups and other agencies at June 30, 1990 Transactions during the year ended June 30, 1991: School activities and other agencies revenues Interest on investments School activities and other agencies expenditures Due to school activity groups and other agencies at June 30, 1991 Note 10: Cash and Investments $ 874,461 3,260,064 19,575 (3,145,235) $ 1,008,865 Arkansas statutes authorize school districts to deposit their funds in any bank located in the State of Arkansas. In addition, they may invest in bonds of the United States of America, general obligation bonds of the State of Arkansas, and bank certificates of deposit or repurchase agreements from a bank or savings and loan that has pledged direct obligations of, or obligations which are fully guaranteed by, the United States of America. 25 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 10: Cash and Investments (Continued) The carrying amount of the School District's deposits (including Agency Funds) with a Little Rock, Arkansas financial institution was $310,645, net of $690,131 reflected as bank overdrafts for financial statement purposes, and the bank balance was $1,707,000. The bank balance is categorized as follows: Amount insured by the FDIC Amount collateralized with securities held by the Federal Reserve Bank in the School District's name Uncollateralized Total bank balance $ 270,982 1,300,000 136,018 $ 1,707,000 Investments of the School District (including Agency Funds) at June 30, 1991, are summarized below. Investments, which are all represented by specific identifiable investment securities, are classified as to credit risk by the three categories described as follows: Category 1 - Insured or registered, or securities held by the School District or its agent in the School District's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the School District's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the School District's name. Total Category Carrying 1 2 3 Amount Certificates of deposit $ 1,150,000 $ 300,000 $ $ 1,450,000 Treasury bills 20,188,155 20,188,155 Repurchase agreements 4,400,000 4,400,000 s 21,338,155 s 300,000 s 4,400,000 s 26,038,155 Note 11: Magnet School Funding A~ a part of its desegregation program (see Note 8), the Federal court directed the School District to participate in a ''Magnet School" system and has vested control of these schools in a Magnet Review Committee (MRC). 26 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 11: Magnet School Funding (Continued) During the year ended June 30, 1988, six schools from the Little Rock School District were organized as a separate reporting group under the control of the MRC. The MRC received its authority from the Federal court as the result of desegregation litigation (see Note 8). During the year ended June 30, 1991, the approved funding level of these schools ("the Magnets") totaled $3,370 per average daily membership (ADM) from the State of Arkansas, Pulaski County special School District (PCSSD), North Little Rock School District (NLRSD) and Little Rock School District (LRSD). The State contributes one half of the cost ($1,685 per ADM) with the three school districts sharing the balance of the cost. The State pays its portion of the NLRSD and PCSSD contributions directly to the respective districts for subsequent remission to the LRSD. Average daily membership: LRSD NLRSD PCSSD Total ADM Contribution rate - local sources Total school districts' contributions Less operating transfers from General Fund to Magnet Fund Total Magnet Revenue - local sources Total Magnet Revenue - state sources $ s $ $ 2,351.97 478.07 900.46 3,730.50 1,685 6,285,893 (3,592,755) 2,693,138 6,285,892 The Little Rock School District accounts for the Magnet School's operating revenues and expenses within its Special Revenue Fund since these funds are restricted to the operations of the Magnets. The School District's portion of the total costs consists of $3,592,755 recorded as an operating transfer from the General Fund with the balance of $370,314 being indirect administrative cost contributions. In addition to the above discussed operating revenues, the School District is also reimbursed by the NLRSD and PCSSD for debt service payments for capital improvements to the Magnets. The total of such reimbursements (which are reflected in revenues of the Debt Service Fund) for the year ended June 30, 1991 are as follows: North Little Rock School District Pulaski County Special School District Total 27 $ 35,434 89,724 $125,158 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements (Continued) June 30, 1991 Note 12: Note Payable On March 28, 1991, the School District issued $14,080,000 of tax and revenue anticipation promissory notes (TRANS). The TRANS, plus accrued interest at a rate of 5.50% per annum, are payable in full December 31, 1991. Security for the TRANS is a pledge of revenue of the School District for the year ended June 30, 1991. Accrued interest of $101,000 is recorded in the General Fund at June 30, 1991. Total interest charges incurred on notes payable, including balances under previous lines-of-credit, for the year ended June 30, 1991 were approximately $155,000. Note 13: Other Litigation and Contingencies At June 30, 1991, the School District is a defendant in various legal actions. Several involve claims by former employees asserting discriminatory hiring practices. The School District intends to vigorously contest these cases. Management and legal counsel are of the opinion that the likelihood of an unfavorable outcome is small and, thus, no provision has been made in the financial statements for any potential liabilities. During the year ended June 30, 1991, judgments were entered against the School District totaling approximately $580,000 to be paid to the District's former attorneys for services performed on behalf of the School District in the Pulaski County school desegregation case. The School District recorded a liability and related expenditure for $580,000 in the June 30, 1991 combined financial statements. Note 14: Risk Management The School District is exposed to various risks of loss related to torts
theft of, damage to, and destruction of assets
errors and omissions
injuries to employees and students
and natural disasters. Effective October 1, 1990, the School District established a Risk Management Fund within the General Fund to account for and finance its uninsured risks of loss. Under this program, the Risk Management Fund provides coverage up to a maximum of $100,000 for each property damage, general liability or other covered claim. The School District purchases commercial insurance for claims in excess of coverage provided by the Fund and for all other risks of loss. Settled claims did not exceed loss fund or other commercial coverage during the year ended June 30, 1991. 28 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Notes to Combined Financial Statements {Continued) June 30, 1991 Note 14: Risk Management {Continued) The claims liability of $252,068 recorded in the General Fund at June 30, 1991 is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. The claims liability includes an amount for claims that have been incurred but not reported. Claims liability activity for the year ended June 30, 1991 is as follows: Balance July 1, 1990 s Claims expense 384,717 Claims paid {132,649) Balance June 30, 1991 s 252,068 29 II II II i 1, II ! SUPPLEMENTARY SCHEDULES 30 'I I I I J
:I! II Schedule 1 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Combining Schedule of Revenues and Expenditures - Special Revenue Funds Year Ended June 30, 1991 Total Federal Food Other Magnet (Memorandum Programs Service Programs Schools Only) Revenues Meal sales $ $ 1,344,429 $ $ $ 1,344,429 State, local and other assistance 34,416 614,452 905,508 8,979,030 10,533,406 Federal financial assistance 4,871,273 3,634,607 8,505,880 Interest income 71,307 71 307 Total revenues 4,905,689 5,664,795 905,508 8,979,030 20,455,022 Ex12enditures Basic programs 38,404 7,943,401 7,981,805 Exceptional child programs 329,798 242,281 572,079 Vocational-technical programs 245,192 181,598 505,984 932,774 Adult continuing education programs 78,262 624,119 702,381 Compensatory education programs 2,707,413 9,352 1,190 2,717,955 Other instructional programs 4,598 29,598 244,392 278,588 Instructional support services 571,066 4,500 945,194 1,520, 760 Operation and maintenance of plant 1,622 1,046,555 1,048,177 General administration 80,426 33,992 1,106,428 1,220,846 Capital outlay 595,785 208,741 107,018 911,544 Food services 5,410,705 5,410,705 Community services 207,934 207,934 Indirect and other 83,593 370,314 453,907 Total expenditures 4,905,689 5,619,446 921,563 12,512,757 23,959,455 Excess of revenues over (under) expenditures 45,349 (16,055) (3,533,727) {3,504,433) Other Financing Sources (Uses) Operating transfer in for LRSD portion of Magnet funding 3,592,755 3,592,755 Operating transfers out for Magnet School equipment lease payments (59,028) (59,028) Total other financing sources 3,533,727 3,533,727 Excess of revenues over (under) expend-itures and other financing uses $ $ 45,349 $_ (16,055) $ $ 29,294 31 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Rockefeller Day Care Center Schedule of Revenues and Expenditures {Cash Basis) - Budget and Actual Year ended June 30, 1991 Revenues Federal funds Tuition Non-Federal matching contribution LRSD {Development program and line item reimbursement) Total revenues Expenditures Salaries and fringe Program supplies General administration Non-Federal matching expenditures Total expenditures Excess of revenues over (under) expenditures Units Eligible Non-eligible Total Note: Budget 10-1-89 to 10-1-90 to 9-30-90 9-30-91 $133,770 41,780 $ 3,525 167,239 346,314 322,763 17,806 2,450 3,525 346,544 (230) 14,376 3,179 17,555 $123,663 32,500 $ 332,438 488,601 440,701 18,853 29,055 488,609 (8) 13,000 3,250 16,250 Schedule 2 Actual 6-30-91 $ 81,019 34,416 42,237 157,672 93,458 14,594 5,885 42,237 156,174 $ 1,498 10,667 2,652 13,319 --The budget amounts as reflected above are by grant periods. The actual amounts, which reflect transactions during both the budget periods, are based on the School District's fiscal year ending June 30, 1991. 32 Schedule 3 LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Revenues of Salary, Operating and Debt Service Funds (Basis of Accounting as Prescribed by Handbook II) Year Ended June 30, 1991 Total General and Debt Service Funds (Memorandum Only) Unadjusted Adjusted Handbook II Net Handbook II Budget Revenues Adjustments Revenues Revenue - Local Sources Current taxes $ 31,547,258 $ 31,899,358 $ s 31,899,358 Delinquent taxes 4,059,535 3,214,974 3,214,974 40% pullback 20,902,212 20,601,593 20,601,593 Excess treasurer's fee 115,000 118,998 118,998 Depository interest 330,000 317,646 317,646 Revenue in lieu of taxes 200,000 120,412 120,412 Miscellaneous and rents 250,000 858,778 (540,800) 317,978 Interest on investments 100,000 141,376 106,480 247,856 Athletic receipts 100,000 91,322 9}, 322 57,604,005 57,364,457 (434,320) 56,930,137 Revenue - County Sources County General 130,165 73,971 73,971 Severance tax 16,232 16,232 130,165 90,203 90,203 Revenue - State Sources MFPA 23,371,654 22,037,764 22,037,764 Apportionment 74,267 73,971 73,971 Vocational 1,526,000 1,265,710 1,265 , 710 Handicapped children 468,000 602,063 602,063 Orphan children 12,720 8,820 8,820 Transportation 2,400,000 2,885,960 2,885,960 Compensatory education 243,243 609,943 609,943 Incentive fund 743,493 1,007,481 1,007,481 Adult education 694,000 624,119 624,119 Desegregation settlement 8,356,778 10,356,778 10,356,778 Desegregation loan 6,000,000 6,000,000 6,000,000 43,890,155 45,472,609 45,472 1 609 Revenue - Other Sources Public law 874 44,625 28,585 28,585 Transfer from federal grant 90,000 95,588 95,588 Transfer from bond account 500,000 613,166 3,435,059 4,048,225 634,625 737,339 3,435,059 4,172,398 Total revenues $ 102,258,950 s 103,664,608 s 3,000,739 s 106,665,347 33 LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Expenditures of Salary, Operating and Debt Service Funds (Basis of Accounting as Prescribed by Handbook II) Year Ended June 30, 1991 Schedule 4 Total General and Debt Service Funds (Memorandum Only) Unadjusted Adjusted Handbook II Net Handbook II Budget Expenditures Adjustments Expenditures Certified salaries $ 49,642,449 $ 48,991,356 $ $ 48,991,356 Non-certified salaries 14,989,410 14,761,997 14,761,997 Substitute salaries 1,439,593 1,439,593 Employee benefits 7,037,307 8,032,968 8,032,968 Purchased services 9,842,416 10,457,142 56,735 10,513,877 Supplies and materials 5,379,939 4,020,746 4,020,746 Capital outlay 3,605,028 3,628,473 571,862 4,200,335 Debt service 6,831,984 6,646,769 2,444,186 9,090,955 Other objects 419251987 510361791 (651,879) 413841912 Total expenditures $ 102,2541520 $ 10310151835 $ 2,4201904 $ 1051436,739 34 LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule 5 Reconciliation of General and Debt Service Fund Balances - Generally Accepted Accounting Principles and Handbook II Basis of Accounting June 30, 1991 Adjusted June 30, 1990 Handbook II fund balances Adjusted Handbook II revenues (Schedule 3) Adjusted Handbook II expenditures (Schedule 4) Adjustments to convert to generally accepted accounting principles (GAAP): Property taxes - debt services Property taxes - general fund Special revenue fund adjustments General and debt service GAAP fund balances at June 30, 1991 General fund Debt service fund Total 35 $ (238,491) 106,665,347 (105,436,739) 4,778,210 (4,273,953) (14,812) $ 1,479,562 $ 178,321 1,301,241 S 1,479,562 THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Long-Term Debt June 30, 1991 Long-term debt at June 30, 1991 is comprised of the following: $4,485,000 December, 1965 Construction School Bonds
payable in annual installments through 1995
interest at 3.25 to 3.6% $2,051,000 June, 1973 Construction School Bonds
payable in annual installments through 1993
interest at 4.7 to 5.0% $6,482,700 June, 1977 Construction School Bonds
payable in annual installments through 1996
interest at 4.25 to 5.1% $6,134,565 March, 1979 Construction School Bonds
payable in annual installments through 1999
interest at 5.4 to 6.0% $4,889,200 March, 1980 Surplus Revenue Construction School Bonds
payable in annual installments through 1994
interest at 5.75 to 6.0% $7,826,000 June, 1987 Construction School Bonds
payable in annual installments through 2007
interest at 6.7 to 7.7% $5,512,750 May, 1988 Construction School Bonds
payable in annual installments through 2007
interest at 6.2 to 7.2% $3,371,000 June, 1988 Refunding School Bonds
payable in annual installments through 1999
interest at 5.6 to 6.6% $8,164,100 September, 1989 Construction School Bonds
payable in annual installments through 2008
interest at 6.1 to 6.75% $17,197,450 September, 1990 Construction School Bonds
payable in annual installments through 2020
interest at 6.25 to 7.2% Total bonds 36 Schedule 6 $ 1,187,000 445,000 2,815,000 3,595,000 1,915,000 7,485,000 5,365,000 2,835,000 8,164,100 17,197,450 51,003,550 (Continued) Schedule 6 (Continued) THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Long-Term Debt (Continued) June 30, 1991 Lease payable in annual installments through July 1991
interest at 6.6% Lease payable in annual installments through October 1991
interest at 8.38% Lease payable in annual installments through October 1991, interest at 8.38% Lease payable in annual installments through October 1992, interest at 7.0% Lease payable in annual installments through April 1993
interest at 8.0% Lease payable in monthly installments through July 1993
interest at 7.8% Lease payable in semi-annual installments through July 1994
interest at 8.5% Lease payable in annual installments through February 1993
interest at 5.9% Lease payable in annual installments through April 1994
interest at 8.9% Lease payable in annual installments through October 1993
interest at 7.62% Lease payable in annual installments through October 1994
interest at 7.99% Lease payable in annual installments through March 1995
interest at 7.95% Lease payable in monthly installments through February 1994
interest at 7.42% Total capital lease obligations 37 $ 378,378 135,769 19,679 25,882 44,114 106,767 605,997 1,931,484 43,061 144,807 1,134,000 87,163 841134 417411235 (Continued) Schedule 6 (Continued) THE -LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Long-Term Debt (Continued) June 30, 1991 $14,632,725 debt payable to the Pulaski County Special School District semi-annually through 2003 Revolving loan
payable in semi-annual installments through January 1994 at 9% Desegregation loan
payable in 20 annual installments beginning September, 1997
interest at 3%. Total Long-Term Debt 38 $ 9,952,323 180,000 6,000,000 $ 71,877,108 OTHER REPORTS AND SUPPLEMENTAL INFORMATION 39 ~cud~ CERTIFIED PUBLIC ACCOUNTANTS Lottie Rock Office: 201 E. Markham Suite 500 Little Rock, AR 72201 (501) 3752025 FAX (501) 3758704 Texarkana Office: 701 Arkansas Blvd. Texarkana, AR 75502 (501) 7732168 FAX (501) 774-7244 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON A STUDY AND EVALUATION MADE AS A PART OF AN AUDIT OF THE BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE ADDITIONAL TESTS REQUIRED BY THE SINGLE AUDIT ACT The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the combined financial statements of The Little Rock School District of Pulaski County, Arkansas (the School District), as of and for the year ended June 30, 1991, and have issued our report thereon dated November 5, 1991. We conducted our audit in accordance with generally accepted auditing standards
Government Auditing Standards, issued by the Comptroller General of the United States
and Office of Management and Budget (0MB) Circular A-128, Audits of State and Local Governments. Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement and about whether the School District complied with laws and regulations, noncompliance with which would be material to a major federal financial assistance program. In planning and performing our audit of the combined financial statements of the School District for the year ended June 30, 1991, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the combined financial statements and on its compliance with requirements applicable to major federal financial assistance programs and not to provide assurance on the internal control structure. The management of The Little Rock School District of Pulaski County, Arkansas 'is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of combined financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors or irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of 40 Members American Institute of Certified Public Accounlants Private Companies Practice Section and S.E.C. Practice Section Board of Directors The Little Rock School District of Pulaski County, Arkansas Page Two the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: 1. Accounting Controls 2. - Cash - Fund balances - Revenues/receivables - Payrolls - Cash receipts - Fixed assets - Expenditures/payables - Investments - Cash disbursements - Property taxes receivable Controls Used in Administering Federal Programs General Requirements: Specific Requirements: Political activity Davis-Bacon Act Civil rights Cash management Federal financial reports Allowable costs/Cost principles Drug-free Workplace Act Administrative requirements Types of services Eligibility Matching, level of effort, or earmarking Reporting Special tests and provisions For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended June 30, 1991, the School District expended 87% of its total federal financial assistance under major federal financial assistance programs. We performed tests of controls, as required by the 0MB circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements and amounts claimed or used for matching that are applicable to each of the School District's major federal financial assistance programs, which are identified in the accompanying schedule of federal financial assistance. Our Procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. 41 I I I I I I L I [ I I I I I I I I I I I I I I I I I II II The Board of Directors The Little Rock School District of Pulaski County, Arkansas Page Three We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the School District's ability to record, process, summarize, and report financial data consistent with the assertions of management in the combined financial statements or to administer federal financial assistance programs in accordance with applicable laws and regulations. Fixed Assets At present, the School District does not have a complete inventory or detail subsidiary ledger of all fixed assets which can be agreed or reconciled to total general fixed assets as reported in the combined financial statements. The School District's fixed asset tracking system should be expanded to include all of its assets and to provide for a complete annual physical inventory count of capital assets. The inventory should be used to determine that all assets purchased are still in possession of the School District and that assets are being utilized in an effective and efficient manner. * * * * * * A material weakness is a reportable condition in which the design or operation of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the combined financial statements being audited or that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe the reportable condition described above is not a material weakness. 42 The Board of Directors The Little Rock School District of Pulaski County, Arkansas Page Pour This report is intended for the information of the Board of Directors, management, and all applicable Federal and State agencies. This is not intended to limit the distribution of this report which is a matter of public record . November 5, 1991 Little Rock, Arkansas 43 .7.._J) ~ ~, -rl/l ~l--~ Certified Public Accountants ~cud~ CERTIFIED PUBLIC ACCOUNTANTS Lottie Rock Olfice: 201 E Markham Suite 500 Little Rock. AR 72201 (501) 375-2025 FAX (501 I 3758704 Texarkana Olfice: 701 Arkansas Blvd Texarkana , AR 75502 (501) 7732168 FAX (501) 7747244 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE BASED ON AN AUDIT OF THE BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the combined financial statements of The Little Rock School District of Pulaski County, Arkansas (the School District), as of and for the year ended June 30, 1991, and have issued our report thereon dated November 5, 1991. We conducted our audit in accordance with generally accepted auditing standards and Government Audi ting Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to The Little Rock School District of Pulaski County, Arkansas is the responsibility of the School District's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the School District's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the combined financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, The Little Rock School District of Pulaski County, Arkansas complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe t~at the School District had not complied, in all material respects, with those provisions. This report is intended for the information of the Board of Directors, management, and all applicable Federal and state agencies. This is not intended to limit the distribution of this report which is a matter of public record. November 5, 1991 Little Rock, Arkansas Certified Public Accountants 44 Members American Institute of Certified Public AccounIants Private Companies Practice Sectoo and S E.C Practice Section ~and'~ CERTIFIED PUBLIC ACCOUNTANTS ~Ille Rock Office: 201 E. Markham su,te 500 Little Rock, AR 72201 (501) 3752025 FAX (501) 375-8704 Texarkana Office: 701 Arkansas Blvd. Texarkana, AR 75502 (501) 773-2168 FAX (501) 774-7244 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the financial statements of the Little Rock School District of Pulaski County, Arkansas (the School District) as of and for the year ended June 30, 1991. We have applied procedures to test the School District's compliance with the following requirements applicable to its federal financial assistance programs, which are identified in the schedule of federal financial assistance for the year ended June 30, 1991: - Political Activity - Federal Financial Reports - Davis-Bacon Act - Allowable Costs/Cost Principles - Civil Rights - Drug Free Workplace Act - Cash Management - Administrative Requirements Our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the School District's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the School District had not complied, in all material respects, with those requirements. However, the results of our procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the accompanying schedule of findings and questioned costs. This report is intended for the information of the Board of Directors, management, and all applicable Federal and state agencies. This is not intended to limit the distribution of this report, which is a matter of public record. November 5, 1991 Little Rock, Arkansas ~4~ Certified Public Accountants Members American lnslitute ol Certified Pubhc Accountants Private Companies Practice Section4 ~ S.E.C. Practice Seclion ~ad~ CERTIFIED PUBLIC ACCOUNTANTS little Rock Office: 201 E. Markham Suite 500 Little Rock, AA 72201 (501) 375-2025 FAX (501) 375-8704 Texarkana Office: 701 Arkansas Blvd. Texarkana, AR 75502 (501) 773-2168 FAX (501) 774-7244 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the financial statements of the Little Rock School District of Pulaski County, Arkansas (the School District) as of and for the year ended June 30, 1991. We also have audited the School District's compliance with the requirements governing types of services allowed or unallowed
eligibility
matching, level of effort, or earmarking
reporting
levels of service
annual assessment of educational needs
services provided to children enrolled in private schools
commitment of funds
record retention
claims for advances and reimbursements
and amounts claimed or used for matching that are applicable to each of its major federal financial assistance programs, which are identified in the accompanying schedule of federal financial assistance for the year ended June 30, 1991.- The management of the School District is responsible for compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance with those requirements in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and 0MB Circular A-128, Audits of State and Local Governments. Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the School District's compliance with those requirements. We believe that our audit provides a reasonabl~ basis for our opinion. The results of our audit procedures disclosed immaterial instances of noncompliance with the requirements referred to above, which are described in the accompanying schedule of findings and questioned costs. We considered these instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. In our opinion, the Little Rock School District of Pulaski County, Arkansas complied, in all material respects, with the requirements governing types of services allowed or unallowed
eligibility
matching, level of effort, or earmarking
reporting
levels of service
annual assessment of educational needs
services provided to children enrolled in private schools
commitment of funds
record retention
claims for advances and reimbursements
and amounts claimed or used for matching that are applicable to each of its major federal financial assistance programs for the year ended June 30, 1991. 46 Members American Institute of Certified Public Accountants Private Companies Practice Section and S.E.C. Practice Section The Board of Directors The Little Rock School District of Pulaski County, Arkansas Page Two This report is intended for the information of the Board of Directors, management, and all applicable Federal and state agencies. This is not intended to limit the distribution of this report, which is a matter of public record. November 5, 1991 Little Rock, Arkansas 47 ~-tf~ Certified Public Accountants !iZ.ma'&a?td~ CERTIFIED PUBLIC ACCOUNTANTS Little Rock Office: 201 E. Markham Suite 500 Little Rock. AR 72201 (501) 375-2025 FAX (501) 375-8704 Texarkana Office: 701 Arkansas Blvd. Texarkana, AR 75502 (501) 773-2168 FAX (501) 774-7244 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the financial statements of the Little Rock School District of Pulaski County, Arkansas (the School District) as of and for the year ended June 30, 1991. In connection with our audit of the combined financial statements of the School District, and with our consideration of the School District's internal control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, Audits of State and Local Governments, we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the year ended June 30, 1991. As required by 0MB Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed and eligibility that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the School District's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that The Little Rock School District of Pulaski County, Arkansas had not complied, in all material respects, with those requirements. Also, the results of our procedures did not disclose any immaterial instances of noncompliance with those requirements. This report is intended for the information of the Board of Directors, management, and all applicable Federal and state agencies. This is not intended to limit the distribution of this report, which is a matter of public record . November 5, 1991 Little Rock, Arkansas ~i~ Certified Public Accountants 48 Members American Institute of Certilled Public Accountants Private Companies Practice Section and S.E.C. Pract1ce Section Program Department of Education Title VI-B Handicapped Chapter 1 Compensatory THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Findings and Questioned Costs June 30, 1991 Findings/Noncompliance Title VI-B requires the School District to re-evaluate children in the handicapped program every third year to determine if they have progressed enough to be placed in the mainstream of education. During our review of 25 files, we found one child who had not been re-evaluated, as required, in the third year of participation in the program. The Chapter 1, ESEA Monitoring Report dated May 21, 1991, noted that Stephens Elementary School was improperly operating its Chapter 1 program as if approved as a schoolwide project. This finding resulted in questioned costs of $71,480.20. In order to accurately record the effect of the finding on the June 30, 1991 financial records of the District, expenses in this amount were charged to the general fund with a related deferral of revenue in the special revenue fund. These funds will be available for use in the 1991-92 school year. A Chapter 1 project must be based on an annual assessment of educational needs that selects those educationally deprived children who have the greatest need for special assistance. The Chapter 1, ESEA Monitoring Report dated Hay 21, 1991 noted that the student selection process was done without regard to identifying students having the greatest needs and was not uniformly applied throughout the School District. A corrective action plan was filed prior to June 30, 1991 to help ensure that participating students are properly selected in the future. 49 Questioned Costs THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Findings and Questioned Costs (Continued) June 30, 1991 Program Department of Education Chapter 1 Compensatory (Continued) Department of Agriculture Naticml Sdml Lunch Program Findings/Noncompliance At least once every three years the School District must complete a Sustained Gains Study to evaluate the effectiveness of its Chapter 1 program. The study uses an objective measurement of individual achievement in basic and more advanced skills aggregated for the School District as a whole and determines whether improved performance is sustained over more than one year. The Chapter 1, ESEA Monitoring Report dated May 21, 1991 noted that a Sustained Gains Study was not completed during the three-year period 1987-89. The Sustained Gains Study was completed and submitted prior to June 30, 1991. Chapter 1 guidelines require that, for participating students failing to show a gain for two consecutive program years, there must be a record or other evidence that the students' plans were in place. The Chapter 1, ESEA Mani tor ing Report dated May 21, 1991 disclosed that no record or evidence of such plans existed. A corrective action plan was filed by the School District prior to June 30, 1991. The National School Lunch Program requires that all meals reported for reimbursement must be supported by accurate meal counts and records and may only be served to eligible children. A review was performed by the Department of Agriculture during the year ended June 30, 1991, and the summary of findings that was prepared noted meal count errors, claims consolidation errors, applicationapproval errors, and roster errors. The total amount of questioned costs associated with these errors was $555. 62. This amount was 50 Questioned Costs THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Findings and Questioned Costs (Continued) June 30, 1991 Program Department of Agriculture National School Lunch Program (Continued) Department of Energy Energy Conservation Findings/Noncompliance deducted from a claim for reimbursement submitted by the School District prior to June 30, 1991. The Davis-Bacon Act requires that wage rates paid laborers on federally financed construction projects at least equal local established rates. We noted through our discussion with the Arkansas Energy Office as to the School District's compliance with the Davis-Bacon Act that instances of noncompliance occurred during the year. As of June 30, 1991, these instances had been resolved and workers had been paid the prevailing wage rate. A corrective action plan was filed by the School District prior to June 30, 1991. 51 Questioned Costs ~cud~ CERTIFIED PUBLIC ACCOUNTANTS little Rock Office: 201 E. Markham Suite 500 Little Rock, AR 72201 Texarkana Office: 701 Arkansas Blvd. Texarkana, AR 75502 (501) 773-2168 FAX (501) 774-7244 (50l) 375 2025 FAX ( 5 0l) 375 " 8704 INDEPENDENT AUDITORS I REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE The Board of Directors The Little Rock School District of Pulaski County, Arkansas Little Rock, Arkansas We have audited the combined financial statements of The Little Rock School District of Pulaski County, Arkansas (the School District) for the year ended June 30, 1991, and have issued our report thereon dated November 5, 1991. These combined financial statements are the responsibility of the School District's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was made for the purpose of forming an op1n1on on the combined financial statements of The Little Rock School District of Pulaski County, Arkansas taken as a whole. The accompanying schedule of federal financial assistance is presented for purposes of additional analysis and is not a required part of the combined financial statements. The information in that schedule has been subjected to the auditing procedures applied in the audit of the combined financial statements and, in our opinion, is fairly stated in all material respects in relation to the combined financial statements taken as a whole. November 5, 1991 Little Rock, Arkansas ~~~ Certified Public Accountants 52 Members American lns11tute of Certified Pubhc Accountants Private Companies Practice Section and SEC. Practice Section Federal Grantor/Pass-Through Grantor/Program Title Major Programs U.S. Department of Education Passed Through State Department of Education: CHAPTER I Compensatory Title VI-B Handicapped U.S. Department of Agriculture Passed Through State Department of Education: National School Lunch Program U.S. Department of Energy Passed Through Arkansas Energy Office: Energy Conservation Total Major Programs Other Federal Programs U.S. Department of Education Passed Through State Department of Education: EESA TITLE II Public Law 874 ECIA CHAPTER II CHAPTER I Handicapped Indochinese Refugee Child Assistance Drug Free Schools and Communities Act of 1986 Vocational Education Act (Carl Perkins) Adult Basic Education Total U.S. Department of Education U.S. Department of Labor Passed Through State Department of Education: CETA/Vocational Job Training Partnership Act Total U.S. Department of Labor THE LITTLE ROCK SCHOOL DISTRICT OF PULASKI COUNTY, ARKANSAS Schedule of Federal Financial Assistance Year Ended June 30, 1991 Federal CFDA Number 84.010 84.027 10.555 81.052 84.164A 84.041 84.151 84.009 84.146 84.186A 84.048 84.002 17. 250 17. 250 53 Program or Award Amount $ 2,904,808 534,635 623,854 77,762 268,961 64,987 7,394 244,170 372,269 83,005 51,796 181,397 Federal Funds Revenues Recognized Expenditures $ 2,757,413 439,580 3,196,993 3,620,962 514,775 7,332,730 43,859 28,585 213,526 56,872 1,306 135,030 268,295 81,027 828,500 51,796 91,616 143,412 $ 2,757,413 439,580 3,196,993 3,620,962 514,775 7,332,730 43,859 28,585 213,526 56,872 1,306 135,030 268,295 81,027 828,500 51,796 91,616 143,412 (Continued) THE LITTLE ROCK SCHOOL DISTRIC'f OF PULASKI COUNTY, ARKANSAS Schedule of Federal Financial Assistance (Continued} Year Ended June 30, 1991 U.S. Department of Agriculture Passed Through State Department of Education: Nutritional Education Total U.S. Department of Agriculture U.S. Department of Health and Human Services Passed Through State Department of Human Services: Development Disabilities Planning Council Title XX Daycare - Contract Title XX Daycare - Vouchers Title XX New Futures Total U.S. Department of Health and Human Services Total Federal Financial Assistance Note: Medicaid reimbursements paid to providers are defined as contracts for services and not federal assistance
therefore, they are not covered by the reporting requirements of 0MB Circular A-128. Federal CFDA Number 10.564 93.630 93.667 93.667 93 . 667 54 $ Program or Award Amount 13,645 45,405 44,475 31,056 Federal Funds s Revenues Recognized 13,645 37,131 38,530 50,310 8,284 134,255 s 8,452,542 Expenditures s 13,645 37,131 38,530 50,310 8,284 134,255 s 8,452,542
This project was supported in part by a Digitizing Hidden Special Collections and Archives project grant from The Andrew W. Mellon Foundation and Council on Library and Information Resources.

<dcterms_creator>Little Rock School District</dcterms_creator>