BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT AUDIT REPORT … · 6/30/2019 · BLUEMOUNTAINUNIFIEDSCHOOLDISTRICT#21 MANAGEMENT’SDISCUSSIONANDANALYSIS YEARENDEDJUNE30,2019 OurdiscussionandanalysisofBlueMountainUniﬁedSchoolDistrict#21

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21AUDIT REPORT AND FINANCIAL STATEMENTS

JUNE 30, 2019

TABLE OF CONTENTS

INDEPENDENT AUDITOR’S REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTSStatement of Net Position Exhibit A

Statement of Activities Exhibit B

FUND FINANCIAL STATEMENTS.

Balance Sheet — Governmental Funds Exhibit C

Reconciliation of the Governmental FundsBalance Sheet to the Statement of Net Position Exhibit D

Statement of Revenues, Expenditures

and Change in Fund Balances —

Governmental Funds Exhibit E

Reconciliation of the Governmental FundsStatement of Revenues, Expenditures andChange in Fund Balances to the Statement

of Activities Exhibit F


and Change in Fund Balance Comparedto Budget — General Fund Exhibit G


and Change in Fund Balance Comparedto Budget — Special Revenue Fund — Various Grants Exhibit H

Statement of Fiduciary Net Position Exhibit I

Statement of Change in Fiduciary Net Position Exhibit J

NOTES TO FINANCIAL STATEMENTS

Page #

1-2

10

11

12

13

14

15

16—17

18

19

19

20—45

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21AUDIT REPORT AND FINANCIAL STATEMENTS

JUNE 30, 2019

TABLE OF CONTENTSBag§_#

SUPPLEMENTAL SCHEDULE

Schedule of the School District’s Proportionate Share of the NetPension Liability and Schedule of School District Contributions Schedule 1 46

INTERNAL CONTROL AND COMPLIANCE REPORT

Independent Auditor’s Report on Internal Control Over Financial

Reporting and on Compliance and Other Matters Based on anAudit of Financial Statements Performed In Accordance WithGovernment Auditing Standards 47 — 48

FOTHERGILL SEGALE & VALLEYCertified Public Accountants

John E. (Jeff) Fothergill, CPAMichael L. Segale, CPASheila R. Valley, CPATeresa H. Kajenski, CPADonald J. Murray, CPA

INDEPENDENT AUDITOR'S REPORT

Board of School Directors

Blue Mountain Unified School District #21Wells River, Vermont

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each maj or

fund, and the aggregate remaining fund information of Blue Mountain Unified School District #21as of and for the year ended June 30, 2019, and the related notes to the financial statements, whichcollectively comprise the School District’s basic financial statements as listed in the table ofcontents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statementsin accordance with accounting principles generally accepted in the United States of America; this

includes the design, implementation, and maintenance of internal control relevant to the

preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. Weconducted our audit in accordance With auditing standards generally accepted in the United States

of America and the standards applicable to financial audits contained in Governmental AuditingStandards, 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 financialstatements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’s judgment,including the assessment of the risks of material misstatement 0f the financial statements, Whetherdue to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the entity’s preparation and fair presentation of the financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we expressno such opinion. An audit also includes evaluating the appropriateness of accounting policies usedand the reasonableness of significant accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinions.

143 BARRE STREET . MONTPELIER 'VERMONT 05602 ' 802—223—6261 - FAX: 802—223—1550 - www.fsv—cpas.com

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the

respective financial position of the governmental activities, each major fund, and the aggregate

remaining fimd information of Blue Mountain Unified School District #21, as of June 30, 2019,

and the respective changes in financial position thereof and the respective budget comparison for

the General Fund and Various Grants Fund for the year then ended in accordance with accounting

principles generally accepted in the United States of America. '

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that .

management’s discussion and analysis on pages 3—9 and the Schedule 1 pension related

information on page 46 be presented to supplement the basic financial statements. Such

information,'a1though not a part of the basic financial statements, is required by the Governmental

Accounting Standards Board, Who considers it to be an essential part of financial reporting for

placing the basic financial statements in an appropriate operational, economic, or historical

context. We have applied certain limited procedures to the required supplementary information in

accordance With auditing standards generally accepted in the United States of America, which

consisted of inquiries of management about the methods of preparing the information and

comparing the information for consistency with management’s responses to our inquiries, the_

basic financial statements, and other knowledge we obtained during our audit of the basic financial

statements. We do not express an opinion or provide any assurance on the information because the

limited procedures do not provide us with sufficient evidence to express an opinion or provide any

assurance.

Other Reporting Required by Government Auditing Standards

In accordance With Government Auditing Standards, we have also issfled our report dated

November 14, 2019, on our consideration of the School District’s internal control over financial

reporting and our tests of its compliance With certain provisions of laws, regulations, contracts,

and grant agreements and other matters. The purpose of that report is solely to describe the scope

of our testing of internal control over financial reporting and compliance and the results of that

testing and not to provide an opinion on the effectiveness of the School District’s internal control

over financial reporting or on compliance. That report is an integral part of an audit performed in

accordance With Government Auditing Standards in considering the School District’s internal

control over financial reporting and compliance.

Respectfully submitted,

5%” “C71"'5’ l/qfiug C534;

FOTHERGILL SEGALE & VALLEY, CPAsMontpelier, VermontVermont Public Accountancy License #110

November 14, 2019

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21MANAGEMENT’S DISCUSSION AND ANALYSIS

YEAR ENDED JUNE 30, 2019

Our discussion and analysis of Blue Mountain Unified School District #21 ’s fmanéial performanceprovides an overview of the School District’s financial activities for the fiscal year ended June 30,

2019. Please read it in conjunction with the School District’s financial statements which begin WithExhibit A.

Financial Highlights

Government— Wide Financial Statements:

0 The School District’s net position decreased by $150,719 during the fiscal year 2019 as a result

of this year’s operations, from $3,066,859 to $2,916,140.

0 The total cost of all of the School District’s programs decreased this year. Total costs for fiscal

year 2019 were $9,430,981, compared to $9,761,553 for the prior fiscal year.

Fund Financial Statements:

0 The fund balance as of June 30,2019 for the General Fund was $339,797, compared to last

year’ 5 balance of $604, 924, a decrease of $265, 127 The decrease 1n fund balance of $265, 127was $163, 862 better than the budget.

0 The fimd balance as of June 30, 2019 for the Various Grants' Fund was $10,253, compared to

$6,625 in the prior year. This balance is related to the athletic program.

0 The fund balance as of June 30, 2019 for the Food Service Fund was zero. During fiscal year

2019, a transfer of $52,834 was authorized in order to cover the current year expenditures in

excess of revenues.

o The fund balance as of June 30, 2019 for the Capital Projects Fund was zero, compared to

$37,909 in the prior year.

Using This Annual Report

This annual report consists of a series of financial statements. The Statement ofNet Position and the

Statement of Activities (Exhibits A and B) provide information about the activities of the School

District as a whole and present a longer-term view of the School District’s finances. Fund financial

statements, starting with Exhibit C include only governmental activities. These statements tell howthese services were financed in the short term as well as what remains for future spending. Fundfinancial statements also report the School District’s operations in more detail than the government—

wide statements by providing information about the School District’s most significant fimds. Theremaining statements provide financial information about activities for which the School District acts

solely as a trustee or agent for the benefit of those outside the government.



Reporting the School District as a Whole

The financial statements of the School District as a whole are reflected in Exhibit A and Exhibit B.One of the most important questions asked about the School District’s finances is, “Is the SchoolDistrict as a whole better off or worse off as a result of the year’s activities?” The Statement ofNet

.Position and the Statement ofActivities report information about the School District as a whole andabout its activities in a way that helps answer this que‘stion. These statements include all assets andliabilities using the accrual basis of accounting, which is similar to the accounting used by mostprivateesector companies. All of the current year’s revenue and expenses are taken into accountregardless of when cash is received or paid.

These two statements report the School District’s net position and changes in net position. You canthink of the School District’s net position — the difference between assets and liabilities — as one way to

measure the SchoOl District’s financial health, or financial position. Over time, increases or decreases

in the School District’s net position is one indicator of Whether its financial health is improving or

deteriorating. You will need to consider other non—financial factors, however, such as changes in the

School District’s property tax base and the condition of the School District’s capital assets, to assess

the overall health of the School District.

The School District’s basic services are governmental activities. They include regular and special

education for Kindergarten through 12th grade, support services, administrative services,

transportation, interest on long—term debt, and other activities. Property taxes (Act 68 state aid) andstate grants finance most of these activities.

Reporting the School District’s Most Significant Funds

The financial statements of the School District’s major funds begins with Exhibit C and providesdetailed information about the most significant fimds — not the School District as a who le. Some fundsare required to be established by State law and by bond covenants. However, the School Boardestablishes other funds to help it control and manage money for particular purposes or to show that it is

meeting legal responsibilities for using certain taxes, grants, and other money. The School District’s

funds use the following accounting approach:

Governmental funds - Most of the School District’s basic services are reported in governmental funds,

which focus on how money flows into and out of those funds and the balances left at year-end that are

available for spending. These funds are reported using an accounting method called modified accrual

accounting, which measures cash and all other financial assets that can readily be converted to cash.

The governmental fund statements provide a detailed short—term View of the School District’s general

government operations and the basic services it provides. Governmental fund information helps youdetermine Whether there are more Or fewer financial resources that can be spent in the near future to

finance the School District’s programs. We describe the relationship (or differences) betweengovernmental activities (reported in the Statement of Net Position and the Statement of Activities) andgovernmental funds on the face of the governmental fimds statements.



The School District as Agent

The School District is the fiscal agent for funds held for various school related activities. The SchoolDistrict’s fiduciary activities include Private Purpose Funds and Agency Funds and are reported in a

separate Statement of Fiduciary Net Position on Exhibit 1, and a Statement of Change in Fiduciary NetPosition on Exhibit J. We exclude these activities fiom the School District’s other financial statements

because the School District cannot use these assets to finance its operations. The School District is

responsible for ensuring that the assets reported in these funds are used for their intended purposes.

The School District as a Whole (Government- Wide Financial Statement Analysis)

The School District’s combined net position decreased by $ 150,719 fiom a year ago — decreasing from$3,066,859 to $2,916, 140.

Our analysis below focuses on the net position (Table 1) and changes in net position (Table 2) of the

School District’s governmental activities.

Table 1'

Net Position

Governmental Activities

2019 2018 Change

Current and other assets $ 1,935,684 $ 1,446,210 $ 489,474

Capital assets 2,921,314 3,024,971 (103,657)

Total assets 4,856,998 4,471,181 385,817

Deferred outflows of resources 195,733 201,900 (6,167)

Long-term liabilities 96,587 397,731 (301,144)

Net pension liability 428,226 380,141 48,085

Other liabilities 1,585,634 796,859 788,775

Total liabilities 2,110,447 1,574,731 53 5,716

Deferred inflows of resources 26,144 31,491 (5,347)

Net position:

Invested in capital assets, net 2,921,314 2,820,563 100,751

Restricted 10,253 44,534 (34,281)

Unrestricted (15,427) 201,762 (217,189)

Total net position $ 2,916,140 $ 3,066,859 $ (150,719)

Unrestricted net position decreased from $201,762 to ($15,427). The amount invested in capital assets,

net of related debt, increased by $100,751. This increase is due to the effects of capital asset purchases,

less depreciation, and a reduction of long-term debt. Deferred outflows and inflows of resources andthe net pension liability are pension related and actuarially determined and recalculated annually by the

State of Vermont in accordance with GASB 68.



Table 2

Change in Net Position


2019 2018 - ChangeREVENUESProgram revenues:

Operating grants and contributions $ 2,436,149 $ 3,023,576 $ (587,427)Charges for services

_

226,545 226,996 (451)General revenues:

Act 68 State aid 6,602,721 6,489,385 113,336Investment income 2,461 1,633 828Other general revenue 12,3 86 27,813 (15,427)

Total revenues 9,280,262 9,769,403 (489,141)

PROGRAM EXPENSES '

Regular instruction and related 3,280,898 3,178,829 102,069Support services — student based 894,892 787,329 107,563

Administrative support services 951,883 1,007,174 (55,291)

Buildings and grounds 702,118 673,530 28,588Transportation 317,148 306,604 10,544

Special Education and related 1,190,488 1,760,793 (570,305)Food service 259,413 264,767 (5,354)

Special grant programs 489,056 555,136 (66,080)Interest on long—term debt

.

0 8,126 (8,126)>

On behalf payments 1,345,085 1,219,265 125,820

Total program expenses 9,430,981 9,761,553 (330,572)

CHANGE IN NET POSITION $ (150,719) $ 7,850 $ (158,569)

Revenues decreased by $489,141 and expenses decreased by $330,572 compared to the prior year. Act68 State aid increased as according to budget. On behalf payments and related increased and are

actuarially determined and reported annually to the School District by the State. Starting in fiscal year2019, the State ofVermont mandated that most special education services be reflected at the

Supervisory Union instead of at the School District. Therefore, special education expenses that werereimbursed by the State of Vermont are not reflected in fiscal year 2019 for the School District and is

the reason for the large decrease in grant revenues and special education expenses.

Table 3 presents the cost of each of the School District’s five largest programs — regular instruction andrelated, special education and related, support services — student based, buildings and grounds, andadministrative support services - as well as each program’s net cost (total cost less revenue generated

by the activities). The net cost shows the financial burden that was placed on the School District’s

taxpayers by each of these functions.



Table 3


Total Cost Net Cost

of Services of Services

2019 2018 2019 2018

Regular instruction and related 33 3,280,898 $ 3,178,829 $ 3,095,611 $ 2,956,955

Support services — student based 894,892 787,329 894,892 787,329

Adminstrative support services 951,883 1,007,174 951,883 1,007,174

Building and grounds 702,118 673,530 702,118 673,530

Special education and related 1,190,488 1,760,793 904,450 858,074

All bthers 2,410,702 2,353,898 219,333 227,919

Totals $ 9,430,981 $ 9,761,553 $ 6,768,287 $ 6,510,981

The School District’s Funds (Fund Financial StatementAnalysis)

As the School District completed the year, its governmental fimds (as presented in the Balance Sheet

on Exhibit C) reported a combined fund balance of $3 50050 compared to a balance 1n the prior yearof $649,458, Which Is a decrease of $299,408.

The Various Grants Fund ended the year with a $ 10,253 fund balance, compared to $6,625 in the prior

year. This fund balance is related to athletics.

The F00d Service Fund began and ended the year with a fund balance of zero. During the year, the

General Fund transferred $52 834 to cover the net expenditure.

General Fund Budgetary Highlighz‘s

Quarterly financial reports reviewed by the Board of School Directors served as the vehicle for

monitoring the actual results compared to budget for the fiscal year. Over the course of the year, the

District’s management did not formally adjust the budget.

See Exhibit G for a comparison of actual to budget that shows the favorable and unfavorable variances

that arose during the year in the General Fund. The larger variances are as follows:

Variance

Favorable

Budget Actual (Unfavorable)

Revenues:

Early essential education $ 34,207 $ 0 $ (34,207)

State special education 963 ,95 3 286,03 8 (677,915)

Expenditures:

Regular education 3,153,300 3,315,635 (162,335)

Administration 1,320,257 949,066 371,191

Special education 1,813,323 1,145,602 667,721

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21

MANAGEMENT’S DISCUSSION AND ANALYSISYEAR ENDED JUNE 30, 2019

General Fund Budgetary Highlights (continuea)

The reasons for these variarices are as follows:

Early essential education and much of the special education services that are reimbursed by the State of

Vermont are now being reflected at the Supervisory Union. Therefore, due to this change both revenue

and related costs were lower than budget.'

When the budget was determined for fiscal year 2019, labor negotiations with staff was not settled. Abudget item of $290,700 Was included as an administrative expenditure. The labor negotiations were

settled and the actual expenses were recorded as regular instruction. This was the major reason for the

large variances in regular instruction and administrative services.

Capital Assets

At June 30, 2019, the School District had $2,921,314 invested in a broad range of capital assets,

including school buildings, furniture, and equipment net of accumulated depreciation. This amountrepresents a net decrease of $103,657 from last year.

Table 4

Capital Assets at Year—End

(Net 0f Accumulated Depreciation)


2019 2018 Change

Land $ 5,500 $ 5,500 $ 0

Land improvements 135,829 147,748 (11,919)

Buildings & improvements 2,510,179 2,560,741 (50,562)

Furniture and equipment 269,806 310,982 (41,176)

Totals $ 2,921,314 $ 3,024,971 $ (103,657)

The capital additions during the fiscal year included $100,072 in building improvements and $37,022

for equipment.

Debt Administration

At June 30, 2019, the School District had no bonds or notes outstanding versus $204,408 on June 30,

2018. The decrease of $204,408 were scheduled principal payments.

BLUE, MOUNTAIN UNIFIED SCHOOL DISTRICT #21

MANAGEMENT’S DISCUSSION AND ANALYSISYEAR ENDED JUNE 30, 2019

Economic Factors and Next Year’s Budgets and Rates

The District’s elected and appointed officials considered many factors When developing the fiscal year

2020 budget for school operations. Education spending was held to‘ a 3.97% increase for fiscal year

2020 and covered the continuation of the School's 1 to 1 computer plan for students and other general

salary increases. The 2020 budget also covered supplies, textbooks, and equipment for the new 7“‘/8th

World Language Class and additional supplies for the new High School Journalism class. The school

has also budgeted for a Theater Performance in the spring of 2020.

Contacting the School District’s Financial Management

This financial report is designed to provide our citizens, taxpayers, customers, and investors andcreditors with a general overview of the School District’s finances and to show the School District’s

accountability for the money it receives. If you have questions about this report or need additional

financial information, contact the School District’s Supervisory Union office located at 5 30 Waits

River Rd., Bradford, Vermont 05033.


STATEMENT OF NET POSITION

JUNE 30, 2019

ASSETSCash

Grants feceivable - State of Vermont ‘

Accounts receivable - other

Due from OESUInventory

'

Prepaid expenses

,Due from fiduciairy funds

Capital assets, net of depreciation of $4,779,443.

Total assets'

DEFERRED OUTFLOWS OF RESOURCESPension related

Total assets plus deferred outflows of resources

LIABILITIES

Accounts payable

Uneamed revemie_

Accrued salaries'and payroll liabilities

Accrued early retirement payable due within one year

Net pension liability

Accrued early retirement payable due afier one year

Total liabilities'

DEFERRED INFLOWS OF RESOURCESPension related

Total liabilities plus deferred inflows of resources

NET POSITION

Invested incapital assets, net of related debt

Restricted for various grants

Unrestricted

Tétal net position

See Notes to Financial Statements. - 10 -

Governmental

Activities

$ 1,257,471

408

10,176

622,728

6,057

37,109

1,735

2,921,314

4,856,998

195,733

5,052,731 ,

735,995

108,080

741,559

49,920

428,226

46,667

2,110,447

26,144

2,136,591

2,921,314

10,253

(15,427)

$ 2,916,140

EXHIBIT A

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21 EXHIBIT B

STATEMENT OF ACTIVITIES

YEAR ENDED IUNE 30, 201-9

Net (Expenses)

Revenues andChanges

Operating in Net Position. Charge for Grants and Governmexital

Functions/Programs » Expenses Services Contributions Activities

Governmental Activities:

Regular instruction and related services $ 3,280,898 $ 171,023 $ 14,264 $ (3,095,611)Support services - student based 894,892 0 0 (894,892)

‘

Administrative support services 951,883 0 0 (951,883)Buildings and grounds 702,1 18 0 v 0 (702,118)Transportation '

317,148 0 164,275 (152,873)Special education and related services 1,190,488 0 286,038 (904,450)Food service 259,413 55,522 155,094 (48,797)Special grant programs 489,056 0 471,393 (17,663)On behalf payments 1,345,085 0 1,345,085

.0

Total governmental activities

I

33- 9,430,981 $ 226,545 $ 2,436,149'

(6,768,287)

General Revenues:

Act 68 State aid 6,602,721

Earnings on investments 2,461

Other income 12,3 86

Total general revenues 6,617,568

Change in net position (150,719)

Net position July 1, 2018 3,066,859

Net position — June 30, 2019 $ 2,916,140

See Notes to Financial Statements. -11-


ASSETSCash

Grants receivable - State of Vermont

Accounts .receivable- other

Due from OESUInventory

Prepaid gxpenses'

Due from fiduciary. funds

Due from other. funds

Total assets

‘

LIABILITIES AND FUND BALANCES

Liabilities

'

Accounts payabLe

Uneamed revenue

Due to other funds

Accrued salaries and payroll liabilities

Total liabilities

Fund Balances

Nonspendable prepaids and. inventory

Restricted for athletics

Assigned for fiscal year 2020

Assigned for future budgets

Unassigned

Total fund balances

Total liabilities and fund balances

See Notes to Financial Statements.

EXHIBIT C

BALANCE SHEET

GOVERNMENTAL FUNDS

JUNE30, 2019

Special Revenue Capital Total

General Varioils Food Projects Governmental

Fund Grants Service Fund_

Funds.

$ 1,238,679 $ 8,629 $ 10,163 $ ‘0 $ 1,257,471

'

408 0 0 0 408

8,119 1,599 458 0 10,176

489,534 107,232 25,962 0 622,728

0'

0 6,057 0 6,057

37,109 0 0 0 37,109

1,735 0 "0 0 1,735

39,813 68,462 21,626 0 129,901

$ 1,815,3974 $‘

‘

185,922 $ 64,266 $ 0 $ 2,065,585

$ 735,249 $ ‘340’

$ 406 $ 0 $ 735,995

0 105,609 2,471 0 108,080

82,450'

6,247 . 41,204 0 129,901

657,901 63,473 20,185 0 741,559

1,475,600 175,669 64,266 0‘ 1,715,535

37,109 0 6,057 0 43,166

0 10,253 0 0 10,253

117,298‘

0’

0'

0 117,298

185,390.

0.

0 0 185,390

0 0 (6,057) 0 (6,057)

339,797 10,253 0 0 350,050

.$ 1,815,397'

$ 185,922 $ 64,266 $ 0 $ 2,065,585

-12-


'

EXHIBIT D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEETTO THE STATEMENT OF NET POSITION

TOTAL FUND BALANCES - GOVERNMENTAL FUNDS

JUNE 30, 2019

Amounts reported for governmental activities in the

statement of net position are different because:

Capital assets used in governmental activities are notfinancial resources and therefore are not reported as

.

assets in governmental funds. The cost of the assets is

$7,700,757, and the accumulated depreciation is $4,779,443

Deferred outflows and inflows of resources related to pensibfis are

applicable to future periods and, therefore, are not reported in'the

governmental funds.

Long—term liabilities and accrued interest, including bonds payable,and net pension obligations are not due and payable in the current

period'and therefore are not reported as liabilities in the funds.

These Iong-term liabilities consist of:

Net pension liability

Accrued early retirement payable

TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES


$ 350,050

2,921,314

'

169,589

428,226

96,587 (524,813)W

‘ BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21 EXHIBIT E‘

STATEMENT OF REVENUES, EXPENDITURESAND CHANGE IN FUND BALANCES

GOVERNMENTAL FUNDS


Special Revenue Funds Capital Total

General Various‘

Food Projects Governmental

Fund. Grants Service Fund Funds

REVENUES’

Act 68 State aid -

$ 6,602,721 $ 0 $ 0 $ 0 ‘$6,602,721

Tuition - regular 171,023 0 0 0 171,023State special education ‘ 286,03 8 0 0 0 286,038

State transportation aid 136,639‘ 0 0 0 136,639

Vocational transportation reimbursement 27,636 0 0 0 27,636

Federal grant programs‘

'

0 341,235 148,066 0 489,301

State grant programs.

14,264 101,276 7,028 0 122,568

Other local sources,‘

11,989,

28,882 0 0 40,871

Food sales 0 0 55,522 .0

'

55,522

Earnings on investments 2,461 0 0 0 2,461

On behalf payments 515,000 0 0 0 515,000

Total revenues‘

. 7,767,771 471,393 210,616 0 8,449,780

EXPENDITURESCurrent

Regular education 3,315,635 0 0 0 3,315,635

Support services - student based - 890,050 0 0 0 890,050

Administration 949,066 0 O 0 949,066

Building operations and maintenance 509,666 0 0 37,909 547,575

Student transportation 317,148 0 0‘

0 3 17,148

Special education '

1,145,602 0 0 0 1,145,602

Food services. 0 0 23 8,844 o . 238,844

Special grant programs 0 489,056 0 0 489,056

On behalf payments_

515,000‘ 0 . 0 0 515,000

Debt service, .

Principal 204,408 0 0 0 204,408

Interest on long-term debt (290) 0 0 0 (290)

Capital outlays 112,488 0 24,606 0 137,094

Total expenditures. 7,958,773 489,056 263,450 37,909 8,749,188

EXCESS (DEFICIENCY) OF -

REVENUES OVER EXPENDITURES (191,002) (17,663) (52,834) (37,909)-

(299,408)

OTHER FINANCING SOURCES (USES)

Transfer (to) from other funds (74,125) 21,291 52,834 ‘ 0 0

Totalother financing sources (uses) (74,125) 21,291 52,834 0 0

NET CHANGE IN FUND BALANCES (265,127) 3,628 0 (37,909) (299,408)

FUND BALANCES - IULY 1, 2018 604,924 6,625 - 0 37,909 649,458

FUND BALANCES - JUNE 30, 2019 $ 339,797 $ 10,253 $ 0 $ 0 $ 350,050

See Notes to Financial Statements. - 14 —


RECONCILMTION OF THE GOVERNMENTAL FUNDS STATENEENTOF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES

TO THE STATEMENT OF ACTIVITIES


TOTAL NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS $

Amounts reported for governmental activities in the statement of

activities are different because:

Capital outlays are reported in governmental funds as expenditures. However, in

the statement of activities, the cost of those assets is allocated over their estimated

useful lives as depreciation expense This 15 the amount by which depreciation

.,($240 751) exceeds capital outlays ($137,094) m the period.

Repayment ofbond and notes principal is an expenditure in the governmental funds,

but the repayment reduces long—term liabilities in the statement of net position.

Governmental funds report pension contributions as expenditures. However, in the

statement of activities, the cost of pension benefits earned net of employeecontributions 13 reported as pension expense:

District pension contributions ‘

Cost of benefits earned net of employee contributions

.

Interest on long—term debt in the statement of activities differs from the amountreported in the governmental funds because interest is recognized as an expenditure

in the funds when itis due, and thus requires the use of current financial resources.- In the statement of activities, however, interest expense is recognized as the

interest accrues, regardless of when it is due The change in interest reported, in the statement of activities is because accrued interest on bonds and notes

payable decreased by $107.

In the statement of activities, certain operating expenses — accrued retirement benefits— are measured by the amounts earned during the year. In the governmental funds,‘

however, expenditures for these items are measured by the amount of financial resources

used (essentially the amounts actually paid). This year, accrued retirement benefits

earned were less than the amounts paid by $96573 6.

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $

EXHIBIT F

(299,403)

(103,657)

204,408

61,408-

(110,313)

107

96,736

(150,719)

Governmental funds reporton behalf revgnue and expenditures based on the' approximate contributions made to

the Vermont State Teachers' Retirement System by the State of Vermont on the School System’s behalf.

On the statement of activities, both the revenue and expense increased by $83 0,085, to represent

.

the long—term actuarially determined contributions.

See Notes to Financial Statements. ‘-

15 -

REVENUESAct 68 State aid

Tuition — regular

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21.

STATENIENT OF REVENUES, EXPENDITURES AND CHANGEIN FUND BALANCE COMPARED TO BUDGET

GENERAL FUND'

YEAR ENDED JUNE 30,2019

State special education

State transportation aid'

Vocational transportation reimbursement

Early essential education

High school completion

Driver education reimbursement

Other sources

Earnings on investments

Total revenues

EXPENDITURESCurrent

Regular education

Instructional programs

Vocational education

Student activities

Athletics

Total regular education

Support services - student based

Guidance

Health services

Behavior specialist

Improvement of instruction

Educational media services - library

Enrichment

Curriculum services

Computer/technology services

Total support services - student based

Administration

School board

Staff rqlations and negotiation

Supervisory Union

Fiscal office

Principal office

Central supply - administration

Total administration.


EXHIBIT G

Original Variance

and Final Favorable

Budget Actual.

(Unfavorable)

$ 6,620,977 $ 6,602,721 '$(18,256)

'

183,600 171,023 (12,577)

963,953 286,038 (677,915)

124,500 136,639 12,139 -

24,200 27,636 3,436

34,207 0 (34,207)

20,000 12,464 (7,536)

1,900 1,800 (100)

10,000 11,989 1,989

1,500 2,461 961

7,984,837 7,252,771 (732,066)

2,821,951 2,977,595 (155,644)

172,258 172,327 (569)

44,970 43,232 1,738

114,121 121,981 (7,860)

3,153,300 3,315,635 (162,335)

224,215 192,111 32,‘1 04

3,615 31,060 (274,445)

62,402 100,195‘

(37,793)

70,500 66,165 4,335

112,589 120,376 (7,787)

111,158 98,608 12,550

112,918 69,161 43,757

219,646 212,374 7,272

917,043 890,050 26,993

123,077 117,866 5,211

472,304 93,923 378,381‘

194,418 186,544 7,874

181,277 167,850 13,427

225,449 271,354 (46,405)

123,732 111,029 12,703

1,320,257 949,066 371,191

16-

Building operations and mainténance

Student transponatidn

Special education

Direc’t instru'ction

Psycholbgical testing services

Speech pathology and audiology serviceS‘

OT and other services

State placed students

Health services

Special education administration

Special education transportation

Total special education

Debt service

Principal‘

Interesto'n long-term debt

Total debt service

Capital outlays

Total expenditures

EXCESS (DEFICIENCY) OFREVENUES OVER EXPENDITURES

OTHER FINANCING SOURCES (USES)Transfer - athletics

Transfer - food services

Total other financing sources (uses)

NET CHANGE IN FUND BALANCE

FUND BALANCE - JULY 1, 2018

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21 EXHIBIT G

STATEMENT OF REVENUES, EXPENDITURES AND CHANGEIN FUND BALANCE COMPARED TO BUDGET

GENERAL FUND


Original Variance

and Final Favorable


530,070 509,666 20,404

318,908 317,148 1,760

1,300,289 343,500 9565789

49,000 0 49,000

117,263 70,277 46,986

68,227 3,672 64,555

0 81,475 (81,475)

49,288 45,121 4,167

106,353 601,557 (495,204)

- 122,903 0 122,903

1,813,323 1,145,602 667,721

206,795 204,408 2,3 87

(254) (290) 36

206,541 204,118 2,423

89,416 112,488 (23,072)

8,348,85 8 7,443,773 905,085

(364,021) (191,002) 173,019

(21,291) (21,291) 0

(43,677) (52,253 4) (9,157)

(64,968) (74,125) (9,157)

53

I

(428,989) (265,127) , $ 163,862w339,797FUND BALANCE - JUNE 30, 2019


REVENUESFederal grants

IDEA B Grants

Title I

Title IIA

CFP Subgrant

VSAC Gear UpFresh Fruit & Vegetable Program

Total federal grants

State grants

Medicaid

EP SD’I‘

Bright Futures Star Program

Building Bright Futures

Local Standards Board

.

Total state grants

Local revenue - special programs

Athletic programs

Other local revenue

Total local revenue - special programs ‘

Total revenues

EXPENDITURESCurrent

IDEA B grants

SWP Title Grants

VSAC Gear UpFresh Fruit & Vegetable Program

Medicaid

EPSDTBright Futures Star Program

Building Bright Futures

Local Standard Board

Athletic programs

Other grants

Total expenditures -

EXCESS (DEFICIENCY) OFREVENUES OVER EXPENDITURES

OTHER FINANCING SOURCESTransfer - athletics

Total other financing sources

NET CHANGE IN FUND BALANCE

FUND BALANCE - JULY 1, 2018

FUND BALANCE - JUNE 30, 2019


- BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #2]

STATEMENT OF REVENUES, EXPENDITURES AND CHANGEIN FUND BALANCE COMPARED TO BUDGET

SPECIAL REVENUE FUND - VARIOUS GRANTS

-18-


Original Variance

and Final Favorable


$ 98,776'

$ 93,774 $ (5,002)

128,486 12,611 (115,875)

55,066 0 (55,066)

0 215,352 215,352

0 4,220 4,220

0 15,278 15,278

282,328 341,235 58,907

80,068 86,510 6,442

10,282 V10,427 145

0 538 538

0 3,416 3,416

0 385 385

90,350 101,276 10,926

0 18‘,858 18,858

0 10,024 10,024

0 28,882 28,882

372,678 471,393 98,715'

98,776 93,774 5,002

183,552 227,963 (44,411) *

0 4,220 (4,220)

0 15,278 (15,278)

80,068 86,510 (6,442)

10,282 10,427 (145)

0 538 (538)

0 3,416 (3,416)

0 385 (385)

0 36,521 (36,521)

0 10,024_

(10,024)

372,678 489,056 (116,378)

0 (17,663) (17,663)

0 21,291 21,291

0'

21,291 21,291

$ 0 3,628 $ 17,663)

6,625

$ 10,253

EXHIBIT H

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21 EXHIBIT I

STATEMENT OF FIDUCIARY NET POSITIONJUNE 30, 2019

. Private-Purpose Agency

_

I

'

Trusts Fund .

ASSETS .

Cash ''

$ 103,633 $ 68,484

LIABILITIES

Due to student groups_

0 $ 68,484Due to General Fund 1,735 0

Total liabilities, ,

1,735 $ 68,484

NET POSITION .-

‘

4

Restricted $ 101,898

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21. EXHIBIT J

STATEMENT OF CHANGE IN FIDUCIARY NET POSITION '


Private-Purpose

Trusts

ADDITIONS - Interest income'

$ 623

Change in net position. 623

NET POSITION - JULY 1, 2018 101,275

NET POSITION - JUNE 30, 2019 $ 101,898

See Notes to Financial Statements. - 19 -

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2019

Blue Mountain Unified School District #21 operates under the authority of the Vermont EducationLaws under the governance of a School Board of Directors, Which is comprised of the communitiesof Wells Rive; Groton, and Ryegate, Vermont.

Blue Mountain Unified School District #21, for financial reporting purposes, consists only of thefunds of the District. The District's elected Board of Directors has no financial accountability for anyother governmental entity. Control or dependence on the Board was determined on the basis ofbudget adoptions, designation of management, influence over operations, and accountability forfiscal matters.

.

-

'

NOTE 1 - SUMZMARY OF SIGNIFICANT ACCOUNTING POLICIES

The District’s financial statements are prepared in accordance with generally accepted accountingprinciples (GAAP). The Governmental Accounting Standards Board (GASB) is primarilyresponsible for establishing GAAP for state and local govermnents through its pronouncements(including Statements and Interpretations). The more significant accounting policies established in

GAAP and used by the District are discussed below.'

Reporting Entity

The District’s basic financial statements include the' accounts of all its operations. The criteria for

including organizations as component units Within the DiStrict’s reporting entity are set forth in

.GASB 14 as amended by GASB 39, and Section 2100 of GASB’S Codification of GovernmentalAccounting and Financial Reporting Standards.

The District has no component units.

Basic Financz'al Statements — Govemment— Wide Statements

The District’s basic financial statements include both governmentwide (reporting the District as.awhole) and fimd financial statements (reporting the District’s major funds). The govemment—Widefinancial statements categorize activities as either governmental or business type.

The govemment-widc Statement ofNet Position presents all the District’s activities on a full accrual,economic resource basis, Which recognizes all long—term assets and receivables as well as long-termdebt and obligations. The District’s net position is reported in three parts — investment in capitalassets, net of related debt; restricted net position; and unrestricted net position. The District first -

utilizes restricted resources to finance qualifying activities for which both restricted and unrestrictedresources are available.

The govemment—wide Statement of Activities reports both the gross and net cost of each of theDistrict’sgovernmental functions. The fimctions are also supported by general government revenue(Act 68 state aid/propel’cy taxes and other local revenue), The Statement of Activities reduces grossexpenses by related program revenue, consisting of operating and capital grants and contributions.Program revenue must be directly associated with the governmental function (regular education,special education, etc.). Operating grants include operating-specific and discretionary (eitheroperating or capital) grants while the capital grants column reflects capital—specific grants.

The net costs (by governmental fimction) are normally covered by general revenue (educationspending, interest income, etc.)

-20-


JUNE 30, 2019

NOTE 1 - SUMNIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

This government—wide focus 1s more on the sustainability ofthe District as an entity and the changein the District’ 3 net position resulting from the current year’ 3 activities

Basic Financial Statements — Fund Financial Statements

The financial transactions of the District are reported in individual funds in the fimd financial

statements. Each fimd is accounted for by providing a separate set of self-balancing accounts that

comprises its assets, liabilities, fimd equity, revenue and expenditures. The various funds are

reported by major funds within the financial statements.

The emphasis in fund financial statements is on the major funds in the governmental categories.

GASB No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or

expenditures of either' fund category or the govemmental and enterprise combined) for the

determination of major fimds. The District has chosen to treat all funds as major funds.

Governmental Funds

The funds used by the School District are Governmental Funds. The focus of the governmental'

funds’ measurement (in the fimd statements) is upon determination of financial position and changes'in financial position (sources, uses, and balances of financial resources) rather than upon net income.

The f0 flowing is a description of the major governmental funds of the DistriCt:

General Fund is the main operating fund of the District. It is used to account for all financial

resources except those required to be accounted for in another fund.

Various Grants is used to account for the proceeds of specific revenue sources that are legally

restricted to expenditures for spécified purposes.

Food Service is used to account for the activity related to the food service program.

Capital Projects Fund is the fund used to account for the activity relating to capital projects.

Fiduciary Fu'nds

Fiduciary funds are used to fepox’t assets held in a trustee or agency capacity for others and therefore

are not available to support School District programs. The reporting focus is on net position, and

changes in net position and are reported using accounting principles similar to proprietary funds.

The School District’s fiduciary funds are presented in the fiduciary fund financial statements by type

(pension, private purpose, and agency). Since by definition these assets are being held for the benefit

of a third party (other local governments, private parties, pension participants, etc.) and cannot be

used to address activities or obligations of the government, these funds are not incorporated into the

government—wide statements.

-21-


JUNE 30, 2019

NOTE 1 - SUNIMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis ofAccounting .

Basis of accounting refers to the point at which revenue or expenditures are recognized in theaccounts and reported in the financial statements. It relates to the timing of the measurements maderegardless of the measurement focus applied.

Accrual - All of the govemmental activities in the govemment—wide financial statements and thefiduciary funds are presented on the accrual basis of accounting. Revenue is recognized when earnedand expenses are recognized when transactions are incurred.

Modified Accrual - The governmental fund financial statements are presented on the modifiedaccrual basis of accounting. Under the modified accrual basis of accounting, revenue is recordedWhen susceptible to accrual; i.e., both measurable and available. “Available” means collectible

within six months after year end. Expenditures are generally recognized under the modified accrualbasis of accounting when the related liability is incurred. The exception to this general rule is thatprincipal and interest on general obligation long-term debt, compensated absences, claims andjudgments, and Certain prepaids Which are recognized when due.

‘

Capital Assets

Capital assets purchased or acquired with. an original cost of $5,000 or more are reported at historicalcost or estimated historical cost. Contributed assets are reported at fair value as of the date received.Additions, improvements, and other capital outlays that significantly extend the useful life of anasset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.Depreciation on all assets is provided on the straight—line basis over, the following estimated usefullives: buildings over 40 years, improvements over 10 — 40 years and furniture and equipment over 5— 20 years.

'

Inventory

Inventories are determined by physical count and are valued at cost. Inventory fepresents food andsupplies in the Food Service Fund.

Intery‘imdActivizy

Interfimd activity is reported as either loans, services provided, reimbursements, 01' transfers. Loansare reported as interfund receivables and payables as appropriate and are subj ect- to elimination uponconsolidation. Services provided, deemed to be at market or near market rates, are treated as revenueand expenditures. Reimbursements are done when one fund incurs a cost: charges the appropriatebenefiting fimd and reduces its related cost as a reimbursement. All other interfund activities aretreated as transfers. Transfers between funds are netted in preparation of the govemment—Widefinancial statements.

Interfund balances reflected on Exhibit C result from the time lag between the dates that (1)interfund goods and services are provided or reimbursable expenditures occur, (2) transactions arerecorded in the accounting system, and (3) payments between funds are made.

-22-

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21' NOTES TO FINANCIAL STATEMENTS

‘ JUNE 30, 2019

NOTE 1 r SUMIMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)-

Govemment—wide Net Position

Net position represents the difference between assets and liabilities in the statement of net position.

Government-Wide net position is divided into three components:

Invested id capital assets. net of related débt consist of the historical cost of capital assets

less accumulated depreciation and less any'debt that remains outstanding that was used to

financelthose assets plus deferred outflows of resources less deferred inflows of resources

related to those assets.

Restricted net position— consist of assets that are restricted by the School District’s creditors,

enabling legislation, by grantors, and by other contributors.

Unrestricted net position — all other net position is repdrted in this category.

The School District first utilizes restricted resources to finance qualifying activities.

Fund Equity

GASB Statement No. 54 “Fund Balance Reporting and Governmental Type Definitions” provides

fund balance categories to make the nature and extent of the constraints placed on a government’s

fund balance more transparent. The following classifications describe the relative strength ofspending constraints placed on the purposes for Which resources can be used:.

Nonspendable - Amounts that are not in spendable formv(such as prepaids) or are required to

be maintained intact..

Restricted — Amounts constrained to specific purposes by their providers (such as grantors

and higher levels of government), through constitutional provisions, or by enabling

legislation.

Committed Aniounts constrained to specific purposes by the government itself, using the

highest level of decision-making authority, a formal vote of the voters To be reported as

committed, amounts cannot be used for any other purpose unless the government takes the

same highest level action to remove or change the constraint

Assigned- Amounts a government intends to use for a specific purpose; intent can be‘ expressed by the governing body or by an official or body to which the governing body

delegates the authority.

Unassignv ed - A11 amounts not includgd in other spendable classifications.

When expenditure is incurred that qualifies for payment fiom any of the three unrestricted fimdbalance categories, it is applied in the following order: Committed, Assigned, and then Unassigned.

-23-


JUNE 30, 2019

NOTE 1‘: SUMIMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)1

Deferred Outflows ofResources

The School System reports decreases in net assets that relate to future periods as deferred outflowsof resources in a separate section of its government-wide statement of net position. The deferred

outflows of resources reported in this year’s financial statements are l) differences'between expected

and actual results 2) changes of assumptions 3) net difference betWeen projected and actual earnings

.on plan investments 4) changes in proportion and differences between School'System contributions

and proportionate share of contributions and 5) deferred outflows for contributions made to the

School System’s defined benefit pension plans between the measurement date of the net position

liabilities from those plans and the end of the School System’s fiscal year. No deferred outflows ofresources affect the governmental funds financial statements in the current year.

Deferred Inflows_ ofResources

The School System’s statements ofnet position and its governmental fimd balance sheet report a

separate section for deferred inflows of resources.'This separate financial statement element reflects

an increase in net assets that applies to a future period(s). Deferred inflows of resources are reported

in the School System’s statement of net position for changes in proportion and differences betweenSchool System contributions and propofiionate share of contributions, and differences betweenexpected and actual results. This deferred inflow of resources is attributed to pension expense over a

total of 5 years, including the current year. No deferred infldws of resources affect the governmentalfands financial statements in the cun‘ent year.

Pensions

GASB Statement No. 68 establishes standards for measurmg and recognizing liabilities, deferred

outflows of resources, deferred inflows of resources, and‘ expenses/expenditures.

For purposes of measuring the net pension liability, deferred outflows of resources and deferred

inflows of resources related to pensions, and pension expense, information about the fiduciary net

position of the Vermont Municipal Employees‘ Retirement System (VMERS) and additions_

to/deducti'ons from VMERS’S fiduciary net position have been determined on the same basis as they. are reported by VMERS For this purpose, benefit payments (including refimds of employee

contributions) are recognized when due and payable'1n accordance with the benefit terms.

Investments are reported at fair value.

On BehalfPaymenz‘S

On behalf payments are contributions made by the State of Vermont to the State Teachers''

Retirement System on behalf of the School District's teaching employees. The General Fund budgetdoes not include on behalf payments as a revenue or expense.

-24-


JUNE 30? 2019

NOTE 1 - SUMNIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use ofEstimateS

The preparation'of financial statements in conformity with accounting principles generally acceptedin the United States requires management to make estimates and assumptions that affect certain

reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

BudgetAdoption

The District follows these procedures 1n establishing the budgetary data reflected m the financial_statements for the General Fund and Special Revenue Various Grants Fund:

The operating and grants budget 1s prepared by the School District’ s administration'with the

direction from the School Board and assistance from the Superintendent and Business Manager andapproved by the School District Board at a properly warned meeting for the presentation to the

voters. The operating and grants budget includes proposed expenditures by line item and the meansof financing them. The budget is approved by School District voters at a properly warned annualmeeting. Budgetary integration is employed as a management control device during the year for the

governmental funds. Unspent appropriations lapse at yeanend.

The School District is not legally required to adopt, a budget for the Food Service Fund or Capital

Projects Fund. Therefore, a budgetary comparison is not presented for these funds.-

_

NOTE 2 - DEPOSITS

The Treasurer is authorized to invest excess deposit and investments. There is no written formal

policy.

Custodial Credit Risk Deposits. Custodial credit risk is the risk that in the event of a bank failure,

the District’ 3 deposits may not be returned to it. As of June 30, 2019, $447,938 of the SchoolDistrict’ 5 bank balance of $1,496,458 was FDIC insured. The remainmg balance of $1, 048, 520 wascollateralized

—25—_


JUNE 30, 2019

NOTE 3 - CAPITAL ASSETS

The summary of capital assets as of June30, 2019 is as follows: -

Capital assets not depreciated

Land

Capital assets depreciated

Land improvements

Buildings

Improvements

Furniture and equipment

Totallcapital assets depreciated

Accumulated depreciation'

Land improvements

Buildings

Improvements

Furniture and equipment

Total accumulated depreciation

Total capital assets, net

Balance Balance

June 30, 2018 Additions Depreciation June 30, 2019

$ 5,500 $ 0 $ 0 . $ 5,500

229,686 0 0 229,686

1,643,137 100,072 0 1,743,209

5,017,968 0 0 5,017,968

667,372 37,022 0 704,394

7,553,163 137,094 0 7,695,257

(81,938) 0 (11,919) (93,857)

(1,551,825) 0 (5,498) (1,557,323)

(2,548,539) 0 (145,136) (2,693,675)

(356,390) 0 (78,198) (434,588)-

(4,538,692) 0 (240,751) (4,779,443)

$ 3,024,971 $ 137,094 $ (240,751) $ 2,921,15 14

Depreciation expense of$240,751 was charged to the following functions as follows:

AmountFunction

Regular education $ 34,171

Special education 34,171

Food service 9,854

Buildings and grounds 162,555 .

Total $ 240,751‘

26-


NOTES TO FINANCIAL STATEMENTSJUNE 30, 2019

NOTE 4 — GRANTS RECEIVABLE AND UNEARNED REVENUEGrants receivable and unearnéd revenue consisted of the following as of June 30, 2019:

Grants Uneamed

Receivable Revenue

State of Vermont:

IDEA B $ 0 $ 418

Medicaid_

- 0 ' 84,342

Driver Ed-

‘

408 0

Subtotal - State of Vermont 4 408 84,760

Other Sources: -

Rowland Grant 0 306

Building Bright Futures 0 3,819

Bright Futures Star Program 0 869

E-Rate 0 15,238

VSBIT Safety 0 117

Others 0 2,97 1

Total'

$ 408 $ 108,080'

NOTE 5 - INTERFUND TRANSFERS

Transfers are used to move revenues fiom the fund that statute or budget required to cbllcct them to

the fund that statute or budget required to expend them and use unrestricted revenues collected in the

General 'Fund to finance various programs accounted for in other funds in accordance with budgetary

authorizations.

During tfie fiscal year, two‘interfimd. transfers occurred between funds. The General Fund transferred .

$52,834 to the Food Service Fund and $21,291 to the Various Grants Fund for athletics. These

transfers were made in accordance with Board authorization.

NOTE 6 - SHORT-TERM DEBT

The School District obtained a Line of Credit of $899,5 89 for cash flow purposes. They drew

$400, 000 from the account on October 26, 2018 and repaid the debt 1n full on October 31, 2018Interest paid on short—term debt was $107.

-27-



NOTE 7 —— LONG-TERM DEBT

- A11 long-term debt at June 30, 2019 was paid off. Changes in long-term debt was as follows:

July 1, 2018'

Increases Decreases June 30, 2019

Bond and notes payable $ 204,408 $ 0 $ (204,408) $ 0

Interest rebates received on lbng-tcrm debt during fiscal year 2019 was $290.

In 2016, a bond with the VT Municipal Bond Bank was refinanced and the District Will receive

refunds of interest that total $65,808 spread out over the next ten years as follows.

Year ending June 30, Interest

2020 $ 7,150

2021 7,244

2022 7,646

2023 6,003

.

2024 -

7,449

2025—2029 30,316

‘Total $ 65,808

NOTE 8. EARLY RETIREMENT PAYABLE AND CONTINGENT LIABILITIES

Early Retirement Program‘

All employees Who have attained the age of fiftyfive at the time of retirement arid who havecompleted a minimum of fifteen years of service With the District are eligible for the followingbenefits: -

The District will pay the fill premium for health insurance for a period of eighteen months. The V

District Will also make available to each employee a sum not to exceed $10,000 to be paid over a

three year period from the expiration of health insurance premium payments to pay health insurance

premiums. As of June 30, 2019, seventeen teachers are receiving the benefits. The summary ofactivity during fiscal year 2019 for these early retirement benefits is as follows:

Balance - July 1, 2018 $ 193,323

Earned 10,000

Paid Out (106,736)

Balance - June 30, 2019 96,587

Due within one year 49,920

Due afier one year $ 46,667

-28

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21‘


NOTE 8 — EARLY RETIREMENT PAYABLE AND CONTINGENT LIABILITIES (Continued)

The following is the approximate breakdown of the filture payable obligation under thisprogram for

these seventeen teachers: ‘

'

Retirement Health Ins.

Fiscal Year Ending Payable Payable -

. Total

June‘30,2020 $ 43,333 $ 6,587 $ 49,920June 30, 2021 30,000 0 30,000June 30,2022 16,667 0 16,667

$ 90,000 ‘$ -

6,587 1 96,587

Contingent Liability

As of June 30, 2019,.approximately twenty employees were eligible for early retirement benefits. If

these individuals were to retire, the contingent liability for their eligible benefits based on June,30,

2019 cost factors was $567,603. These costs are not reflected on the financial statements until a

commitment to retire has been received by the SchOol District.

NOTE 9 - CONCENTRATION OF REVENUE

The School District received approximately 78% of its revenue fiom Act 68 State Aid. The amountof Act 68 State Aid received by the School District is equal to the budgeted expenditures approved

by the voters léss expected other revenues for the year. Act 68 State Aid is funded with Statewide

property taxes. The State detemfines a different education property‘tax rate for homestead and non-

homestead properties based on statewide information. The tax rate on homesteads in Wells River,

Groton, and Ryegate is adjusted based on the amount of Act 68 State Aid in relation to the numberof students in the respective Towns. The tax fate for non—homestead property in these towns is not

impacted by the amount of the School District’s Act 68 State Aid. The State uses a common level of

_

appraisal to equalize property values between communities.

In addition to Act 68 State Aid, the Schobl District receives grants from the Sfate of Vermont for

special education, transportation, and other programs.‘

-29-



NOTE 10 ?PENSION, RETIREMENT, AND POST EMPLOYMENT BENEFITS

Vermont Municipal Employees Retirement System

The School District contributes to the Vermont Municipal Employees Retirement System (VMERS)which 1s a cost sharing multiple employer defined benefit pension plan that Is administered by the

State Treasurer and its Board of Trustees. It is designed for school districts and other municipal

employees that work on a regular basis and also includes employees of museums and libraries if at

least half of that institution’s operating expenses are met by municipal fimds. An employee of anyemployer that becomes affiliated with the system may jo in at that time or at any time thereafter. Anyemployee hired subsequent to the effective participation date of their employer who meets the

minimum hourly requirements is required to join the system. During the year ended June 30, 2018,

the retirement system consisted of 402 participating employers.

The plan was established effective July 1, 1975, and is governed by Title 24, V.S.A Chapter 125.

The general administration and responsibility for formulating administrative policy and procedures

of the retirement system for its members and their beneficiaries is vested in the Board of Trustees,

consisting of five members. They are the State Treasurer, two employeerrepresentatives elected bythe membership of the system, and two employer representatives — one elected by the goVemingbodies of participating employers of the system and one selected by the Governor from a list of four

nominees. The list of four nominees is jointly submitted by the Vermont League of Cities and Townsand the Vermont School Boards Association.

All assets are held in a single trust and file available to pay retirement benefits to all members.

Benefits available to each group are based on average final.compensation (AFC) and years of

creditable service -

Summary of System Provisions

Membership is open to all- full time employees of participating municipalities. The municipality

elects coverage under Groups A, B, C, or D. The School System has Group B and C members.

Creditablé service is service as a member plus purchased service.

-30.

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21' NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 10— PENSION,.RETIREMENT, AND POST EMPLOYMENT BENEFITS (Continued)

Benefits provided and contributions:

Avg Final Compensation(AFC)

Group AAverage annual

comp ensation during

higlest 5 consecutive

years

S ervlce Retirement AllowanceEligibility

Amounf

MaJdmum Benefit

Earlier of age 65 with 5.

years ofservice or age 55

with 35 years of service

1.4% ofAFC times

service

Group BAverag: annual

compensation during

Highest 3 consecutive

yearsV

Earlier of age 62 with 5

yeam ofservice or tag: 55

with 30 years of service

1.7% ofAFC times

service as Group Bmember plus percentage

earned as a Group Amember times AFC

60% of AFC, includingportion of allowance provided

by member contributions

Early Retirement AllowanceAge 55 with 5 years of serviceEligibility

Amount Normal allowance based on service and AFC at early

retirement, reduced by 6% for each yem‘

commencement precedes Normal Retirement Age

Vested Retire ment AllowanceEligibilit'y

Amount5 years of service 5 years ofservice

Group CAverage annual

compensation during

"highest 3 consecutive

years

Age-SS with 5 years of

service

2.5% of AFC tfmes

service as Group Cmember plus percentage

earned as a Group A or

B member times AFC

Group DAverage annual

comp ensation during

highest 2 consecutive

years

Age 55 with 5 years of

service

2.5% ofAFC timwservice as Group Dmember plus percentage

earned as a Group A, B,

or C member times AFC

50% of AFC, includingportion 0f allowance provided

by member contributions

n/a

n/a

5 years of service

Age 50 with 20 years of

service

Normal allowance based

on service and AFC at

early retircment, without

reduction

5 years of service

Allowance beginning at normal retirement age based on AFC and service at termination. The AFC is to be

adjusted Annually by one—half of the percentage change in the CPI. subject to the limits on "Post—Retirement

Adjustments" described below. '

Disability Retirement Allowance5 years of service and disability as determined by Retirement BoardImmediate allowance based on AFC and service'to date of disability; children's benefit of 10% of AFC payableto up to three minor children (or children up to age 23 if enrolled in full-time studies) of a disabled Group D

Eligibility

Amount

De ath 3ene f: t

Eligibility

Amount

member.

After 5 years of service After Syears ofservice Afier 5 years of service

Reduced early retirement allowance under 100% survivor option commencinghnmediately or. if greater, survivor's benefit under disability annuity comp uted as

of the date of death

Optional Benefit and Death after Retirement .

Lifetime allowance or actuarially equivalent 50% or 100% joint and survivor

allowance with refund of contributions guarantee.

After 5 years ofservice

70% of the unteduced

accrued benefit plus

children's benefit

Lifetime allbwance or

70% contingent

annuitant option with noreduction

Refund of Contribution Upon termination, if the member so elects or if no other benefit is p ayable, the member's accumulated

contributions are refunded.

Post—Retirement Adjustme nts

Allowance in payment for at least one year, increased on each January 1 by one-half of thepercentage increase

in CPI but not more than the followingpercentage:

2% 3% 3% 3 %Member Contributions 2.5% for fiscal year 4.875% for fiscal year 10% for fiscal year 11.35% for fiscal year

ended 6/30/18. ended 6/30/18. ended 6/30/18.. ended 6/30/18.

Employer Contributions

Retirement Stipend

2.625% eff. 7/1/18

4.0% for fiscal year

ended 6/30/18.

4.125% eff. 7/1/18

5.0% eff. 7/1/18


ended 6/30/18.

5.625% eff. 7/1/18

[0.125% eff. 7/1/18


ended 6/30/18.

7.375% eff. 7/1/18

$25 per month payable at the option of the Board of Retirees

-31-

11.475% eff. 7/1/18


ended 6/30/18.

9.975% eff. 7/1/18


NOTES TO FWANCIAL STATEMENTSJUNE 30, 2019

NOTE 10 -— PENSION, RETIREMENT, AND POST EMPLOYMENT BENEFITS (Continued)

For the year ended June 30, 2019, the District’s contributions to the Plan were $61,408.

Pension Liabilities, Pension Expense, Deferred Outflows ofResourceS, and Deferred Inflows ofResources Related to Pensions. At June 30, 2019, the District reported a liability of $428,226 for its

proportionate share of the net pension liability. The net pension liability was measured as of June 30,

2018, and the total pension liability used to calculate the net pension liability was determined by anactuarial valuation as of that date. The District’ 5 proportion of the net pension liability was based ona proj ection of the District 5 long—term share of contributions to the pension plan relative to the

projected contributions of all participating entities, actuarially determined. At June 30, 2018, the

District’ 3 proportion was 0 30%, which was a decrease of 0.01% from its proportion measured as ofJune 30, 2017.

For the year ended June 30, 2019, the District recognized pension expense of $110,313. At June 30,

2019, the Distlict reported deferred outflows of lesources and deferred inflows of resources related

to pensions from the following sources:

Deferred Deferred

Outflows of Inflows of

Resources Resources

Differences between expected and -

actual results. 35 37,196 $ 6,847

Changes of assumptions.V

47,421 0

Net difference between projected and

actual earnings on Plan investments.'

49,630'

0

Changes in proportion and differences

between School District contributions

and proportionate share of contributions. 78 19,297

Member contributions subsequent to

the measurement date. 61,408 0

Total $ 195,733 $ 26,144

The $61,408 of deferred outflows of resources resulting from the School District’s contributions

subsequent to the measurement date Will be recognized as a pension expense in the year ending June

30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows ofresources will be recognized in pension expense as follows:

Year ending Amount

June 30, 2019 $ 72,335

June 30, 2020 24,451

June 30, 2021 2,534

June 30, 2022 8,859

-32-


NOTES TO FINANCIAL STATEMENTS '

IUNE 30, 2019

NOTE 10 — PENSION, RETIREMENT, AND POST EMPLOYMENT BENEFITS (Continued)

Actuarial Assumptions

The total pénsion liability in the June 30, 2018 actuarial valuation was determined using the

following actuarial assumptions, applied to all periods included in the measurement:

Investment rate ofIreturn — 7.5%, net of pension plan investment expenses, including inflation.

Salary increase —5% per year.

Mortality:

Death in Active Service:

Groups A, B, C — 98% ofRP—2006 blended 60% Blue Collar Employee, 40% Healthy

Employee with generational improvement.

Group D - RP-2006 Blue Collar Annuitant Table with generational improvement.

Healthy Post—retirement:

Groups A, B, C- 98% ofRP-2014 blended 60% Blue Collar Annuitant, 40% Healthy

Annuitant with generational improvement.

Group D 100% of RP 2014 Healthy Annuitant Table with generational improvement.Disabled Post—retirement:

All groups- RP-2006 Disabled Mortality Table With generational improvement.

Spouse ’5‘ age — females three years younger than males.

Cost ofLiving Adjustments — Assumed to occur ‘on January 1 following one year of retirement at the

rate of 1.15% per annum for Group A members and 1.3% per annum for Groups B, C and Dmembers (beginning at Normal Retirement eligibility age for members who elect reduced early

retirement, at age 62 for members of Groups A, B, and D who receive a disability retirement benefit,

and at age 55 for members of Group C who receive a disability retirement benefit). The January 1,

2019 COLA LS assumed to be 1.3% for all age groups.

Actuarial Cost Method — Entry Age Actuarial Cost Method. Entty-Age is the age at date of. employment or, if date is unknown, current age minus years of service. Normal Cost and Actuarial

Accrued Liability are calculated on an individual basis and are allocated by salary, with Normal Cost

determined using the plan of benefits applicable to each participant.

Actuarial Value ofAssets — A smoothing method is used, under which the value of assets for

actuarial purposes equals marketvalue less a five—year phase—in of the differences between actual

and assumed investment return. The value of assets for actuarial purposes may not differ frommarket value of assets by more than 20%.

Inflation — 2.5%

-33-




Long—term expected rate of return‘

The long-term expected rate of return on pension plan investments was determined using a building-

block method in which best—estimate ranges of eXpected future real rates of return (expected returns,, net of pension plan investment expense and inflation) are developed for each major asset class.

These ranges are combined to produce the long-term expected rate of retum by weighting the

expected future real rates of return by the target asset allocation percentage and by adding expected

inflation Best estimates of arithmetic real rates of return for each major asset class included In the

pension plan’s target asset allocation as of June 30, 2018, is summarizedin the following table:

Long—Term_

Target Expected Real

Asset Class'

Allocation Rate of Return

US Equity 18.00%'

6.10%Non—US Equity 16.00% 7.45%

Global Equity: 9.00% 6.74%

Real Estate 8.00% 5.11%

Private Markets 15.00% 7.60%

Hedge ‘Funds 8.00% 3.86%

Fixed Income ”26.00% 225%

Discount Rate — The discount rate used to measure the total pension liability was 7.5%. In.

accordance with paragraph 29 of GASB 68, professional judgement was applied to determine that

the System’s projected fiduciary net position exceeds proj ected benefit payments for current active

and inactive members for all years. The analysis was based on the expectation that employers will'

continue to contribute at the rates set by the Board, Which exceed the actuarially determined

contribution, Which is comprised on an employer normal cost payment and a payment to reduce the

unfunded liability to zero by June 30 2038. Therefore, the long-term expected rate of return onpension plan investments was applied to all periods of projected benefit payments to determine the

total pension liability

The following presents the net pension liability, calculated using the discount rate of 7. 5%, as well

as what the net pension liability would be if 1t w'ere calculated using a discount rate that IS one

percent lower (6.5%) or one percent higher (8.5%) than the current rate:

1% Decrease (6.5%) Discount Rate (7.5%) 1% Increase (8.5%) .

$ 725,319 $ 428,226 $.

186,608

Plan Fiducz’ary Net Position. Detailed information about the Plan's fiducieuy‘ net position is available

in- the State of Vermont’s Comprehensive Annual Financial Report (CAFR). The CAFR can be

viewed on the State’s Department of Finance and Management website.

-34-


JUNE 30, 2019

NOTE 10 — PENSION, RETIREMENT, AND POST EMPLOYMENT 'BENEFITS (Continued)

Vermont State Teachers Retirement System

Plan descripflon

The State of Vermont on behalf of the School District contributes to the Vermont State Teachers

Retirement System (VSTRS) which IS a cost sharing multiple employer defined benefit pension plan

with a special funding situation. It covers nearly all public day school and nonsectarian private high

school teachers and administrators as well as teachers 1n schools and teacher training institutions

Within and supported by the State that are controlled by the State Board of Education. Membershipin the system for those covered classes is' a condition of empléyment. During the year ended June 30,

‘

2018, the retirement system consisted of 25 5 participating employers.

The plan was created in 1947, and is governed by Title 16, V.S.A. Chapter 555.

Management of the plan is vested in the VSTRS Board of Trustees, which consists of the Secretary

of Education (exéofficio); the State Treasurer (ex—officio); the Commissioner of Financial-Regulation

(ex-officio); two trustees and one alternate who are members of the system (each elected by_ the

system under rules adopted by the Board) and one trustee and one alternate who are Letired membersof the system receiving retirement benefits (who are elected by the Association of Retired Teachersof Vermont)

The Pension Plan is divided into the following membership groups:

0 Group A for public school teachers employed within the State of Vermont prior to July 1,

1981 and who elected to remain in Group A0 Group C — for public school teachers employed within the State of Vermont on or after July

I, 1990, or hired before July 1, 1990 and were a member of Group B at that time

All assets are held in a single trust and are available to pay retirement benefits to all members.Benefits available to each group are based on average final compensation (AFC) and years ofcreditable service, and are summarized below:

-35-


JUNE 30, 2019

' NOTE 10— PENSION, RETIREMENT, AND POST EMPLOYNIENT BENEFITS (Continued)

Benefits provided and contributions

Group A Group C - Group #1* Group C - Group #2**

Normal service retirement Age 60 or .30 years of Age 62 or with 30 years Age 65 or when the sumeligibility (no reduction) service of service of age and service equals

._ 90

'

Average Final Compensation

(AFC)

Benefit formula - normal

service retirement


y ems, including unused

annual leave, sick leave,

and bonus/incentives

1.67% times creditable

service times AFC


years, excluding all

payments for anything

other than service

actually performed .

1.25% times service

prior to 6/30/90 times

AFC plus 1.67% times

service after 7/1/90 times

AFC


years, excluding all

payments for anything

other than service

actually perfonned

1.25% times service

prior to 6/30/90 timm

AFC plus 1.67% times

service afier 7/1/90 times

AFC, 2.0% after

attaining 20 years

Maximum Benefit payable 100% of AFC 53.34% of AFC 60% of AFCPostRetirement COLA

.

Full CPI, up to a 50% CPI, up to a 50% CPI, tip to a

maximum of 5% after 12 maximum of 5% after 12 maximum of 5%,months of retirement; months of retirement or minimum of 1% after 12

minimum of 1% with 30 y ears'; minimum months ofnormal- of 1% retirement or 3g 65

Early Retirement Eligibility Age 55 with 5 years of.

Age 55 with 5 years of Ag: 55 with 5 years ofservice service service

'

Early Retirement Reduction Actuarial reduction 6% per year from £13 62 Aduarial reduction

Disability Benefits Unreduced, accrued Unreduogd, accrued Unreduoed, accrued

benefit with minimum of benefit with minimum of benefit with minimum of

25% ofAFC 25% of AFC 25% ofAFCDeath-in—S‘e rvice Benefit Disability benefit or Disability benefit or Disability benefit or

early retirement early retirement early retirement

benefit,whichever is benefit,whichever is benefit,whichever is

gieater, with 100%survivorship factor

applied plus children's

benefits up to maJdmumof three concurrently

greater, with 100%survivorship factor


benefits up to maximum

of three concurrently

greater, with 100%survivorship factor


benefits up to maximum

of three concurrently

*Group #1 are members who were within 5 years of normal retirement (age 62 or 30 years of

service) on June 30, 2010.**Group #2 are members who were less than 57 years of age or had less than 25 years of service onJune 30,2010.

Members of all groups may qualify for vested deferfed allowance, disability allowances and death

benefit allowances subject to meeting various eligibility requirements. Benefits are based on AFCand service.

-36-


JUNE 30, 2019


Significant Actuarial Assumptions and Methods

The total pension liability as of June 30, 2018 wés determined by an actuarial valuation as of June‘

30, 2017, using the actuarial assumptions outlined below.

Investment rate ofreturn — 7.50%

Salary increases — ranging from 3.75% to 9.09%..Representative values of the assumed annual ratesof fiJture salary increases are as follows:

Age Annual rate of Salary Increase20' 9.09%

25 7.78%

30 6.47%

35 5.60%

40 4.92%

45 4.43%

50 4.09%

55 3.85%

60 3 .75%

Mortality — Pre-retirement - 98% of RP—2006 White collar employee with generational projectionusing scale SSA—2017. Healthy Post—retirement — 98% of RP-2006 white collar annuitant withgenerational proje’ctibn using scale SSA—2017. Disabled post-retirement — RP-2006 Disabled ‘

Mortality Table with generational projection using scale SSA—2017.

Inflation —2.5%.¥

Spouse ’s Age * Females three years younger than males.

Cost ofLiving Adjushnents - Assumed to occur on January 1 following one year of retirement at therate of 2.55% per annum for Group A members and 1.3% for 2019 Group C members.

Inactive members — Valuation liability equals 250% of accumulated contributions. Previously, this'

liability was assumed to equal 332.5% of accumulated contributions.

‘

Actuarial Cost Method — Entry age actuarial cost method. Entry age is the age at date of employmentor, if date is unknown, current age minus years of service. Normal cost and actuarial accrued liability

are calculated on an individual basis and are allocated by salary, With normal cost determined usingthe plan of benefits applicable to each participant.

Actuarial Value ofAssets — The amount of the assets for valuation purposes equals ‘the preliminaryasset value plus 20% of the difi‘erence between the market and preliminary asset values. Thepreliminary asset value is equal to the previous year’s-asset value (for valuation purposes) adjustedfor contributions less benefit payments plus expenses and expected investment income. If necessary,a fin‘ther adjustment is made to ensure that the valuation assets are within 20% 0f the market value.

-37-




Long-term expected rate of return

The long-term expected rate of return on pension plan investments was determined using a building-

block method in which best-estimate ranges of expected filture real rates of return (expected returns,

net ofpension plan investment expense and inflation) are developed for each major asset class.

These ranges are combined to produce the long-term expected rate of return by weighting the

expected future real rates of return by the target asset allocation percentage and by adding expected

inflation.

Best estimates of arithmetic real rates of return for each major asset class included in the pensionplan’s target asset allocation as of June 30, 2018 are summarized in the following table:

Long-Term Expected

Asset Class Target Allocation‘

Real Rate of Return

US Equity 18.00% 6.10%Non—US Equity 16.00% 7.45%.

Global Equity 9.00% 6.74%

Fixed Income 26.00% 2.25%Real Estate 8.00% 5.11%

Private Markets 15.00% 7.60%

Hedge Funds 8.00% 3.86%

Discount Rate — The discount rate used to measure the total pension liability was 7.50%. In

accordance With paragraph 29 of GASB 68, professional judgement was applied to determine that

the System’s projected fiduciary net position exceeds projected benefit payments for current active

and inactive members for all years. The analysis was based on the expectation that employers will

continue to contribute at the rates sét by the Board, which exceed the actuarially determined

contribution, which is comprised on an employer normal cost payment and a payment to reduce the

unfunded liability'to zero by June 30, 2038. Therefore, the long—term expected rate of return onpension plan investments was applied to all pefiods of projected benefit payments to determine the

total pension liability.'

The contribution made by the State on behalf of the participants in the State Teachers Retirement

System is approximately $515,000 and is reported as both revenue and an expenditure on Exhibit E.

This amount is based on information provided by the State and is 15.75% of covered payroll. Of the

School System’s total payroll of $4,902,702, $3,272,396 was covered under the Vermont State

Teachers Retirement System. The government wide on behalf pension expense consists of:

Fund financial statements — Exhibit E $ 515,000

GASB 68 — pension adjustment 572,000

GASB 75 - post employment benefits 258,085

Government wide — Exhibit B 53 1,345 ,085

-38-



NOTE 10 —- PENSION; RETIREMENT, AND POST EMPLOYMENT BENEFITS (Continued)

VSTRS POST EMPLOYMENT BENEFITS

Plan description. See plan description noted on page 35. The Vermont State Teachers’ Retirement

System (VSTRS) provides postemployment benefits to eligible VSTRS employees who retire fiomthe System through a cost-sharing, multiple-employer postemployment benefit (OPEB) plan (the

.

Plan).'

..

Vermont Statute Title 16 Chapter 55 assigns the éuthorityito VSTRS to establish and amend the'

benefits provisions of the Plan and to establish maximum obligations of the Plan members to

contribute to the Plan.

All assets of the Plan are held in a single trust and are available to fiay OPEB benefits to all

members.'

.

Summary of Plan

Eligibility

VSTRS retirees and their spouses are eligible for health coverage if the retiree is eligible for pensionbenefits. Pension eligibility requirements are below:

Group A — Public school teachers employed within the Stafe of Vermont prior to July 1, 1981 andelected to remain in Group A.

,

0 Retirement — Attainment of 30 years of cyéditable service, or age 55

Group C - Public school teachers employed Within the State 6f Vermont on or after July 1, 1990.

Teachers hired before July 1, 1990 and were Group B members in service on July 1, 1990 are nowGroup ,C members. Grandfathered participants are Group C members Who were within five years ofnormal retirement eligibility as defined prior to July 1, 2010.

0 Retirement Group C grandfathered: Attainment of age 62, or 30 years creditable service, or'

age 55 with 5 years of creditable service.

0‘ Retirement Group C non—grandfathered: Attainment of age 65, or age plus creditable service

equal to 90, or age 55 with 5 years of creditable service.

Vesting and Disability: 5 years of creditable service. Participants who terminate with 5 years ofservice under the age of 55 may elect coverage upon receiving pension benefits.

Benefit Types: Medical and prescription drug. Retirees pay the full cost for dental benefits.

Duration of Coverage: Lifetime.

Spousal Benefits: Same benefits as for retirees.

-39.




Spousal Coverage: Lifetime.

Retiree Contributions

Retired before June 30‘ 2010 — Retirees with at least 10 years of service pay premium costs in excessof an 80% VSTRS subsidy. Retirees with less'than 10 years of service do not'receive any premiumsubsidy. Spouses do not receive any premium subsidy, regardless of the retiree’s service.

‘ Retired after June 30 2010— Retirees pay premium costs in excess of the following VSTRS subsidy,

based on service:

Years of Service at June 30. 2010 Subsidy

10 years or more 80%Less than 10 years

Less than 15 years at retirement 0%15—1999 years at retirement 60%20-2499 years at retirement 70%25 or more years at retirement 80%

Spouses of retirees can receive an 80% subsidy, if they meet the following requirements:

Spouse Coverage with 80% Subsidy:

Years of Service at June 30 2010 Required Years Of Service at Retirement

Less than 10 years 25 years of service at retirement

Between 10 and 14.99 years 25 years of service at retirement

Between 15 and 24.99 years 10 additional years from June 30, 201-0

Between 25 and 29.99 years 35 years of service at retirement

30 or more years 5 additional years from June 30, 2010

Spouses of retirees who do not meet the above requirements for an 80% subsidy can receive

unsubsidized coverage. -

Premium Reduction ODtion— Participants retiring on or after January 1, 2007 with a VSTRSpremium subsidy have a one time option to reduce the VSTRS subsidy percentage during the

retiree’ 5 life so that a surviving spouse may continue to receive the same VSTRS subsidy for the

spouse’s lifetime. If the retiree elects the joint and survivor pension option but not the PremiumReduction Option, spouses are covered for the spouse’s lifetime but pay 100% of the plan premiumafter the retiree’s death.

-40-



NOTE 10 — PENSION, RETIREMENT,>AND POST EMPLOYMENT BENEFITS (Continued)

Actuarial Assumptions

The total OPEB liability used the following actuarial assumptions, applied to all periods included 1n

‘

the measurement, unless otherwise specified:

Discount Rate: 3.87% based on the 20 year Bond Buyer GO index at June 30, 2018.

Salary Increase Rate: Varies by age. Representative values of the assumed annual rates of future

salary Increases are as follows:

Age Annual rate of Salary Increase

25 7.78%30 6.47%35 5.60%40 4.92%45 4.43%50 4.09%55 3.85%60 3.75%

Inflation: 2.75%

Healthcare Cost: Non-Medicare — 7.15% graded to 4.5% over 12 years

Trend Rates: Medicare — 7.15% graded to 4.5% over 12 years

Retiree Contributions: Equal to health trend.

Mortality Rates — Death in Active Service All Groups - 98% ofRP-2006 white collar employeewith generational projection using scale SSA-2017. Healthy Post-retirement — All Groups — 98% 0fRP-2006 white collar arinuitant with generational projection‘using scale SSA—2017. Disabled Post-

4

retirement - RP-2006 Disabled Mortality Table with generational projection using scale SSA—2017.The tables with the generational projection to the ages of members as of the measurement date

reasonably reflect the mortality experience of the Plan as of the. measurement date. The mortality i

tables were then adjusted to future years using a generational projection With scale SSA-2017 to

reflect fixture mortality improvement.

Actuarial Cost Method: Entry—Age Normal, Level Percentage of Pay

Asset Valuation Method: Market Value

Measurement Date: June 30, 2018 .

Actuarial Valuation Date: June 30, 2017

-41-



NOTE 10 -. PENSION, RETIREMENT, AND POST EMPLOYMENT BENEFITS (Continued)

Per Capita Cost Development:

Medical and Prescription Drug — Per capita claims costs were based on claims for the period July

1, 2015 through June 30, 2018. Claims were separated by non-Medicare and Medicare retireesgand

by claim type (medical vs. prescription drug). Claims were separated by plan year, then adjusted as

follows: -

0 Total claims were divided by the number of adult members to yield a per capita clfiim,0' The per capita claim was trended to the midpoint of the valuation year at assumed trend rates

0 The per capita claim was adjusted for the effect of any plan changes.

Per capita claims for each plan year were then combined by taking a weighted average. The- weights used in this average account for a number of factors including each plan year’s volatility

of claims experience and distance to the valuation year. Actuarial factors were then applied to the

weighted average cost to estimate individual retiree and spouse costs by age and by gender;

Administrative expense Per capita claims costs were based on claims for the period July 1, 2015_

through June 30, 2018. Expenses were separated by plan year, then adjusted as described above to

yield a cOmbined weighted avefage per capita claims’ cost.

Per Capita Health Costs: Medical and prescription drug claims for the year beginning July 1, 2018are shown in the table below for retirees and for spouSes at selected ages. These costs are net ofdeductibles and other benefit plan cost sharing provisions.

Medical Presc

Retiree Retiree

Male Female Male Female Male Female Male Female50 $ 9 732 7 1 ‘ 780 1091 1 429

55 9745 1 1 7 70 l 16 1460 1

60 1 1 5 10 10 5 ‘

1 5 1 18

64 13'

11 11 190 468 159

65 491 1491 1 1751 751

70 728 . 1 728 1 1 88 1

75 1 1 470 1 1

Administrative Expenses: An annual administrative expense of $5 88 per participant with health andwelfare coverage increasing at 3% per year was added to projected incurred claim costs in

developing the benefit obligations.-

-42-



‘NOTE 10 - PENSION, RETIREMENT, AND POST EMPLOYMENT BENEFITS (Continued)

Health CarelCost Trend Rates: Health care trend measureé the anticipated overall rate at whichhealth plan costs are expected to increase in future years. The rates shown below are “ne ” and are

applied to-the netAper capita costs shown above. The trend shown for a particular plan year-is the rate

that is applied to that year’s cost to yield the next year’s projected cost.

Year ending

June 30, Health Costs

2019 7.150%_

2020 6.925%2021 6.700%2022 6.475%2023 6.250%2024 6.025%2025 5.800%2026 5.575%2027 5.350%2028 5.125%2029 4.900%2030 4.675%

2031 & later 4.500%

The trend rate assumptions were developed using Segal’s internal guidelines, which are established

each year using data sources such as the 2019 Segal Health Trend Survey, internal client results,

trends fiom other published surveys prepared by the S&P Dow Jones Indices, consulting firms andbrokers, and CPI statistics published by thé Bureau of Labor Statistics

Retiree Contribution Increase Rate: Retiree contributions were assumed. t6 increase with health

trend. Retiree contribution rates were based on 2018 premiums. Plan premiums were weighted byactual retiree and dependent enrolment separately for non—Medicare and Medicare.

Health Care Reform Assumptions: The Plan is assumed to be in compliance with the Patient

Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act.

(HCERA) 0f2010 as of the valuation date. The valuation includes the projected effect of the Act’s

provision which imposes an excise tax on high cost employer-sponsorcd health coverage beginningin 2022. The excise tax limit is assumed to increase by 2.5% each year after 2018.

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NOTES TO FINANCIAL STATEMENTSTUNE 30, 2019

NOTE 11 —— OPERATING LEASES

The District has two office equipment leases. The lease expense for fiscal year 2019 wasV approximately $14,273. The remaining lease payments are approximately as follows:

FY20 $ 14,057

FY21 2,921

Total $ 16,978

NOTE 12 - RECONCILIATION OF EXHIBIT E TO EXHIBIT G

Amounts recOrded in the Statement of Revenues, Expenditures and Changes in Fund Balance

Compared to, Budget — General Fund (Exhibit G) are reported on the basis budgeted by the District;

Amounts recorded in the Statement ofReVenues, Expenditures and Changes in- Fund Balances

(Exhibit E) for the General Fund were adjusted for on behalfpayments of fringe benefits (see Notes

1 and 10) as follows:

Revenues Expenditufes

Exhibit E - $ 7,767,771 $ 7,958,773

On behalf payments (515 ,000) (515,000)

Exhibit G $ 7,252,771 $ 7,443 ,773

NOTE 13 - EXCESS OF EXPENDITURES OVER APPROPRIATIONS

For the year ended June 30, 2019, expenditures exceeded appropriations in the Various Grants Fund

by $1 16,378 The excess expenditures were funded by additional revenues.

NOTE 14 — RISK MANAGEMENT

The District IS exposed to various risks of loss related to torts; theft of, damage to, and destruction of

assets; errors and omissions; injuries to employees; and natural disasters The District maintains

commercial msurance coverage covering each of those risks of loss. Management believes such

coverage is sufficient to preclude any significant uninsured losses to the District Settled claims have

not exceeded this commercial coverage in any of the past three (3) fiscal years.

The School District elected to be on the direct reimbursement method of covering unemploymenttaxes that might be collected by former employees who are deemed eligible by the VermontDepartment of Labor As former or “RIF”ed (Reduction 1n Force) employees collect benefits, the

State of Vermont bills the School District quarterly for reimbursement No estimate of unpaid claims

has been made at year—end.

In addition, the District is a member of Vermont Education Health Initiative (VBHI) for Medical

Benefits. VEHI is a non-pro fit corporation formed to provide insurance and risk managementprograms for Vermont school districts and is owned by participating Districts.

To provide health insurance coverage, VEHI has establiShed a self—funded fully insured program in

conjunction with Blue Cross and Blue Shield (BCBS). A portion of member contributions is used to

purchase reinsurance and to fund a reserve required by the reinsurance.

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NOTE 15 — COMMITMENTS AND CONTINGENCIES

The District participates in a number of federally assisted and State grant programs which are subject

to audit by the grantors or their representatives. The audits of these programs for or including the

year ended June 30, 2019, have not yet been reviewed by the grantor agencies. Accordingly,

compliance with applicable grant requirements will be established at some future date. The amount,

if any, of expenditures which may be disallowed by the granting agencies cannot be determined at

this time, although the District expects such amounts, if any, to be immaterial.

The Supervisory Union entered into a contract on behalf of Blue Mountain Unified School District

in March, 2017 for transportation of the students With Butler’s Bus Service, Inc. The term of the

contract is July 1, 2017 through June 30, 2022. The District’s share'of the combined contract is to

pay $275 per bus per school day for transportation. This per day amount increases 4% each year.

The contract provides a renegotiation and extension clause. The District’s minimum share of future

contract payments are:

FY20 $ 52,647

FY21 54,753

FY22 56,943

Total $ 164,343

NOTE 16 — SUBSEQUENT EVENTS

Management has evaluated subsequent events through November 14, 2019, the date which the

financial statements were available for issue.

On July 1, 2019, the District obtained 3. Revenue Anticipation Note fiom Community Bank, NA. in

the amount of $1,262,875 at an interest rate of 2.7% to be paid in full before June 30, 2020. The note

was issued for cash flow purposes. One advance was taken on October 21, 2019 in the amount of

$200,000 and another on October 28, 2019 in the amount of $200,000. The $400,000 was paid backin full on November 5, 2019. Interest paid on the note was $325.

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SCHEDULE OF THE SCHOOL DISTRICT'S PROPORTIONATB SHARE OF THENET PENSION LIABILITY

VERMONT EMPLOYEES MUNICIPAL RETIREMENT PLANAS OF MEASUREMENT DATE JUNE 30,

SCHEDULE 1

2018 2017 2016District‘s proportion of the net

pension liability (asset) 0.30440% 0.31376% 0.34073%

District's propofionate share of_

the net pension liability (asset) . $ 428,226 $ 380,141 $ 438,505

District's covered-employee payroll $ 1,185,056 $ 1,124,425 $ 1,138,873

District's proportionate share of the net

pension 1iability(asset) as a percentage

of its covered-e'mployee payroll 36.14% 33.81% 38.50%

Plan fiduciary net position as a

_

percentage of the total pension- liability 82.60% 83.64% 80.95%

BLUE MOUNTAIN UNIFIED SCHOOL DISTRICT #21'SCHEDULE OF SCHOOL DISTRICT CONTRIBUTIONS

VERMONT EMPLOYEES MUNICIPAL RETIREMENT PLANYEARS ENDED JUNE 30,

2019 2018 2017 2016 2015

Contractually required contributions 3; 61,408 $ 53,319 $ 51,240 $ 5 1,785 $ 51,715

Contributions in relatibn to the

contractually required contribution (61 ,408) (53,319) (51,240) (51,785) (51,715)

Contribution deficiency (excess)

I

$ 0 $ 0 $ 0 $ 0 $ 0

District's covered—employce payroll $ 1,301,524 $ 1,185,056 $ 1,124,425 $ 1,138,873 $ 1,153,951

Contributions as a percentage of

covered-employee payroll 4.718% 4.499% 4.557% 4.547% 4.482%

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FOTHERGILL SEGALE 8: VALLEYCertified Public Accountants

John E. (Jeff) Fothergill, CPAMichael L. Segale, CPASheila R. Valley, CPATeresa H. Kajenski, CPADonald J. Murray, CPA

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED

ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITH GOVERNMENTAUDITING STANDARDS

To the Board of School Directors

Blue Mountain Unified School District #21

Wells River, Vermont

We have audited, in accordance with auditing standards generally accepted in the United States

of America and the standards applicable to financial audits contained in Government AuditingStandards issued by the Comptroller General of the United States, the financial statements of the

governmental activities, each major fund, and the aggregate remaining fund information of BlueMountain Unified School District #21, as of and for the year ended June 30, 2019, and the

related notes to the financial statements, Which collectively comprise the School District’s basic

financial statements and have issued our report thereon dated November 14, 2019.

Internal Control over Financial Reporting

In planning and performing our audit, we considered the School District’s internal control overfinancial reporting (internal control) to determine the audit pro cedures that are' appropriate in the

circumstances for the purpose of expressing our opinions on the financial statements, but not for

the purpose of expressing an opinion on the effectiveness of the School District’s internal

control. Accordingly, we do not express an opinion on the effectiveness of the School District’s

internal control.

A deficiency in internal control exists when the désign or operation of a control does not allow

management or employees, in the normal course ofperformjng their assigned functions, to

prevent, or detect and correct misstatements on a timély basis.

A material weakness is a deficiency, or a combination of deficiencies, in internal control suchthat there is a reasonable possibility that a material misstatement 0f the entity's financialstatements will nof be prevented, or detected and corrected on a timely basis.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that

is less severe than a material weakness, yet important enough to merit attention by those chargedWith governance.

Our consideration of internal control was for the limited purpose described in the first paragraphof this section and was not designed to identify all deficiencies in internal control over financialreporting that might be material weaknesses or, significant deficiencies. Given these limitations,

143 BARRE STREET - MONTPELIER °VERMONT 05602 - 802-223—6261 - FAX: 802—223—1550 - www.fsv—cpas.com

during our audit we did not identify any deficiencies in internal control that we consider to be

material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the School District's financial

statements are free of material misstatement, we performed tests of its compliance with certain

provisions of laws, regulations, contracts, and grant agreements, noncompliance with Whichcould have a direct and material effect on the determination of financial statement amounts.

However, providing an opinion on compliance with those provisions was not an objective of our

audit, and accordingly, we do not express such an opinion The results of our tests disclosed noinstances of noncompliance or other matters that are required to be reported under GovernmentAuditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness of

the entity’s internal control or on compliance. This report is an integral part of an audit

performed in accordance with Government Auditing Standards in considering the entity’s

internal control and compliance. Accordingly, this communication is not suitable for any other

purpose.

Respectfully submitted,

29mg? 42% ,5 MM. 6%‘ FOTHERGILL SEGALE & VALLEY, CPAs

Montpelier, VermontVermont Public Accountancy License #110

November 14, 2019

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Documents

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