State of Arizona Riverside Elementary School District No. 2€¦ · Other Matters Required Supplementary Information Accounting principles generally accepted in the United States

StateofArizona

RiversideElementarySchoolDistrictNo.2

ANNUALFINANCIALREPORT

FortheYearEndedJune30,2017

(Thispageintentionallyleftblank.)

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INTRODUCTORYSECTION

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STATEOFARIZONARiversideElementarySchoolDistrictNo.2

FinancialStatementTableofContentsJune30,2017

Exhibit PageINTRODUCTORYSECTION

TableofContents 4‐5OfficialRoster 6

FINANCIALSECTIONIndependentAuditors'Report 8‐10RequiredSupplementaryInformation‐Management'sDiscussionandAnalysis 11‐22

BASICFINANCIALSTATEMENTSGovernment‐wideFinancialStatements:StatementofNetPosition A‐1 24StatementofActivities A‐2 25

FundFinancialStatements:BalanceSheet‐GovernmentalFunds B‐1 26‐27ReconciliationoftheBalanceSheettotheStatementofNetPosition B‐1 29StatementofRevenues,Expenditures,andChangesinFundBalances‐GovernmentalFunds B‐2 30‐31

ReconciliationoftheStatementofRevenues,Expenditures,andChangesinFundBalancesofGovernmentalFundstotheStatementofActivities B‐2 33

StatementofFiduciaryAssetsandLiabilities‐AgencyFunds C‐1 35

NOTESTOTHEFINANCIALSTATEMENTS 36‐59

ScheduleREQUIREDSUPPLEMENTARYINFORMATION

BudgetaryComparisonSchedule‐GeneralFund I 62NotestoRequiredSupplementaryInformation‐BudgetaryComparisonSchedule 63ScheduleofDistrict'sProportionateShareoftheNetPensionLiability II 64ScheduleofDistrictPensionContributions III 65

SUPPLEMENTARYINFORMATIONBudgetaryComparisonSchedule‐MaintenanceandOperationFund IV 68NotetoSupplementaryInformation 69

STATISTICALSECTION(Unaudited)AverageDailyMembership V 72SecondaryAssessedValuationByPropertyClassification VI 73AssessedValuationofMajorTaxpayers VII 74PropertyTaxLeviesandCollections VIII 75DirectandOverlappingGovernmentalActivitiesDebt IX 76LegalDebtMarginInformation X 77DirectandOverlappingAssessedValuationsandTaxRates XI 78ComparitiveSecondaryAssessedValuations XII 79EstimatedFullCashValueHistory XIII 80

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FinancialStatementTableofContentsJune30,2017

Schedule PageCOMPLIANCESECTION

ReportonInternalControlOverFinancialReportingandonComplianceandOtherMattersBasedonanAuditofFinancialStatementsPerformedinAccordancewithGovernmentAuditingStandards 82‐83

FEDERALFINANCIALASSISTANCEReportonComplianceforEachMajorFederalProgramandonInternalControlOver

ComplianceRequiredbytheUniformGuidance 86‐87ScheduleofExpendituresofFederalAwards XIV 88‐89ScheduleofFindingsandQuestionedCosts XV 90‐91

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Official RosterJune30,2017

Name TitleBoardofEducation

Dr.JoyceLuckie BoardPresident

MartinMartinez BoardVicePresident

LillieValencia BoardMember

AdministrativeOfficials

Dr.JaimeRivera Superintendent

RubenGutierrez AssociateSuperintendent

JoseMoreno ExecutiveDirectorofBusinessServices

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FINANCIALSECTION

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INDEPENDENTAUDITORS’REPORTTheGoverningBoardofRiversideElementarySchoolDistrictNo.2Phoenix,ArizonaReportonFinancialStatements

Wehaveauditedtheaccompanyingfinancialstatementsofthegovernmentalactivities,eachmajorfund,andtheaggregateremainingfundinformationofRiversideElementarySchoolDistrictNo.2(the“District”),asofand for the year ended June30, 2017, and the relatednotes to the financial statementswhich collectivelycomprisetheDistrict’sbasicfinancialstatementsaslistedinthetableofcontents.Management’sResponsibilityfortheFinancialStatementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordancewithaccountingprinciplesgenerallyaccepted intheUnitedStatesofAmerica;this includesthedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Auditors’ResponsibilityOurresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit.Weconductedouraudit in accordance with auditing standards generally accepted in the United States of America and thestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoserisk assessments, the auditor considers internal control relevant to the District’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheDistrict’sinternalcontrol. Accordingly,weexpressnosuchopinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinions.OpinionsInouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,therespectivefinancial position of the governmental activities, each major fund, and the aggregate remaining fundinformationofRiversideElementarySchoolDistrictNo.2,asofJune30,2017,andtherespectivechangesinfinancialpositionfortheyearthenendedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

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OtherMattersRequiredSupplementaryInformationAccounting principles generally accepted in the United States of America require that theManagement’sDiscussion and Analysis on pages 11 through 22, and Schedules I, II, III, and the notes to the requiredsupplementaryinformationonpages62through65,bepresentedtosupplementthebasicfinancialstatements.Such information, although not a part of the basic financial statements, is required by the GovernmentalAccountingStandardsBoardwhoconsidersittobeanessentialpartoffinancialreportingforplacingthebasicfinancialstatementsinanappropriateoperational,economicorhistoricalcontext. Wehaveappliedcertainlimited procedures to the required supplementary information in accordance with auditing standardsgenerally accepted in theUnited States of America,which consisted of inquires ofmanagement about themethods of preparing the information and comparing the information for consistencywithmanagement’sresponsestoourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidencetoexpressanopinionorprovideanyassurance.OtherInformationOurauditwasconductedforthepurposeofformingouropinionsonthefinancialstatementsthatcollectivelycomprisetheDistrict’sbasicfinancialstatements.Theintroductorysection,theScheduleofExpendituresofFederal Awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrativeRequirements,CostPrinciples,andAuditRequirementsforFederalAwards,supportingscheduleIV,notetothesupplementaryinformation,andStatisticalSectionschedulesVthroughXIIIarepresentedforthepurposeofadditionalanalysisandarenotarequiredpartofthebasicfinancialstatements.The Schedule of Expenditures of Federal Awards, supporting schedule IV, and note to the supplementaryinformation aremanagement’s responsibility andwas derived from and relates directly to the underlyingaccounting and other records used to prepare the basic financial statements. Such information has beensubjectedtotheauditingproceduresappliedintheauditofthebasicfinancialstatementsandcertainadditionalprocedures,includingcomparingandreconcilingsuchinformationdirectlytotheunderlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatementsortothebasicfinancialstatementsthemselves,andotheradditionalproceduresinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Inouropinion,theScheduleofExpendituresofFederalAwards,supportingscheduleIV,andnoteto thesupplementary informationare fairlystated inallmaterialrespects, inrelation tothebasic financialstatementsasawhole.TheintroductorysectionandtheStatisticalSectionschedulesVthroughXIIIhavenotbeensubjectedtotheauditingproceduresappliedintheauditofthebasicfinancialstatements,andaccordingly,wedonotexpressanopinionorprovideanyassuranceonthem.

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OtherReportingRequiredbyGovernmentAuditingStandardsInaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreportdatedMarch22,2018,onourconsiderationoftheDistrict’sinternalcontroloverfinancialreportingandonourtestsofitscompliancewithcertainprovisionsoflaws,regulations,contractsandgrantagreementsandothermatters.Thepurposeofthatreportistodescribethescopeofourtestingofinternalcontroloverfinancialreportingandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheinternalcontroloverfinancialreportingoroncompliance.ThatreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandardsinconsideringtheDistrict’sinternalcontroloverfinancialreportingandcompliance.

Carr,Riggs&Ingram,LLCAlbuquerque,NewMexicoMarch22,2018

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STATEOFARIZONARiversideElementarySchoolDistrictNo.2Management’sDiscussionAndAnalysisFortheYearEndedJune30,2017

Unaudited

AsmanagementoftheRiversideElementarySchoolDistrictNo.2,weofferreadersoftheRiversideElementarySchoolDistrict No. 2 financial statements this narrative overview and analysis of the financial activities of the RiversideElementarySchoolDistrictNo.2forthefiscalyearendedJune30,2017. Pleasereadinconjunctionwiththebasicfinancialstatements,whichfollowthissection. Thediscussionandanalysisincludescomparativedatafortheprioryear.FinancialHighlightsKeyfinancialhighlightsforfiscalyearJune30,2016,wereasfollows:

As of June 30, 2016, the District’s total net position was $28.5 million. This is an increase of $1.5million,or5.5percent,fromfiscalyear2015‐16.

District‐wide general revenues of $12.8 million accounted for 84percent of all fiscal year 2016‐17revenues. Program specific revenues in the form of charges for services and grants and contributionsaccountedfor$2.4 million, or15.8 percent, of total fiscal year 2016‐17 revenues.

District‐wide expenses increased $1.4million, or 10.8 percent, from $13million in fiscal year 2016‐17

to$14.4millioninfiscalyear2016‐17.

The District had $14.4 million in expenses related to governmental activities; of which $2.4 millionof these expenses were offset by program specific charges for services or grants and contributions.General revenues of $12.8 million were adequate to provide support for the remaining$12millioncostsoftheseprograms.

In fiscal year 2016‐17, the General Fund reported $5.8 million in revenues and $5.7 million in

expenditures. The revenues consisted primarily of $5.5 million in property taxes. The General Fund’sfundbalance increased$202thousand,or44percent, from$461thousand, asof June30,2016, to$664thousand,asofJune30,2017.

During fiscalyear2016‐17, theDistrictmadebondprincipalpaymentsof$5.5millionandbond interest

paymentsof$1.5million.AsofJune30,2017,theDistricthad$37.9millionin outstandingbondprincipaland$7.1million ininterestthatareduethroughthefiscalyear2030‐31. Foradditionalinformationseefinancialstatementnote6.

In fiscal year 2016‐17, the District issued $7.6 million in School Improvement Bonds. For further

informationregardingnewbonds,seefinancialstatementnote6.OverviewofFinancialStatements

This annual financial report contains, in addition to this Management Discussion and Analysis, the District'sbasic financial statements andsupplementary information.These three sections together provide a comprehensiveoverviewof theDistrict's finances.Thebasic financial statements are comprised of two kinds of statements thatpresent financial information from different perspectives, district‐wideandfunds.

District‐widefinancialstatements,which consist oftheStatementofNet Position and the Statement ofActivities, provide both short‐term and long‐term information about the District's overall financialposition.

Fund financial statements, which report on the individual funds of the District, focus on reporting theDistrict'soperationsinmoredetail.Thesefundfinancialstatementscomprisetheremainingstatements.

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Unaudited

Notes to the financial statements, which are included just following the basic financial statements, providemoredetaileddataandexplainsomeoftheinformationinthestatements. Thesupplementary information sectionsprovide further explanations and additional support for the financial statements, including comparisonsof theDistrict'sbudgettoactualrevenuesandexpendituresfortheyear.

District‐wide financial statements. The district‐wide financial statements are designed to provide readerswithabroadoverviewoftheDistrict’sfinances,inamannersimilartoaprivate‐sectorbusiness.

The Statement of Net Position presents information on all of the District’s assets, deferred outflows of resources,liabilities,anddeferredinflowsofresourceswiththe differencebetweenthese itemsreportedasnetposition.Overtime, increasesordecreasesinnetpositionmayserveasausefulindicatorofwhetherthefinancialpositionoftheDistrictisimprovingordeteriorating.

The Statement ofActivitiespresents information showing how the District’s net position changed during the mostrecent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to thechange occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in thisstatement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes andearnedbutunusedcompensatedabsences).The district‐wide financial statements outline functions of the District that are principally supported by propertytaxes and intergovernmental revenues. The governmental activities of the District include instruction, supportservices, central services, operation and maintenance of plant, student transportation, operation of non‐instructionalservices,andinterestandotherchargesonlong‐termdebt.Fund financial statements. A fund is a grouping of related accounts that is used to maintain control overresources that have been segregated for specific activities or objectives. The District uses fund accounting toensure and demonstrate compliance with finance‐related legal requirements. All of the fundsoftheDistrictcanbedividedintotwocategories: governmentalfundsandfiduciaryfunds.

Governmental funds. Governmental fundsareused toaccount foressentially thesamefunctions reported asgovernmental activities in the district‐wide financial statements. However, unlike the district‐wide financialstatements,governmentalfundfinancialstatementsfocusonnear‐terminflowsofexpendableresources,aswellasonbalancesofexpendableresourcesavailableattheendofthefiscal year. Such information may be usefulin evaluating the District’s near‐term financing requirements.Because the focus of governmental funds isnarrower than that of thedistrict‐wide financial statements, it isuseful to compare the information presented for governmental funds with similar information presentedfor governmental activities in the district‐wide financial statements. By doing so, readers may betterunderstand the long‐term impact of the District’s near‐term financing decisions.Both thegovernmental fundBalance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances provide areconciliation to facilitate this comparison between governmental funds and district‐wide governmentalactivities.

Informationispresentedseparatelyinboththegovernmentalfunds'BalanceSheetandStatementof Revenues,Expenditures,andChangesinFundBalancesfortheGeneralFund,AdjacentWaysFund,BondBuildingFund,andtheDebt Service Fund.Informationfromtheothergovernmentalfundsarecombinedintoasingle,aggregatedpresentation.

Fiduciary funds. Fiduciary fundsareused toaccount for resourcesheld for thebenefitofparties outsidetheDistrict. Fiduciary funds are not reflected in the district‐wide financial statements because the resources ofthose funds are not available to support the District’s own programs. The accrual basisofaccountingisusedforfiduciaryfunds.

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Unaudited

Notes to the financial statements. The notes provide additional information that is essential to a fullunderstanding of the data provided in the district‐wide and fund financial statements. The notes to the financialstatementscanbefoundimmediatelyfollowingthebasicfinancialstatements.Other information. In addition to the basic financial statements and accompanying notes, this report alsopresents certain required supplementary informationconcerningtheDistrict’sbudgetprocess. The District adoptsan annual expenditure budget for all governmental funds. A Budgetary Comparison SchedulehasbeenprovidedfortheGeneralFundstartingonpage62.District‐WideFinancialAnalysis

Net Position. Net position may serve over time as a useful indicator of a government’s financial position. Inthe case of the District, assets plus deferred outflows of resources exceeded liabilities and deferred inflows ofresourcesby$28.5millionasofJune30,2017.

By far the largest portion of the District’s net position, $26.4 million reflects its investment in capital assets(e.g., land, buildings, other improvements, and vehicles, furniture and equipment), less any relateddebtusedtoacquire those assets that is still outstanding. The District uses these capital assets to provide services to itsstudents; consequently, these assets are not available for future spending. Although the District’s investment inits capital assets is reportednet of relateddebt, it shouldbenoted that the resources needed to repay this debtmust be provided from other sources, since the capital assets themselves cannot be used to liquidate theseliabilities. In addition, $0.24millionof net position is restricted for debt service payments of bond principal andinterest, and$0.32millionofnetposition isrestricted by state legislation for voter approved initiatives and foodservice.The remainingportionof netposition,$1.5million,isconsideredunrestricted.

TheDistrict’s financialposition is theproductofseveral financialtransactionsincludingthenetresultsof activities,the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciationofcapitalassets.

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Unaudited

SummaryofStatementofNetPositionThe following table presents a two‐year comparison of the District’s net position for the fiscal years endedJune30,2017and2016.

AsofJune30,2017

AsofJune30,2016 Change

PercentChange

AssetsCurrentassets 14,113,744$ 19,767,291$ (5,653,547)$ ‐28.6%Capitalassets 61,071,909 57,363,711 3,708,198 6.5%

Totalassets 75,185,653 77,131,002 (1,945,349) ‐2.5%

DeferredoutflowsofresourcesDeferredamountonrefunding 412,385 403,093 9,292 2.3%Deferredoutflowsrelatedtopensions 1,902,423 964,497 937,926 97.2%

Totaldeferredoutflowsofresources 2,314,808 1,367,590 947,218 69.3%

Totalassetsanddeferredoutflowsofresources 77,500,461$ 78,498,592$ (998,131)$ 66.7%

LiabilitiesCurrentliabilities 1,271,983$ 5,555,556$ (4,283,573)$ ‐77.1%Noncurrentliabilities 46,705,206 45,304,413 1,400,793 3.1%

Totalliabilities 47,977,189 50,859,969 (2,882,780) ‐5.7%

DeferredinflowsofresourcesDeferredinflowsrelatedtopensions 936,510 610,614 325,896 53.4%

NetpositionNetinvestmentincapitalassets 26,424,131 29,792,951 (3,368,820) ‐11.3%Restricted 582,761 1,114,274 (531,513) ‐47.7%Unrestricted 1,579,870 (3,879,216) 5,459,086 ‐140.7%

Totalnetposition 28,586,762 27,028,009 1,558,753 5.8%

Totalliabilities,deferredinflowsofresources,andnetposition 77,500,461$ 78,498,592$ (998,131)$ ‐1.3%

ThefollowingaresignificantcurrentyeartransactionsthathavehadanimpactontheStatementofNetPosition:

The decrease of $5.7million in current assets was primarily due to the decrease of cash in the BondBuildingFundforconstructionrelatedexpenditures.

The District had $5.7million in additions to capital assets, a priorperiod restatementof $0.7million, thatwereoffsetbydepreciationexpense of$2.7million,resulting inanoverall increaseincapitalassetsof$3.7million.

The decrease of $4.3million in current liabilities was primarily due to the decrease of constructioncontract payablebalanceof$3.4millionandaccountspayablebalanceof$0.9million.

The increase of $1.4million in noncurrent liabilities was primarily due toan increase in bondspayableof$0.6millionandnetpensionliabilityof$0.8.Foradditionalinformation,seefinancialstatementnote6.

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Unaudited

Changes innetposition. TheDistrict’s total revenues for the fiscal yearended June30,2017,were$15.2million.Thetotalcostofallprogramsandserviceswas$14.4million.Thefollowingtablepresents atwo‐yearcomparisonofthechangesinnetpositionforthefiscalyearsendedJune30,2017and2016.

YearEndedJune30,2017

YearEndedJune30,2016 Change

PercentChange

Revenues:Programrevenues:Chargesforservices 34,582$ 25,483$ 9,099$ 35.7%Operatinggrantsandcontributions 2,416,853 2,159,654 257,199 11.9%Generalrevenues:Taxes 12,406,747 12,150,078 256,669 2.1%Paymentinlieuoftaxes‐SRP 145,712 144,031 1,681 1.2%Stateaid 36,897 47,423 (10,526) ‐22.2%Investmentincome 72,365 118,273 (45,908) ‐38.8%Miscellaneous 123,571 56,163 67,408 100.0%

Totalrevenues 15,236,727 14,701,105 535,622 3.6%

Expenses:Instruction 6,109,450 5,463,737 645,713 11.8%Supportservices‐studentsandstaff 1,705,904 1,332,920 372,984 28.0%Supportservices‐administration 2,588,092 2,157,932 430,160 19.9%Operationandmaintenanceofplant 1,101,478 1,699,121 (597,643) ‐35.2%StudentTransportationservices 473,915 556,751 (82,836) ‐14.9%Operationofnon‐instructionalservices 855,505 606,116 249,389 41.1%Interestonlong‐termdebt 1,556,906 1,248,883 308,023 24.7%

Totalexpenses 14,391,250 13,065,460 1,325,790 10.1%

Changeinnetposition 845,477 1,635,645 (790,168) ‐48.3%

Beginningnetposition 27,741,285 25,392,364 2,348,921 9.3%

Endingnetposition 28,586,762$ 27,028,009$ 1,558,753$ 5.8%

Overall District‐widerevenuesincreased$536thousand,or3.6percent,whileexpensesincreased$1.3million,or10percent,resultinginanincreaseinnetpositionof$1.6million,or5.8percent.

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Unaudited

0.2%

15.9%

81.4%

1.0% 0.2%

0.5%0.8%

District‐Wide RevenuesFY 16‐17

Charges for services

Operating grants and contributions

Taxes

Payment in lieu of taxes ‐ SRP

State aid

Investment income

Miscellaneous

42.5%

11.9%

18.0%

7.7%

3.3%

5.9%

10.8%

District‐Wide ExpensesFY 16‐17

Instruction

Support services ‐ students and staff

Support services ‐ administration

Operation and maintenance of plant

Student Transportation services

Operation of non‐instructionalservices

Interest on long‐term debt

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Unaudited

$‐ $2 $4 $6 $8 $10 $12

Charges for services

Operating grants and contributions

Taxes

Payment in lieu of taxes ‐ SRP

State aid

Investment income

Miscellaneous

Mi l lions

District‐Wide Revenues2 year Comparison

FY 15‐16 FY 16‐17

$‐ $1 $2 $3 $4 $5 $6 $7

Instruction

Support services ‐ students and staff

Support services ‐ administration

Operation and maintenance of plant

Student Transportation services

Operation of non‐instructional services

Interest on long‐term debt

Mi l lions

District‐Wide Expenses2 year Comparison

FY 15‐16 FY 16‐17

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Unaudited

Governmental Activities. The Statement of Activities on page 25 shows the cost of program services and thecharges for services and grants offsetting those services. The following table displays information from theStatementofActivitiesgovernmentalactivities and comparesthenetcostof services fromoneyear to thenext. Thenetcostof services increasedby$1.1millionduetoexpenses reported in theStatementofActivities increasing$1.3million,whileprogramrevenuesdecreased$266thousand.

NetCostofServices

ExpenseFunctionAsofJune30,

2017AsofJune30,

2016 ChangePercentChange

Instruction (4,609,997)$ (4,216,543)$ (393,454)$ 9.3%Supportservices‐studentsandstaff (1,663,329) (1,277,723) (385,606) 30.2%Supportservices‐administration (2,523,500) (2,068,571) (454,929) 22.0%Operationandmaintenanceofplant (1,073,988) (1,628,760) 554,772 ‐34.1%Studenttransportationservices (473,915) (556,751) 82,836 ‐14.9%Operationofnon‐instructionalservices (38,180) 116,908 (155,088) ‐132.7%Interestonlong‐termdebt (1,556,906) (1,248,883) (308,023) 24.7%

Total (11,939,815)$ (10,880,323)$ (1,059,492)$ 9.7%

Theprogramexpensecategoriesshownabovearesummarizedbelow:

Instruction expenses are the cost of activities directly dealing with the teaching of students and theinteractionbetweenteacherandstudent.

Support services ‐ students and staff expenses include the cost of activities involved with assistingstaffwiththecontentandprocessofteachingtostudents.

Support services ‐ administration expenses are associated with the cost of administrative and financialsupervisionoftheDistrict.

Operation and maintenance of plant expenses involve keeping the school grounds, buildings andequipmentingoodworkingcondition.

Student transportation services expenses involves the conveying of students to and from school asprovided by state law.This includes trips between home and school and trips to schoolactivities.

Operationofnon‐instructional servicesexpenses are primarily the cost of food serviceoperations.

Interest on long‐term debt expenses are for the payment of interest on bonds issued by the Districtandlease‐purchaseagreement.

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FinancialAnalysisoftheDistrict’sFundsAsnotedearlier, theDistrictuses fundaccountingtoensureanddemonstratecompliancewithfinance‐relatedlegalrequirements.Governmental funds. The focus of the District’s governmental funds is to provide information on near‐ terminflows, outflows, and balances of expendable resources. Such information is useful in assessing the District’sfinancing requirements. In particular, unreserved fund balance may serve as a useful measureoftheDistrict’snetresourcesavailableforspendingattheendofthefiscalyear.ThefinancialperformanceoftheDistrictasawholeisreflectedinitsgovernmentalfunds.AstheDistrict completedthe year, its governmental funds reported a combined fund balance of $7.2 million, a decreaseof$2.3million,or24.4percent.The fund balances consisted of the following: $6.6 million is considered restricted. $650 thousand of totalgovernmentalfunds'fundbalancesareconsideredunassigned.The following table provides analysis of the District'smajor and non‐major fund balances and the total changeinfundbalancesfromtheprioryear.

GovernmentalFundBalances

FundAsofJune30,

2017AsofJune30,


GeneralFund 663,705$ 461,463$ 202,242$ 43.8%AdjacentWaysFund 2,092,499 1,990,458 102,041 5.1%BondBuildingFund 3,627,487 5,787,670 (2,160,183) ‐37.3%DebtServiceFund 268,243 677,661 (409,418) ‐60.4%OtherGovernmentalFunds 578,768 647,920 (69,152) ‐10.7%

Total 7,230,702$ 9,565,172$ (2,334,470)$ ‐24.4%

The following are significant current year transactions that have had an impact on the Governmental Funds'fundbalances:

The General Fund's fund balance increased $202 thousand, or 43.8 percent, primarily due to anincreaseofpropertytaxescollectedduringthecurrentyear.

The Adjacent Way Fund’s fund balance increased $102 thousand, or 5.1 percent, primarily due to areductionofexpendituresduringthecurrentyear.

TheBondBuilding Fund's fund balance decreased$2.2million,or37.3percent,primarilydue to capitaloutlayexpendituresinthecurrentyet.

TheDebtServiceFund'sfundbalanceincreased$409thousand,or60.4percent,duetofluctuations basedonprincipalandinterestpayments.

The Other Governmental Funds' fund balances overall decrease of $69 thousand, or 10.7 percent,wasprimarilyduetoanincreaseinexpendituresoverrevenuesduringthecurrentyear.

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MaintenanceandOperationFundBudgetaryHighlights

TheDistrict'sbudgetispreparedaccordingtoArizonalawandisbasedonthemodifiedaccrualbasisof accounting.The Maintenance and Operation Fund Budgetary Comparison Schedule is supplementary information and ispresentedon page68.Theadoptedand finalbudgetamountsas well as the variancesbetweenthefinalbudgetandtheactualexpendituresincurredarepresented.

Over the course of the year, the District revised theMaintenance andOperation Fund annual expenditurebudgetfor reclassification of salaries, benefits, and other expenditures across functional categories. The final budgetedexpendituresdecreasedonly$280thousand,or4.7percent,fromtheadoptedbudget.Theactualamountsexpended in theMaintenanceandOperationFundwere$112thousand,or2percent, less thanthe final budget. This was primarily due to the District budgetary planning to carry forward fundstothenextyearincaseofareductioninstatefundingweretooccur,andduetoanincreaseinbudgetcapacityasaresultofthesuccessfulpassingofProposition123(inflationlawsuitsettlementagreementelectionheldonMay17,2016).

MaintenanceandOperationFund–BudgettoActual

Expenditures FinalBudgetActual

Expenditures VariancePercentVariance

Instruction 2,472,478$ 2,422,311$ 50,167$ 2.1%Studentservices 425,269 418,248 7,021 1.7%Instructionservices 365,653 360,212 5,441 1.5%Generaladministrationservices 248,448 245,226 3,222 1.3%Schooladministrationservices 292,778 299,983 (7,205) ‐2.4%Centralandothersupportservices 741,149 713,217 27,932 3.9%Operationandmaintenanceofplant 710,470 737,907 (27,437) ‐3.7%Studenttransportation 353,220 300,421 52,799 17.6%

Total 5,609,465$ 5,497,525$ 111,940$ 2.0%

CapitalAssets

As of June 30, 2017, the District had invested $61 million in capital assets (net of accumulateddepreciation),including school buildings, athletic facilities, buses and other vehicles, computers and otherequipment. Totaldepreciationexpensefortheyearwas$2.7million.

The followingschedulepresentsatwo‐yearcomparisonofthecapitalassetbalances forthefiscalyears endedJune30,2017and2016.

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Unaudited

CapitalAssets(continued)

GovernmentalactivitiesAsofJune30,

2017AsofJune30,


Land 2,855,758$ 2,855,758$ ‐$ 0.0%Constructioninprogress 75,686 17,443,471 (17,367,785) 100.0%Buildingsandimprovements 60,771,840 39,458,956 21,312,884 54.0%Otherimprovements 7,938,238 6,712,608 1,225,630 18.3%Vehicles,furnitureandequipment 8,016,490 6,916,318 1,100,172 15.9%

Total 79,658,012$ 73,387,111$ 6,270,901$ 8.5%

Less:Accumulateddepreciation (18,586,103)$ (16,023,400)$ (2,562,703)$ 16.0%

Capitalassets,net 61,071,909$ 57,363,711$ 3,708,198$ 6.5%

The increase in capital assetsof $3.7million, or6.5percent,wasdue todepreciationexpenseof $2.6 million beingless than the net capital additions of $6.3 million. Additional information on the District’s capital assets canbefoundinfinancialstatementnote4.Long‐TermDebt

TheDistrictreported$46.7millioninlong‐termdebtfortheyearendedJune30,2017.

AsofJune30,2017

AsofJune30,2016 Change

PercentChange

Bondspayable 37,940,000$ 37,380,000$ 560,000$ 1.5%Discountonbonds (24,838) (26,908) 2,070 ‐7.7%Premiumonbonds 758,647 757,218 1,429 0.2%Compensatedabsences 390,243 301,018 89,225 29.6%Netpensionliability 7,641,154 6,893,085 748,069 10.9%

Total 46,705,206$ 45,304,413$ 1,400,793$ 3.1%

TheDistricthadthefollowingsignificanttransactionsregardinglong‐termdebt:

The increase in bonds payable was due the issuance of $7.6 million in School Improvement Bondsoffsetbyabondprincipalpaymentof$7.1million.Foradditionalinformationsee financialstatementnote6.

The increase in the premium on bonds was due to the premium associated with the current yearbondissuancebeingoffsetbytheamortizationofthebonds.

The increase in compensated absences of $89 thousand was due to the earning and use ofaccumulatedleavebalances.

The net pension liability increased $748 thousand due to deferred inflows of resources related topensionsexceedingpensionexpensesanddeferredoutflowsof resourcesrelatedtopensions duringthefiscalyear.Formoreinformationonnetpensionliabilityseefinancialstatementnote 8.

21


Unaudited

EconomicFactorsandNextYear’sBudgetandRates

Many factors were considered by the District’s administration during the process of developing the budgetforthenextfiscalyear(fiscalyear2017‐18).Theprimaryfactorsconsideredindevelopingfiscal year2017‐18'sbudgetweretheDistrict’sstudentpopulationandemployeesalaries.Alsoconsideredin thedevelopmentofthebudgetisthelocaleconomyandinflationofthesurroundingarea.

The following table presents a comparisonwith theMaintenance and Operation Fund's final budget for thisfiscalyear(fiscalyear2016‐17)andtheadoptedbudgetfornextfiscalyear(fiscalyear2017‐18).

GeneralFund:Expenditures:

FinalBudgetFY2016‐2017

AdoptedBudget2017‐

2018Increase(Decrease)

PercentChange

Regulareducation 4,155,809$ 4,011,165$ (144,644)$ ‐3.6%Specialeducation 1,048,357 1,078,339 29,982 2.8%Studenttransportationservices 353,084 359,428 6,344 1.8%K‐3readingprogram 52,217 47,702 (4,515) ‐9.5%

Total 5,609,467$ 5,496,634$ (112,833)$ ‐2.1%

Amounts available in the Maintenance and Operation Fund's fiscal year 2017‐18’s budget are $5.5 million, adecreaseof$112,833, or 2.1percent, which are relatively the same as the prior year. Propertytaxesandstateaidareexpectedtobetheprimaryfundingsourceoftheexpendituresforfiscal year2017‐18.The District's attendance has seen growth over the past five years. Average daily membership (ADM) has grownfrom757ADMinfiscalyear2012‐13to892ADMinfiscalyear2016‐17,anincreaseof135 or 17.8% percent. TheDistrict expects attendance to level out and remain in the same range or with moderate increases for thenextseveralyears.

FY 2012‐13 FY 2013‐14 FY 2014‐15 FY 2015‐16 FY 2016‐17

757 810 840 846 892

700

720

740

760

780

800

820

840

860

880

900

Average Daily Membership5 Year Comparison

CONTACTINGTHEDISTRICT’SFINANCIALMANAGEMENT

This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a generaloverviewoftheDistrict’sfinancesandtodemonstratetheDistrict’saccountabilityfortheresourcesitreceives.Ifyouhave questions about this report or need additional information, contact the Business Department, RiversideElementarySchoolDistrictNo.2,1414S.51stAve.,Phoenix,Arizona85043.

22

BASIC

FINANCIALSTATEMENTS

23

STATEOFARIZONA ExhibitA‐1RiversideElementarySchoolDistrictNo.2

StatementofNetPositionJune30,2017

GovernmentalActivities

AssetsCash,investments,andcashequivalents 7,694,307$Cashheldbypayingagent 6,139,434Receivables:Propertytaxes 170,023Other 23,600Duefromothergovernments 86,380

Capitalassets 79,658,012Less:accumulateddepreciation (18,586,103)

Totalassets 75,185,653

DeferredoutflowsofresourcesDeferredchargesondebtrefunding 412,385Deferredoutflowsrelatedtopensions 1,902,423

Totaldeferredoutflowsofresources 2,314,808

Totalassetsanddeferredoutflowsofresources 77,500,461$

LiabilitiesAccountspayable 80,347$Accruedpayrollandbenefits 113,939Contractspayable 393,373Accruedinterest 684,324NoncurrentliabilitiesDuewithin1year 5,728,730Dueinmorethan1year 40,976,476

Totalliabilities 47,977,189

DeferredinflowsofresourcesDeferredinflowsrelatedtopensions 936,510

Totaldeferredinflowsofresources 936,510

NetpositionNetinvestmentincapitalassets 26,424,131Restrictedfor:Debtservice 244,143Foodserivce 112,816Otherpurposes 225,802

Unrestricted 1,579,870

Totalnetposition 28,586,762

Totalliabilities,deferredinflowsofresources,andnetposition 77,500,461$

Theaccompanyingnotesareanintegralpartofthesefinancialstatements.

24

STATEOFARIZONA ExhibitA‐2

Functions/Programs ExpensesChargesforServices

OperatingGrantsand

ContributionsGovernmentActivities

GovernmentalActivities:Instruction 6,109,450$ ‐$ 1,499,453 (4,609,997)$Supportservices:Students 735,883 ‐ 18,366 (717,517)Instruction 970,021 ‐ 24,209 (945,812)Generaladministration 782,201 ‐ 19,522 (762,679)Schooladministration 386,382 ‐ 9,643 (376,739)

Centralservices 1,419,509 ‐ 35,427 (1,384,082)Operationandmaintenanceofplant 1,101,478 ‐ 27,490 (1,073,988)Studenttransportation 473,915 ‐ ‐ (473,915)Operationofnoninstructionalservices 855,505 34,582 782,743 (38,180)Interestandothercharges 1,556,906 ‐ ‐ (1,556,906)

Totalgovernmentalactivities 14,391,250$ 34,582$ 2,416,853$ (11,939,815)

GeneralRevenues:Taxes:Propertytaxes,leviedforoperatingprograms 5,554,507Propertytaxes,leviedfordebtservices 6,190,204Propertytaxes,leviedforcapitalprojects 662,036

Paymentinlieuoftaxes‐SRP 145,712Stateaid:Generalpurposes 36,897

Investmentincome 72,365Miscellaneous 123,571

Totalgeneralrevenues 12,785,292

Changeinnetposition 845,477

Netposition,beginning 27,028,009Netposition,restatement(note14) 713,276

Netposition‐asrestated 27,741,285

Netposition,ending 28,586,762$

Net(Expense)RevenueandChangesinNet

PositionProgramRevenues

FortheYearEndedJune30,2017StatementofActivities



25

GeneralFundAdjacentWays

FundBondBuilding

Fund

AssetsCash,investments,andcashequivalents 735,001$ 2,092,267$ 4,026,031$Cashheldbypayingagent ‐ ‐ ‐Receivables:Propertytaxes 108,248 4,551 ‐Other ‐ ‐ ‐Duefromothergovernments 42,012 ‐ ‐

Totalassets 885,261$ 2,096,818$ 4,026,031$

Liabilities,deferredinflowsofresources,andfundbalancesLiabilitiesAccountspayable 41,839$ ‐$ ‐$Accruedpayrollandbenefits 77,731 ‐ 5,171Contractspayable ‐ ‐ 393,373Bondspayable ‐ ‐ ‐Bondinterestpayable ‐ ‐ ‐

Totalliabilities 119,570 ‐ 398,544

DeferredinflowsofresourcesUnavailablerevenue‐propertytaxes 101,986 4,319 ‐

Totaldeferredinflowsofresources 101,986 4,319 ‐

FundbalancesSpendable:Restrictedfor:Debtservice ‐ ‐ ‐Capitalexpenditures ‐ 2,092,499 3,627,487Voterapprovedinitiatives ‐ ‐ ‐Foodservice ‐ ‐ ‐Instruction ‐ ‐ ‐Operationofnoninstructionalservices ‐ ‐ ‐

Unassigned 663,705 ‐ ‐

Totalfundbalances 663,705 2,092,499 3,627,487

Totalliabilities,deferredinflowsofresources,andfundbalances 885,261$ 2,096,818$ 4,026,031$


BalanceSheetGovernmentalFunds

June30,2017


26

ExhibitB‐1Page1of2

DebtServiceFund

OtherGovernmental

Funds Total

261,049$ 579,959$ 7,694,307$6,139,434 ‐ 6,139,434

53,284 3,940 170,023‐ 23,600 23,600‐ 44,368 86,380

6,453,767$ 651,867$ 14,113,744$

‐$ 38,508$ 80,347$‐ 31,037 113,939‐ ‐ 393,373

5,485,000 ‐ 5,485,000654,434 ‐ 654,434

6,139,434 69,545 6,727,093

46,090 3,554 155,949

46,090 3,554 155,949

268,243 ‐ 268,243‐ 233,538 5,953,524‐ 202,096 202,096‐ 120,195 120,195‐ 130 130‐ 36,816 36,816‐ (14,007) 649,698

268,243 578,768 7,230,702

6,453,767$ 651,867$ 14,113,744$


27


28

STATEOFARIZONA ExhibitB‐1RiversideElementarySchoolDistrictNo.2 Page2of2

AmountsreportedforgovernmentalactivitiesintheStatementofNetPositionaredifferentbecause:

Fundbalances‐totalgovernmentalfunds 7,230,702$

Capitalassets,netofaccumulateddepreciation,usedingovernmentalactivitiesarenotfinancialresourcesand,therefore,arenotreportedinthefunds. 61,071,909

Propertytaxesnotcollectedwithinsixtydaysafteryearendarenotconsidered"available"revenuesandareconsideredtobeunavailablerevenueinthefundfinancialstatements,butareconsideredrevenueintheStatementofActivities. 155,949

Long‐termliabilities,includingnetpensionliability,bondspayable,andcurrentandlongtermportionsofaccruedcompensatedabsencesarenotdueandpayableinthecurrentperiodand,therefore,arenotreportedasaliabilityinthefunds:

Bondspayable (32,455,000)Accruedinterestpayable (29,890)Unamortizeddiscount 24,838Unamortizedpremiums (758,647)Compensatedabsences (390,243)Netpensionliability (7,641,154)

Deferredoutflowsandinflowsofresourcesrelatedtopensionsanddeferredchargesorcreditsondebtrefundingsareapplicabletofuturereportingperiodsand,therefore,arenotreportedinthefunds:

Deferredoutflowsofresourcesrelatedtopensions 1,902,423Deferredinflowsofresourcesrelatedtopensions (936,510)Deferredamountonrefunding 412,385

Totalnetposition‐governmentalfunds 28,586,762$

June30,2017

GovernmentalFundsReconciliationoftheBalanceSheettotheStatementofNetPosition


29

GeneralFundAdjacentWays

FundBondBuilding

FundRevenuesPropertytaxes 5,529,337$ 210,935$ ‐$Intergovernmentalgrantsandaid:Federal 41,348 ‐ ‐State 55,112 ‐ ‐Local 10,319 ‐ 330

Chargesforservices ‐ ‐ ‐Paymentinlieuoftaxes‐SRP 65,423 2,553 ‐Investmentincome 3,831 11,852 ‐Miscellaneous 48,050 ‐ ‐Totalrevenues 5,753,420 225,340 330

ExpendituresCurrent:Instruction 2,401,347 ‐ 622,902Supportservices:Students 426,423 ‐ 143,257Instruction 366,416 ‐ 399,888Generaladminstration 250,382 ‐ 5,542Schooladministration 307,833 ‐ 34,258Centralandothersupportservices 740,575 ‐ 658,971Operationandmaintenanceofplant 781,546 ‐ ‐Studenttransportation 309,208 ‐ 2,148

Operationofnoninstructionalservices 6,508 ‐ 62,840Debtservice:Principal ‐ ‐ ‐Interest ‐ ‐ ‐Bondissuancecosts ‐ ‐ ‐

Capitaloutlay 152,863 123,299 5,305,707Totalexpenditures 5,743,101 123,299 7,235,513

Excess(deficiency)ofrevenuesoverexpenditures 10,319 102,041 (7,235,183)

Otherfinancingsources(uses)Transfersin 191,923 ‐ ‐Transfers(out) ‐ ‐ ‐Bondpremium ‐ ‐ ‐Bondproceeds ‐ ‐ 5,075,000Proceedsofrefundingbonds ‐ ‐ ‐Paymenttorefundedbondescrowagent ‐ ‐ ‐Totalotherfinancingsources(uses) 191,923 ‐ 5,075,000

Netchangeinfundbalances 202,242 102,041 (2,160,183)

Fundbalances‐beginning 461,463 1,990,458 5,787,670

Fundbalances‐endofyear 663,705$ 2,092,499$ 3,627,487$

FortheYearEndedJune30,2017GovernmentalFunds

StatementofRevenues,Expenditures,andChangesinFundBalancesRiversideElementarySchoolDistrictNo.2

STATEOFARIZONA


30

ExhibitB‐2Page1of2

DebtServiceFund

OtherGovernmental

Funds Total

6,184,418$ 457,671$ 12,382,361$

223,553 1,742,564 2,007,465‐ 376,337 431,449‐ 4,187 14,836‐ 34,582 34,582

72,384 5,352 145,71255,813 869 72,36572,223 3,298 123,571

6,608,391 2,624,860 15,212,341

‐ 1,253,055 4,277,304

‐ 52,822 622,502‐ 193,683 959,987‐ 18,856 274,780‐ 37,860 379,951‐ 6,968 1,406,514‐ 11,481 793,027‐ 19,585 330,941‐ 757,735 827,083

5,485,000 ‐ 5,485,0001,501,170 ‐ 1,501,170

74,024 ‐ 74,024‐ 150,044 5,731,913

7,060,194 2,502,089 22,664,196

(451,803) 122,771 (7,451,855)

‐ ‐ 191,923‐ (191,923) (191,923)

138,775 ‐ 138,775‐ ‐ 5,075,000

2,565,000 ‐ 2,565,000(2,661,390) ‐ (2,661,390)

42,385 (191,923) 5,117,385

(409,418) (69,152) (2,334,470)

677,661 647,920 9,565,172

268,243$ 578,768$ 7,230,702$


31


32

STATEOFARIZONA ExhibitB‐2RiversideElementarySchoolDistrictNo.2 Page2of2

AmountsreportedforgovernmentalactivitiesintheStatementofActivitiesaredifferentbecause:

Netchangeinfundbalances‐totalgovernmentalfunds (2,334,470)$

Governmentalfundsreportcapitaloutlaysasexpenditures.However,intheStatementofActivities,thecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedasdepreciationexpense:

Capitaloutlay 5,731,913Depreciationexpense (2,726,533)

IntheStatementofActivities,onlythegain/lossonthesaleofcapitalassetsisreported,whereasinthegovernmentalfunds,theproceedsfromthesaleincreasefinancialresources.Thus,thechangeinnetpositiondiffersfromthechangeinfundbalancebythebookvalueofcapitalassetssold. (10,458)

Districtpensioncontributionsarereportedasexpendituresinthegovernmentalfundswhenmade.However,theyarereportedasdeferredoutflowsofresourcesintheStatementofNetPositionbecausethereportednetpensionliabilityismeasuredayearbeforetheDistrict'sreportdate.Pensionexpense,whichisthechangeinthenetpensionliabilityadjustedforchangesindeferredoutflowsandinflowsofresourcesrelatedtopensions,isreportedintheStatementofActivities:

Districtpensioncontributions 528,148Pensionexpense (664,187)

RevenuesintheStatementofActivitiesthatdonotprovidecurrentfinancialresourcesarenotreportedasrevenuesinthefunds:

Changeinunavailablepropertytaxes (24,386)

Debtproceedsprovidecurrentfinancialresourcestogovernmentalfunds,butissuingdebtincreaseslong‐termliabilitiesintheStatementofNetPosition.Repaymentofdebtprincipalisanexpenditureinthegovernmentalfunds,buttherepaymentreduceslong‐termliabilitiesintheStatementofNetPosition.Also,governmentalfundsreporttheeffectofpremiums,discounts,andsimilaritemswhendebtisissued,whereastheseamountsareamortizedintheStatementofActivities:

Bondproceeds (7,640,000)Principalpaymentsonbonds 8,146,390Bondpremiumcapitalized (138,775)Currentyearamortizationofbondpremium 119,575Currentyearamortizationofbonddiscount (2,070)Amortizationofdeferredchargesonbondrefunding (50,445)

Inthegovernmentalfunds,expendituresarenotrecognizedfortransactionsthatarenotnormallypaidwithexpendableavailableresources.IntheStatementofActivitiesexpensesarereportedregardlessofwhenthefinancialresourcesareavailable:

Increaseincompensatedabsences (89,225)

Changeinnetpositionofgovernmentalactivities 845,477$

ReconciliationoftheStatementofRevenues,Expenditures,andChangesinFundBalancesofGovernmentalFundstotheStatementofActivities



33


34

STATEOFARIZONA ExhibitC‐1

StudentActivities

EmployeeInsuranceProgram Total

CurrentAssetsCashandcashequivalents 9,090$ 245,681$ 254,771$

Totalassets 9,090$ 245,681$ 254,771$

CurrentLiabilitiesDuetostudentorganizations 9,090$ ‐$ 9,090$Depositsheldforothers ‐ 245,681 245,681

Totalliabilities 9,090$ 245,681$ 254,771$

StatementofFiduciaryAssetsandLiabilities

June30,2017


AgencyFunds


35


NotestotheFinancialStatementsJune30,2017

NOTE1. SummaryofSignificantAccountingPoliciesRiverside Elementary School District No. 2 “the District” accounts for its financial transactions inaccordance with the policies and procedures of the Arizona Department of Education’s UniformSchoolFinancialReportingManual. The financial statements of theDistrict have been prepared inconformity with accounting principles applicable to governmental units adopted by theGovernmentalAccountingStandardsBoards(GASB).DuringtheyearendedJune30,2017,theDistrictadoptedGASBStatementsNo.73,AccountingandFinancialReporting forPensionsandRelatedAssetsthatarenotwithintheScopeofGASBStatement68,andAmendments toCertainProvisionsofGASBStatements67and68 (partial),No.74,FinancialReporting for Postemployment Benefit Plans Other Than Pension Plans, No. 77, Tax AbatementDisclosures, No. 78 Pensions Provided through Certain Multiple‐Employer Defined Benefit PensionPlans, and No. 80, Blending Requirements for Certain Component Units – an amendment of GASBStatementNo. 14. These five Statements are required to be implemented as of June 30, 2017, ifapplicable.GASBStatementNo.73establishesaccountingandfinancialreportingstandardsfordefinedbenefitpensions anddefined contributionpensions that arenot provided to employeesof state and localgovernment employers and are not within the scope of Statement 68. A portion of thispronouncementwaseffectiveandwasimplementedfortheJune30,2016yearend,andaportioniseffectiveforJune30,2017yearend.EffectiveforJune30,2017aretheprovisionsofthestatementthat address accounting and financial reporting by employers and governmental nonemployercontributingentitiesforpensionsthatarenotwithinthescopeofStatement68.Thisdoesnothaveamaterialeffectonthe financialstatementsoftheDistrict,as itspensionplan iswithinthescopeofStatement68.The objective of GASB Statement No. 74 is to improve the usefulness of information aboutpostemploymentbenefitsotherthanpensions(otherpostemploymentbenefitsorOPEB)includedinthegeneralpurposeexternalfinancialreportsofstateandlocalgovernmentalOPEBplansformakingdecisionsandassessingaccountability.ThisStatementresults fromacomprehensivereviewof theeffectiveness of existing standards of accounting and financial reporting for all postemploymentbenefits (pensions and OPEB) with regard to providing decision‐useful information, supportingassessments of accountability and interperiod equity, and creating additional transparency. ThisStatement does not affect the District’s financial statements directly; however, the effects on theDistrict’s OPEB plan, administered through the Arizona State Retirement System, will be seen infutureperiods.

GASBStatementNo. 77 is intended to improve theusefulnessof financial statementspreparedbystateand local governments –whichare intended, amongother things, toassistusersof financialstatementsinassessing(1)whetheragovernment’scurrent‐yearrevenuesweresufficienttopayforcurrent‐yearservices(interperiodequity),(2)whetheragovernmentcompliedwithfinance‐relatedlegalandcontractualobligations,(3)whereagovernment’sfinancialresourcescamefromandhowituses them, and (4) a government’s financial position and economic condition and how they havechangedaftertime–byincludinginformationaboutcertainlimitationsonagovernment’sabilitytoraise resources. This includes limitations on revenue‐raising capacity resulting from governmentprogramsthatusetaxabatementstoinducebehaviorbyindividualsandentitiesthatisbeneficialtothegovernmentoritscitizens–suchastheencouragementofeconomicdevelopment.Forfinancialreportingpurposes,thisStatementdefinesataxabatementasresultingfromanagreementbetweenagovernmentandan individualorentity inwhichthegovernmentpromisesto forgotaxrevenuesand the individual or entity promises to subsequently take a specific action that contributes toeconomicdevelopmentorotherwisebenefitsthegovernmentoritscitizens.

36



NOTE1. SummaryofSignificantAccountingPolicies(continued)

These tax abatements may affect the financial position of the government and its results ofoperations,includingitsabilitytoraiseresourcesinthefuture.StatementNo.77requiresdisclosureof tax abatement information about (1) a reporting government’s own tax abatement agreementsand(2)thosethatareenteredintobyothergovernmentsthatreducethereportinggovernment’staxrevenues.This Statement requires governments that enter into tax abatement agreements to disclose thefollowinginformationabouttheagreements:

Briefdescriptive information, suchas the taxbeingabated, the authorityunderwhich taxabatements are provided, eligibility criteria, the mechanism by which taxes are abated,provisions for recapturing abated taxes, and the types of commitments made by taxabatementrecipients;

Thegrossdollaramountoftaxesabatedduringtheperiod;

Commitmentsmadebyagovernment,otherthantoabatetaxes,aspartofataxabatementagreement.

Fortaxabatementagreementsenteredintobyothergovernments,thefollowingshouldbedisclosed:

Thenamesofthegovernmentsthatenteredintotheagreements;

Thespecifictaxesbeingabated;and

Thegrossdollaramountoftaxesabatedduringtheperiod.

The objective of GASB Statement No. 78 is to address a practice issue regarding the scope andapplicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue isassociatedwithpensionsprovidedthroughcertainmultiple‐employerdefinedbenefitpensionplansand to state or local governmental employerswhose employees are providedwith such pensions.This Statement amends the scope and applicability of Statement 68 to exclude certain pensionsprovidedtoemployeesof stateor localgovernmentalemployers. TheDistrict’spensionplandoesnotmeetthecriteriaforexclusion.TheobjectiveofGASBStatementNo.80istoimprovefinancialreportingbyclarifyingthefinancialstatement presentation requirements for certain component units. This Statement amends theblending requirements established in paragraph 53 of Statement No. 14, The Financial ReportingEntity,asamended.This Statement amends the blending requirements for the financial statementpresentationofcomponentunitsofallstateandlocalgovernments.Theadditionalcriterionrequiresblending of a component unit incorporated as a not‐for‐profit corporation in which the primarygovernment is the sole corporatemember. The additional criterion does not apply to componentunits included in the financial reporting entity pursuant to the provisions of Statement No. 39,DeterminingWhetherCertainOrganizationsAreComponentUnits.

37




A. ReportingEntity

The District is a special‐purpose government that a separately elected governing bodygoverns. It is legally separate from and fiscally independent of other state and localgovernments. Furthermore, there are no component units combinedwith the District forfinancialstatementpresentationpurposes,anditisnotincludedinanyothergovernmentalreportingentity.Consequently,theDistrict’sfinancialstatementspresentonlytheactivitiesof those organizational entities for which its elected governing board is financiallyaccountable.

TheGoverningBoard isorganizedunder§15‐321of theArizonaRevisedStatutes (A.R.S.).Management of the District is independent of other state or local governments. ThemembershipoftheGoverningBoardconsistsofthreememberselectedbythepublic.Underexistingstatutes, theGoverningBoard’sdutiesandpowers include,but arenot limited to,the acquisition, maintenance and disposition of school property; the development andadoptionofaschoolprogram;andtheestablishment,organizationandoperationofschools.The Board also has broad financial responsibilities, including the approval of the annualbudget, and the establishment of a system of accounting and budgetary controls. TheDistrict's major operations include education, student transportation, food service, andmaintenanceandconstructionofDistrictfacilities.Inevaluatinghowtodefine theDistrict, for financialreportingpurposes,managementhasconsideredallpotentialcomponentunits.Thedecisiontoincludeanypotentialcomponentunits in the financial reportingentitywasmadebyapplying the criteria set forth inGASBStatementsNo.14,asamendedbyGASBStatementNo.39,GASBStatementNo.61,andGASBStatement No. 80. Blended component units, although legally separate entities, are insubstancepartofthegovernment’soperations.Eachdiscretelypresentedcomponentunitisreported in a separate column in the government‐wide financial statements to emphasizethatitislegallyseparatefromthegovernment.The basic‐but not the only‐criterion for including a potential component unit within thereportingentityisthegoverningbody’sabilitytoexerciseoversightresponsibility.Themostsignificantmanifestationofthisabilityisfinancialinterdependency.Othermanifestationsoftheabilitytoexerciseoversightresponsibilityinclude,butarenotlimitedto,theselectionofgoverning authority, the designation of management, the ability to significantly influenceoperations, and accountability for fiscal matters. A second criterion used in evaluatingpotential component units is the scope of public service. Application of this criterioninvolvesconsideringwhethertheactivitybenefitsthegovernmentand/oritscitizens.Athirdcriterionusedtoevaluatepotentialcomponentunitsforinclusionorexclusionfromthereportingentityistheexistenceofspecialfinancingrelationships,regardlessofwhetherthe government is able to exercise oversight responsibilities. Finally, the nature andsignificance of a potential component unit to the primary government could warrant itsinclusion within the reporting entity. Based upon the application of these criteria, theDistrict has no component units, and is not a component unit of another governmentalagency.Governmentalactivitiesnormallyaresupportedbytaxesand intergovernmentalrevenues,andarereportedseparatelyfrombusiness‐typeactivities,whichrelytoasignificantextentonfeesandchargestoexternalusersforsupport.TheDistrictdoesnothaveanybusiness‐typeactivities.

38




B. BasisofPresentation(continued)

Thebasicfinancialstatementsincludebothgovernment‐widestatementsandfundfinancialstatements. The government‐wide statements focus on the District as a whole, while thefund financial statements focus on major funds. Each presentation provides valuableinformationthatcanbeanalyzedandcomparedbetweenyearsandbetweengovernmentstoenhancetheinformation’susefulness.Government‐wide statements: District‐wide financial statements are prepared using theeconomicresourcesmeasurement focusandtheaccrualbasisofaccounting.Theapproachdiffers from the manner in which governmental fund financial statements are prepared.Governmental fund financial statements, therefore, include a reconciliation with briefexplanationstobetteridentifytherelationshipbetweenthedistrict‐widestatementsandthestatementsforthegovernmentalfunds.These statements report the financial activities of the overall government, except forfiduciary activities. Eliminations have been made to minimize the effect of the interfundactivities.The Statement of Activities presents a comparison between direct expenses and programrevenues for each function of the District's governmental activities. Direct expenses arethosethatarespecificallyassociatedwithaprogramorfunctionand,therefore,areclearlyidentifiable to a particular function. The District does not allocate indirect expenses toprogramsorfunctions.Programrevenuesincludechargespaidbytherecipientofthegoodsor services offered by the program, and grants and contributions that are restricted tomeeting the operational or capital requirements of a particular program. Property taxes,stateaid,andinvestmentearningsarerevenuesthatarenotclassifiedasprogramrevenuesand are reported as general revenues. The comparison of direct expenses with programrevenues identifies the extent to which each governmental function is self‐financing ordrawsfromthegeneralrevenuesoftheDistrict.Fund financial statements: Governmental fund financial statements separately reportdetailedinformationabouttheDistrictinthegovernmentalandfiduciaryfundseventhoughthe fiduciary funds are excluded from the district‐wide financial statements. The focus ofgovernmental fund financial statements is onmajor funds rather than reporting funds bytype. Each major fund is reported in a separate column. Other governmental funds areaggregated and reported in a single column. Because the focus of governmental fundfinancial statements differs from the focus of district‐wide financial statements, areconciliationispresentedwitheachofthegovernmentalfundfinancialstatements.TheDistrictreportsthefollowingmajorgovernmentalfunds:

TheGeneralFundistheDistrict’sprimaryoperatingfund.Itaccountsforallfinancialresources used for maintenance and operation, except those required to beaccountedforandreportedinanotherfund.The Adjacent Ways Fund is a capital projects fund that accounts for restrictedrevenues(largelypropertytaxes)receivedtofinancesuchimprovementsaspublicstreetsoralleysadjacenttoschoolproperty.

39




B. BasisofPresentation(continued)

TheBondBuildingFundisacapitalprojectsfundthataccountsformoniesreceivedfromDistrictbondissuesthatareusedtoacquiresites,constructorrenovateschoolbuildings, supply school buildings with furniture and equipment, improve schoolgroundsandpurchasepupiltransportationvehicles.The Debt Service Fund accounts for the accumulation of resources for, and thepaymentoflong‐termdebtprincipal,interestandrelatedcosts.

Additionally,theDistrictreportsthefollowingfundtype:

Theagency funds account forassetsofothers forwhich theDistrictanagent.TheDistrict maintains two agency funds to account for student club activities andemployeewithholdings.TheStudentActivitiesFundaccountsformoniesraisedbystudents to finance student clubs, and the Employee Insurance ProgramWithholdings Fund accounts for unremitted payroll deductions for employeeinsurance,retirementbenefitsandtaxwithholdingstemporarilyheldbytheDistrict.

C. MeasurementFocusandBasisofAccounting

Government‐wideFinancialStatements: The government‐wide financial statements arepresented using the economic resources measurement focus and the accrual basis ofaccounting.Theagencyfundsarecustodialinnatureanddonothaveameasurementfocusbututilizetheaccrualbasisofaccountingforreportingitsassetsandliabilities.Revenuesarerecorded when earned, and expenses are recorded at the time liabilities are incurred,regardless of when the related cash flows take place. Property taxes are recognized asrevenue in the year for which they are levied. Grants and donations are recognized asrevenue as soon as all eligibility requirements the provider imposed have beenmet. As ageneral rule the effect of internal activity has been eliminated from the government‐widefinancialstatements.Underthetermsofgrantagreements,theDistrictfundscertainprogramsbyacombinationofgrantsandgeneralrevenues.Therefore,whenprogramexpensesareincurred,thereareboth restricted and unrestricted resources available to finance the program. The Districtappliesgrantresourcestosuchprogramsbeforeusinggeneralrevenues.Fund Financial Statements: Governmental funds in the fund financial statements arereportedusingthecurrentfinancialresourcesmeasurementfocusandthemodifiedaccrualbasis of accounting. Under thismethod, revenues are recognizedwhen they become bothmeasurableandavailable.TheDistrictconsidersallrevenuesreportedinthegovernmentalfundstobeavailableiftherevenuesarecollectedwithin60daysafteryear‐end.The District’s major revenue sources that are susceptible to accrual are property taxes,tuition, intergovernmental grants and aids, and investment earnings. Expenditures arerecordedwhen the related fund liability is incurred, except for claims and judgments andcompensatedabsences,whicharerecognizedasexpenditurestotheextenttheyaredueandpayable. General capital asset acquisitions are reported as expenditures in governmentalfunds.Issuancesofgenerallong‐termdebtandacquisitionsundercapitalleaseagreementsarereportedasotherfinancingsources.

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D. ExpensesandExpendituresProperty taxes, stateaid, and investment incomeassociatedwith the current fiscal periodareallconsideredtobesusceptibletoaccrualandsohavebeenrecognizedasrevenuesofthe current fiscalperiod.Food servicesandmiscellaneous revenuesarenot susceptible toaccrualbecausegenerallytheyarenotmeasurableuntilreceivedincash.Grantsandsimilarawards are recognized as revenue as soon as all eligibility requirements imposed by thegrantororproviderhavebeenmet.Using the accrual basis of accounting, expenses are recognized at the time a liability isincurred.Inthemodifiedaccrualbasisofaccounting,expendituresaregenerallyrecognizedintheaccountingperiodinwhichtherelatedfundliabilityisincurred,asundertheaccrualbasisofaccounting.However,underthemodifiedaccrualbasisofaccounting,expendituresrelated to compensated absences and claims and judgments, are recorded only whenpayment is due. Bond payments, including interest due July 1, 2016, were accrued asresources from the current yearwere used for the payments. Allocations of cost, such asdepreciation and amortization, are not recognized in the governmental funds.When bothrestrictedandunrestrictedresourcesareavailable foruse, it is theDistrict’spolicy touserestrictedresourcesfirst,thenunrestrictedresourcesastheyareneeded.

E. PaymentinLieuofTaxes‐SRPPaymentsreceivedfromtheSaltRiverProjectinlieuoftaxesitwouldhavehadtopayhaditspropertyorothertaxbasebeensubjecttotaxationonthesamebasisasprivatelyownedproperty.Suchrevenuewouldincludepaymentsmadeforprivatelyownedpropertythatisnot subject to taxation on the same basis as other privately owned property because ofactionbythelocalgovernmentalunit.

F. InvestmentEarningsInvestmentearningsiscomposedofinterest,dividends,andnetchangesinthefairvalueofapplicableinvestments.

G. PropertyTaxCalendarProperty tax leviesareobtainedbyapplying tax ratesagainst either theprimaryassessedvaluationorthesecondaryassessedvaluation.Primaryandsecondaryvaluationcategoriesare composed of the exact same properties. However, the primary category limits theincreaseinpropertyvaluesto10percentfromthepreviousyear,whilethereisnolimittotheincreaseinpropertyvaluesforsecondaryvaluation.Overrideanddebtservicetaxratesare applied to secondary assessed valuation and all other tax rates are applied to theprimaryassessedvaluation.The County Treasurer is responsible for collecting property taxes for all governmentalentitieswithintheCounty.TheCountyleviesrealandpersonalpropertytaxesonorbeforethethirdMondayinAugustthatbecomedueandpayableintwoequalinstallments.ThefirstinstallmentisdueonthefirstdayofOctoberandbecomesdelinquentafterthefirstbusinessdayofNovember.Thesecondinstallment isdueonthefirstdayofMarchof thenextyearandbecomesdelinquentafterthefirstbusinessdayofMay.Thebillingsareconsideredpastdue after these dates, at which time the applicable property is subject to penalties andinterest.

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G. PropertyTaxCalendar(continued)Thecountyalso leviesvariouspersonalproperty taxesduring theyear,whicharedue thesecondMondayofthemonthfollowingreceiptofthetaxnotice,andbecomedelinquent30daysthereafter.Pursuant toA.R.S., a lienagainstassessed real andpersonalpropertyattacheson the firstday of January preceding assessment and levy; however according to case law, anenforceablelegalclaimtotheassetdoesnotarise.Property tax receivables are reported at full value as they are considered 100 percentcollectibleduetothecountyattachingalienagainstallamountspastdueasnotedabove.

H. FederalRevenueSourcesTheDistrictreceivesfederalawardsfortheenhancementofvariouseducationalprograms.Federal awards generally received based on applications submitted to, and approved by,various granting agencies. For federal awards inwhich a claim to these grant proceeds isbased on incurring eligible expenditures, revenue is recognized to the extent that eligibleexpenditureshavebeenincurred.

I. CashandInvestments

A.R.S. require theDistrict to deposit certain cashwith the County Treasurer. That cash ispooledbytheCountyTreasurerforinvestmentpurposes.Interestearnedfrominvestmentspurchased with pooledmonies is allocated to each of the District’s funds based on theiraveragebalances.All investments are stated at fair value. For additional information regarding investmentsseefinancialstatementnote2.

J. CapitalAssetsCapitalassets,whichincludeland,constructioninprogress,otherimprovements,buildingsandimprovements,andvehicles,furniture,andequipmentarereportedinthegovernment‐widefinancialstatements.Suchassetsarerecordedathistoricalcost,orestimatedhistoricalcost if actual historical cost is not available. Donated capital assets are recorded at theestimated fairmarketvalueat thedateofdonation.Thecostsofnormalmaintenanceandrepairs that do not add to the value of the asset ormaterially extend assets lives are notcapitalized. The capitalization thresholds (the dollar value abovewhich asset acquisitionsareaddedtothecapitalassetaccounts)are$5,000forallassets.

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J. CapitalAssets(continued)

Capitalassets aredepreciatedusing thestraight‐linemethodover the followingestimatedusefullives: Assets Years Buildingsandimprovements 20‐50 Otherimprovements 5‐40 Vehicles,furnitureandequipment 5‐15

K. DeferredOutflowsandInflowsofResources

The statement of net position and balance sheet include separate sections for deferredoutflows of resources and deferred inflows of resources. Deferred outflows of resourcesrepresent a consumption of net position that applies to future periods that will berecognized as an expense or expenditure in future periods. Deferred inflows of resourcesrepresentanacquisitionofnetpositionor fundbalance thatapplies to futureperiodsandwillberecognizedasarevenueinfutureperiods.Inaddition,delinquentpropertytaxesthatwillnotbecollectedwithinthe60dayavailabilityperiodarereportedasdeferredinflowsofresourcesinthegovernmentalfundfinancialstatements.

L. PensionsFor purposes of measuring the net pension liability, deferred outflows of resources anddeferred inflowsofresourcesrelatedtopensions,andpensionexpense, informationaboutthe pension plan’s fiduciary net position and additions to/deductions from the plan’sfiduciarynetpositionhavebeendeterminedonthesamebasisastheyarereportedbytheplan.Forthispurpose,benefitpayments(includingrefundsofemployeecontributions)arerecognizedwhen due and payable in accordancewith the benefit terms. Investments arereportedatfairvalue.

M. NetPosition

Inthedistrict‐widefinancialstatementsnetpositionisreportedinthreecomponents:1)netinvestment in capital assets; 2) restricted; and 3) unrestricted. Net investment in capitalassets consists of capital assets (net of accumulated depreciation) reduced by theoutstandingbalancesofanybonds,capitalleasesorconstructioncontractpayablesusedtoacquire,constructorimprovetheseassets.TheDistrictincludesunspentbondproceedsintheamountof$4,026,031inthecalculationofnetinvestmentincapitalassets.Restrictednetposition is reportedwhen constraints placedon thenet positionuse are either externallyimposedby creditors (suchas throughdebt covenants), grantors, contributors, or lawsorregulations of other governments or by enabling legislation.Unrestricted net position arenet positions that do not meet the definition of either of the first two categories of netposition.

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N. FundBalanceClassificationsGASB Statement No. 54, Fund BalanceReporting and Governmental Fund TypeDefinitionsprovidesmoreclearlydefinedfundbalancecategoriestomakethenatureandextentoftheconstraints placed on a government’s fund balance more transparent. The governmentalfunds’ fundbalancesarereportedseparatelywithinclassificationsbasedonahierarchyoftheconstraintsplacedonthoseresources’use.Theclassificationsarebasedontherelativestrength of the constraints that control how the specific amounts can be spent. Theclassifications are nonspendable, restricted, and unrestricted, which includes committed,assigned,andunassignedfundbalanceclassifications.The nonspendable fund balance classification includes amounts that cannot be spentbecausetheyareeithernotinspendableform,suchasinventoriesandprepaidexpenses,orarelegallyorcontractuallyrequiredtobemaintainedintact.

Restrictedfundbalancesarethosethathaveexternallyimposedrestrictionsontheirusageby creditors (such as through debt covenants), grantors, contributors, or laws andregulations of other governments or imposed by law through constitutional provisions orenablinglegislation.Theunrestrictedfundbalancecategoryiscomposedofcommitted,assigned,andunassignedresources.Committedfundbalanceareamountsthatcanonlybeusedforspecificpurposespursuanttoconstraintsimposedbytheformalactionofthegoverningboard.Theseamountscannotbeused for any other purposes unless the governing board removes or changes the specificpurposebytakingthesamekindofformalactionpreviouslyusedtocommittheseamounts.Adoptionoftheannualbudgetdoesnotconstituteacommitmentasappropriationslapseatyearendwithoutgoverningboardaction.Thisalso includescontractualobligations to theextent that existing resources in the fund have been specifically committed for use insatisfyingthosecontractualrequirements.

AssignedfundbalanceareamountsthatareconstrainedbytheDistrict’s intenttobeusedfor specific purposes, but are neither restricted nor committed. The intent should beexpressed by the governing board or body or official to which the governing board hasdelegated theauthority toassignamounts tobeused for specificpurposes.Assigned fundbalanceingovernmentalfunds,otherthanthegeneralfund,includesallspendableamountsthatarenotrestrictedorcommitted,ifthatamountispositive.

Theunassignedfundbalanceistheresidualclassificationforthegeneralfundandincludesallspendableamountsnotreportedintheotherclassifications.Thegeneralfundistheonlyfund thatmayreportapositiveunassigned fundbalanceamount.Forgovernmental fundsother than the general fund, negative fund balances are reported here if restricted,committed,orassignedamountsexceedtotalspendablefundbalance.Whenanexpenditureisincurredthatcanbepaidfromeitherrestrictedorunrestrictedfundbalances,itistheDistrict’spolicytouserestrictedfundbalancefirst.ItistheDistrict’spolicyto use committed amounts first when disbursing unrestricted fund balances, followed byassignedamounts,andlastlyunassignedamounts.

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O. CompensatedAbsencesCompensated absences consists of vacation and sick leave employees earned based onservicesalreadyrendered.Professionalstaff(12monthadministrators)earnvacationinaccordwiththeprovisionsoftheirrespectiveemploymentagreements,withamaxaccumulationofupto25days.UponleavingtheDistrict,theemployeeisentitledtocompensationofunusedvacationdays(maxof 25 days) at a rate equal to the current daily rate of pay for the respective employee.Supportstaffearnvacationattherateof10workingdaysperfiscalyearduringthefirst5yearsofemployment,accumulabletoamaximumof20days.Supportstaffwithmorethan5years employment, earn vacation at the rate of 15 days per fiscal year, accumulable to amaximumof30days.UponleavingtheDistrict,theemployeeisentitledtocompensationofunusedvacationdaysatarateequaltotheemployee’sregulardailyrateofpay.

Employeesmay accumulate an unlimited number of sick leave hours. Each staff membershallbecreditedwithasickleaveallowanceattherateof1daypermonthupto10or12days,determinedbythenumberofmonthsemployed;12monthemployeereceives12days,10month employees receive 10 days. Upon retirement or voluntary termination in goodstanding,anemployeewith5ormoreyearsofservicetotheDistrictshallbecompensatedforunusedaccumulatedsickleaveinaccordancewiththefollowingprovisions: 5to9yearsofservice–½oftheper‐diemofthethencurrentsteprateofpayforthe

employee’s position and individual salary classification times the number of unusedaccumulatedsickleavedays.

10ormoreyearsofservice–¾oftheper‐diemofthethencurrentsteprateofpayfortheemployee’spositionandindividualsalaryclassificationtimesthenumberofunusedaccumulatedsickleavedays

The noncurrent compensated absences liability consists of the estimated amounts duewithin one year and the amounts due after one year, including related benefits, foraccumulated sick leave and vacation are reported on the government‐wide financialstatements. A liability for these amounts, including related benefits, is reported ingovernmental fundsonly if theyhavematured, forexample,asa resultofemployee leave,resignationsandretirements.Generally,resourcesfromtheGeneralFundareusedtopayforcompensatedabsences.

P. Estimates

The preparation of the financial statements in conformity with accounting principlesgenerallyacceptedintheUnitedStatesofAmericarequiresmanagementtomakeestimatesand assumptions that affect the amounts reported in the financial statements andaccompanyingnotes.Actualresultsmaydifferfromthoseestimates.

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NOTE2. DepositsandInvestmentsArizonaRevisedStatutesrequiretheDistricttodepositallcashwiththeCountyTreasurer,exceptasdiscussedbelow.CashwiththeCountyTreasurerispooledforinvestmentpurposes,exceptforcashinthebondbuildinganddebtservicefunds,whichmaybeinvestedseparately.Statute authorizes the District to separately invest monies of the bond building and debt servicefundsintheStateTreasurer’sinvestmentpool,obligationsissuedorguaranteedbytheUnitedStatesoranyofitsagenciesorinstrumentalities,specifiedstateandlocalgovernmentbondsandnotes,andinterest‐bearingsavingsaccountsorcertificatesofdeposit.Statute authorizes theDistrict to depositmonies of the auxiliary operations and student activitiesfundsinbankaccounts.TheDistrictmayalsoinvestthesemonies.Inaddition,statuteauthorizestheDistricttomaintainvariousbankaccountssuchasclearingaccountstotemporarilydepositreceiptsbeforetheyaretransmittedtotheCountyTreasurer,revolvingaccountstopayminordisbursements,andwithholdingsaccountsfortaxesandemployeeinsuranceprograms.Someofthesebankaccountsmay be interest bearing. Statutes require collateral for deposits at 102 percent of all deposits notcoveredbyfederaldepositoryinsurance.Statutedoesnot includeanyrequirementsforcreditrisk,concentrationofcreditrisk,interestraterisk,orforeigncurrencyrisk.CashHeldbytheDistrictCustodialCreditRisk–Deposits.Custodialcreditriskistheriskthatintheeventofabankfailure,theDistrict’sdepositsmaynotbereturnedto it. Asof June30,2017theDistrict’scarryingamountofdemand deposits and bank balances were $241,213 in the fiduciary funds. The Federal depositInsuranceCorporationprotectstheDistrictagainstlossonthefirst$250,000ofdemanddepositsand$250,000 of time deposits located within the state. The demand and time deposits in excess of$250,000arecoveredbycollateralheldbythepledgingfinancialinstitution’strustdepartmentintheDistrict’sname.InvestmentsHeldbyMaricopaCountyTreasurer§15‐996,A.R.S.authorizestheMaricopaCountyTreasurertoreceiveandholdallDistrictmoniesandpool the monies with other school districts for investment purposes. As of June 30, 2017, theDistrict'sgovernmental fundsandagency funds reported$7,694,307and$13,558, respectively,ondeposits with the Maricopa County Treasurer's investment pool (MCTIP), a local governmentinvestmentpool.TheMaricopaCountyTreasurerinveststhecashinapoolunderpolicyguidelinesestablishedbythecounty.ThecountyaccountsfortheinvestmentpoolintheirFiduciaryInvestmentTrust Fund. Interest rate risk, credit risk, custodial credit risk and concentration of credit riskregardingtheMCTIPareincludedintheComprehensiveAnnualFinancialReportofMaricopaCounty.Thefairvalueofeachparticipant'spositionintheMCTIPapproximatesthevalueoftheparticipant'ssharesinthepool.TheMaricopaCountyTreasurer'sinvestmentpoolisanexternalinvestmentpoolwithnoregulatoryoversight.TheMCTIPisnotrequiredtoregister(andisnotregistered)withtheSecurities and Exchange Commission. As of June 30, 2017, the MCTIP had not received a qualitycreditratingfromanationalratingagency.

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NOTE2. DepositsandInvestments(continued)

Debt Service: §15‐1025 A.R.S. provides that the District may invest and reinvest all moniesbelongingtoorcreditedtotheschooldistrictasadebtservicefund.Thedebtservicefundsmaybeinvested in 1) obligations issued or guaranteed by the United States or any of its agencies orinstrumentalities; 2) specified state and local government bonds; 3) interest bearing savingsaccounts or certificates of deposits that is insured as required by the general depository law ofArizona;and4)bonds,debenturesorotherobligationsissuedbycertainfederalbanks.Thepurchaseof the securities is required to be made by the Maricopa County Treasurer. All earnings on theinvested debt service monies shall be credited to the debt service fund. The Debt Service Fundreported cash and investments as of June 30, 2017, in the amount of $261,049, all of whichwasinvestedintheMCTIP.Inaddition,theDebtServiceFundreportedcashheldbypayingagentasofJune 30, 2017, in the amount of $6,139,434 for the July 1, 2017, bond principal and interestpayments.InterestRateRisk ‐ Investments: Interest rate risk is the risk that changes in interest ratewilladverselyaffectthefairvalueofaninvestment.TheDistrictdoesnothaveaformalinvestmentpolicythat limits investmentmaturities as ameans ofmanaging its exposure to fair value losses arisingfromincreasinginterestrates.CreditRisk:Creditriskistheriskthataninsurerorothercounterpartytoaninvestmentinadebtsecuritywillnotfulfillitsobligations.TheDistricthasnoinvestmentpolicythatwouldfurtherlimititsinvestmentchoicesthanwhatisallowableperA.R.S.CustodialCreditRisk ‐ Investments: Custodial credit risk for investments is the risk that, in theeventofafailureofthecounterparty’sfailure,theDistrictwillnotbeabletorecoverthevalueoftheinvestmentsorcollateral securities thatare inanoutsideparty’spossession.TheDistrictdoesnothavea formalpolicy forcustodialcredit.At June30,2017, theDistrict's investmentof$7,707,865,$13,558ofwhichispartoftheDistrict’sagencyfunds, investedintheCountyinvestmentpoolwasnot subject to custodial credit risk because the related securities are uninsured, unregistered andheldbyMaricopaCountynotintheDistrict'sname.Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributed to themagnitudeoftheDistrict'sinvestmentinasingleissuer.TheDistrictdoesnothaveaformalpolicyforconcentrationofcreditrisk.AtJune30,2017,theDistrict'sinvestmentof$7,707,865investedinthecountyinvestmentpoolwassubjecttoconcentrationofcreditrisk.

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NOTE3. ReceivablesReceivable balances have been disaggregated by type and presented separately in the financialstatementswiththeexceptionoftheamountsduefromothergovernments.AsofJune30,2017,theDistricthadatotalof$23,600inotherreceivableswhichwasduefromAspinFoodServiceCooperativeforfundsheldasadepositonaccount.AsofJune30,2017,theDistricthadthefollowingamountsduefromothergovernments:

GeneralFund

OtherGovernmental

Funds Total

DuefromstategovernmentStategrants ‐$ 9,960$ 9,960$

DuefromfederalgovernmentFederalgrants ‐ 34,408 34,408E‐Rate 42,012 ‐ 42,012

Totals 42,012$ 44,368$ 86,380$

Theabovereceivablesaredeemed100%collectible.

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NOTE4. CapitalAssetsCapital asset activity for the year ended June30, 2017,were as follows. Land and construction inprogressarenotsubjecttodepreciation.

Governmentalactivities:Balance Balance

June30,2016 Restatement Additions Deletions June30,2017

Capitalassetsnotbeingdepreciated:Land 2,855,758$ ‐$ ‐$ ‐$ 2,855,758$Constructioninprogress 17,443,471 686,151 75,686 (18,129,622) 75,686

depreciated 20,299,229 686,151 75,686 (18,129,622) 2,931,444

Capitalassetsbeingdepreciated:Buildingsandimprovements 39,458,956 27,312 21,285,572 ‐ 60,771,840Otherimprovements 6,712,608 354 1,225,276 ‐ 7,938,238

Vehicles,furnitureandequipment 6,916,318 ‐ 1,275,001 (174,829) 8,016,490

Totalcapitalassetsbeingdepreciated 53,087,882 27,666 23,785,849 (174,829) 76,726,568

Lessaccumulateddepreciation:Buildingsandimprovements (9,940,631) (772) (1,597,862) ‐ (11,539,265)Otherimprovements (2,435,443) 231 (302,563) ‐ (2,737,775)

Vehicles,furnitureandequipment (3,647,326) ‐ (826,108) 164,371 (4,309,063)

Totalaccumulateddepreciation (16,023,400) (541) (2,726,533) 164,371 (18,586,103)

Totalcapitalassets,netofdepreciation 57,363,711$ 713,276$ 21,135,002$ (18,140,080)$ 61,071,909$

Depreciationexpensewaschartedtofunctionsasfollows:

Instruction 1,746,781$Supportservices‐studentsandstaff 108,068Supportservices‐administration 436,620Operationandmaintenanceofplant 275,218Studenttransportationservices 138,036Operationofnon‐instructionalservices 21,810

Totaldepreciationexpense 2,726,533$

Adjustmentsinthecurrentyearwereduetomanagementfeesrelatedtoconstructionprojectinprioryears.

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NOTE5. ConstructionandOtherCommitmentsTheDistricthadmajorcontractualcommitmentsrelatedtovariouscapitalprojectsatJune30,2017,forthefollowingconstructioncontracts:

ProjectContractAmount

AmountPaidasofJune30,2017

ContractBalance

NewConferenceRoomLightingandControlsatMaricopaInstituteofTechnology 16,742$ $3,439 13,303$RemodelofLobbyatKingsRidgePreparatoryAcademy 18,697 17,247 1,450

Totals 35,439$ 20,686$ 14,753$

NOTE6. Long‐termLiabilities

ThefollowingscheduledetailstheDistrict’slong‐termliabilityandobligationactivityfortheyearendedJune30,2017:

Balance Balance DueWithinJune30,2016 Additions Retirements June30,2017 OneYear

Bondspayable 37,380,000$ 7,640,000$ (7,080,000)$ 37,940,000$ 5,485,000$Discountonbonds (26,908) ‐ 2,070 (24,838) (2,070)Premiumonbonds 757,218 138,775 (137,346) 758,647 162,501Compensatedabsencespayable 301,018 172,524 (83,299) 390,243 83,299Netpensionliability 6,893,085 2,221,143 (1,473,074) 7,641,154 ‐

TotalLong‐TermDebt 45,304,413$ 10,172,442$ (8,771,649)$ 46,705,206$ 5,728,730$

Theretirementspresentedaboveforthebondspayabledonotpresentthesameasthedebtserviceprincipal payments on the Statement of Revenues, Expenditures, and Changes in Fund Balance,exhibitB‐2.TheDistricthasselectedtofollowguidancefromtheNationalCouncilonGovernmentalAccounting Statement 1, paragraph 72, which permits accrual of debt service liabilities andexpendituresifagovernmenthasprovidedfinancialresourcestoadebtservicefundforpaymentofliabilities that will mature early in the following year. The exhibit B‐2 presents this July 1, 2017paymentinaccordancewiththeabovestatement,howeverthegovernmentwidestatementsdonotrecognizethispaymentuntilthepaymentsisofficiallypaidonJuly1,2017.Bonds: TheDistrict’s bonded debt consists of various issues of general obligation bonds that aregenerallycallableandnoncallablewithinterestpayablesemiannually.Bondproceedspayprimarilyfor acquiring or constructing capital facilities. Bonds have also been issued to advance‐refundpreviouslyissuedbonds.TheDistrictrepaysgeneralobligationbondsfromvoter‐approvedpropertytaxes,whicharespecificallyassessedfordebtserviceandarerecordedintheDebtServiceFund.Duringtheyear,theDistrictissuedSchoolImprovementBonds(PrivatePlacement,TaxExempt)inthe amount of $7,640,000 for the purpose of construction, student technology integration, andremodeling projects across the District. Of the total amount originally authorized during theNovember5,2014BondElection,$32,160,000remainsunissued.

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NOTE6. Long‐termLiabilities(continued)ThefollowingbondswereoutstandingatJune30,2017:

OriginalAmountIssued

InterestRates

OutstandingMaturities

OutstandingPrincipal

June30,2017DueWithinOneYear

SchoolImprovementBonds:Project2006,SeriesB‐2(2010) 7,545,000$ 5.4‐6.6% 7/1/2029 6,155,000$ 370,000$Project2011,SeriesC(2013) 14,465,000 2.0‐4.5% 7/1/2028 11,960,000 1,975,000Project2011,SeriesD(2014) 4,565,000 2.0‐3.0% 7/1/2017 1,465,000 1,465,000Project2014,SeriesA(2015) 10,200,000 3.10% 7/1/2021 10,200,000 1,675,000Project2014,SeriesB(2016) 5,075,000 1.03‐1.42% 7/1/2021 5,075,000 ‐

RefundingBonds:Series2011 3,820,000 4.0‐5.0% 7/1/2030 520,000 ‐Series2016 2,565,000 1.42‐4.5% 7/1/2021 2,565,000 ‐

37,940,000$ 5,485,000$

AnnualrequirementstoamortizeallbondeddebtoutstandingasofJune30,2017,areasfollows:FiscalYearEnding Principal Interest

2018 5,485,000$ 1,296,850$ 6,781,850$2019 5,880,000 1,108,945 6,988,9452020 6,320,000 935,786 7,255,7862021 5,770,000 759,807 6,529,8072022 5,110,000 605,605 5,715,605

2023‐2027 6,510,000 2,066,875 8,576,8752027‐2031 2,865,000 324,025 3,189,025

37,940,000$ 7,097,893$ 45,037,893$

TotalDebtService

DefeasedDebt:Inprioryears,theDistrictdefeasedcertaingeneralobligationbondsbyplacingtheproceedsofnewbondsinanirrevocabletrusttoprovideforallfuturedebtservicepaymentsontheold bonds.Accordingly, the trust account assets and the liability for thesedefeasedbonds arenotincludedintheDistrict’sfinancialstatements.AtJune30,2017,thefollowingoutstandingbondswereconsidereddefeased:

Description AmountSchoolImprovementBonds,Project2000,SeriesC(2005) $ 675,000SchoolImprovementBonds,Project2006,SeriesA(2007) 2,260,000

Total $ 2,935,000

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NOTE7. RiskManagementTheDistrictisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,anddestructionofassets;errorsandomissions;injuriestoemployees;andnaturaldisasters.TheDistrictisamemberoftheArizonaSchoolRiskRetentionTrust,Inc.(ASRRT),togetherwithotherschooldistrictsinthestate. ASRRT is a public entity risk pool currently operating as a common riskmanagement andinsuranceprogramformemberschooldistricts.TheDistrictpaysanannualpremiumtoASRRTforitsgeneral insurancecoverage.TheagreementprovidesthatASRRTwillbeself‐sustainingthroughmemberpremiumsandwillreinsurethroughcommercialcompaniesforclaimsinexcessofspecifiedamounts.Foremployeehealth insurance, theDistrict isamemberof theArizonaSchoolBoardsAssociationInsuranceTrust(ASBAIT),togetherwithotherschooldistricts.ASBAITwasestablishedin1981bythe Arizona School Board Association. Its formation was in response to Arizona schooladministratorsdesiretoobtaincomprehensivehealthbenefitsatreasonablecosts.ASBAIToperatesby an "Agreement and Declaration of Trust" in accordancewith the laws of the State of Arizona,including, without limitation, A.R.S. §15‐382. The agreement provides that ASBAIT will be self‐sustainingthroughmemberpremiumsandwillreinsurethroughcommercialcompaniesforclaimsinexcessofspecifiedamounts.SchooldistrictshavetheauthoritytojoinASBAITwithoutcompetitivebidding.TheDistrictcarriescommercialinsuranceforworkers'compensationanddentalinsurance.For insuredprograms, therehavebeennosignificantreductions in insurancecoverage.Settlementamountshavenotexceededinsurancecoverageforthecurrentyearorthethreepriorfiscalyears.

NOTE8. PensionsandOtherPostemploymentBenefitsPlandescription:DistrictemployeesparticipateintheArizonaStateRetirementSystem(ASRS).TheASRS administers a cost‐sharing multiple‐employer defined benefit pension plan, a cost‐sharingmultiple‐employerdefinedbenefithealthinsurancepremiumbenefit(OPEB)plan,andacost‐sharingmultiple‐employerdefinedbenefit long‐termdisability (OPEB)plan. TheArizonaStateRetirementSystemBoardgovernstheASRSaccordingtotheprovisionsofA.R.S.Title38,Chapter5,Articles2and2.1.TheASRSisacomponentunitoftheStateofArizona.TheASRSissuesapubliclyavailablefinancialreportthatincludesitsfinancialstatementsandrequiredsupplementaryinformation.Thereportisavailableonitswebsiteatwww.azasrs.gov.

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NOTE8. PensionsandOtherPostemploymentBenefits(continued)Benefits provided: The ASRS provides retirement, health insurance premium supplement, long‐termdisability,andsurvivorbenefits.Statestatuteestablishesbenefitterms.Retirementbenefitsarecalculatedonthebasisofage,averagemonthlycompensation,andservicecreditasfollows:

BeforeJuly1,2011 OnorafterJuly1,2011Sumofyearsandageequals80 30years,age55

10years,age62 25years,age605years,age50* 10years,age62anyyears,age65 5years,age50*

anyyears,age65

Finalaveragesalaryisbasedon Highest36consecutivemonths Highest60consecutivemonthsoflast120months oflast120months

Benefitpercentperyearof 2.1%to2.3% 2.1%to2.3%service

*Withactuariallyreducedbenefits

RetirementInitialmembershipdate:

Yearsofserviceandagerequiredtoreceivebenefit

Retirementbenefits formemberswho joinedtheASRSpriortoSeptember13,2013,aresubjecttoautomatic cost‐of‐living adjustments based on excess investment earning. Members with amembership date on or after September 13, 2013, are not eligible for cost‐of‐living adjustments.Survivorbenefitsarepayableuponamember’sdeath.Forretiredmembers,theretirementbenefitoptionchosendeterminesthesurvivorbenefit.Forallothermembers,thebeneficiaryisentitledtothe member’s account balance that includes the member’s contributions and employer’scontributions,plusinterestearned.Contributions: In accordance with state statutes, annual actuarial valuations determine activemember and employer contribution requirements. The combined active member and employercontributionratesareexpectedtofinancethecostsofbenefitsemployeesearnduringtheyear,withanadditionalamount to financeanyunfundedaccrued liability.For theyearended June30,2017,statute required active ASRS members to contribute at the actuarially determined rate of 11.48percent (11.34 percent for retirement and 0.14 percent for long‐term disability) of themembers’annualcoveredpayroll,andstatuterequiredtheDistricttocontributeattheactuariallydeterminedrate of 11.48 percent (10.78 percent for retirement, 0.56 percent for health insurance premiumbenefit,and0.14percentforlong‐termdisability)oftheactivemembers’annualcoveredpayroll.Inaddition,theDistrictwasrequiredbystatutetocontributeattheactuariallydeterminedrateof9.47percent (9.17percent for retirement,0.21percent forhealth insurancepremiumbenefit, and0.07percentforlong‐termdisability)ofannualcoveredpayrollofretiredmemberswhoworkedfortheDistrictinpositionsthatanemployeewhocontributestotheASRSwouldtypicallyfill.TheDistrict’scontributions to thepensionplan for the year ended June30, 2017,were$528,148.TheDistrict’scontributionsforthecurrentand2precedingyearsforOPEB,allofwhichwereequaltotherequiredcontributions,wereasfollows:

53



NOTE8. PensionsandOtherPostemploymentBenefits(continued)

YearendedJune30,

RetirementFund

Healthbenefitsupplement

fund

Long‐termdisabilityfund

AlternativeRequired

ContributionTotal

Contributions2017 495,814$ 22,849$ 6,163$ 3,322$ 528,148$2016 466,259 2,187 5,152 7,778 500,6762015 437,046 23,678 4,816 8,121 473,6612014 399,113 21,623 8,934 5,139 434,809

Duringfiscalyear2016,theDistrictpaidforpensionandOPEBcontributionsasfollows:

Fund

PensonandOPEB

ContributionPercentagebyFund

GeneralFund $378,929 71.7%BondBuildingFund 25,187 4.8%OtherGovernmentalFunds 124,032 23.5%

$528,148

Pension liability: At June 30, 2016, the District reported a liability of $7,641,154 for itsproportionateshareoftheASRS’netpensionliability.ThenetpensionliabilitywasmeasuredasofJune30,2016.ThetotalpensionliabilityusedtocalculatethenetpensionliabilitywasdeterminedusingupdateprocedurestorollforwardthetotalpensionliabilityfromanactuarialvaluationasofJune30,2015,tothemeasurementdateofJune30,2016.TheDistrict’sproportionofthenetpensionliability was based on the District’s actual contributions to the plan relative to the total of allparticipatingemployers’ contributions for the year ended June30, 2016.TheDistrict’s proportionmeasuredasofJune30,2016,was0.04734percent,whichwasanincreaseof0.003percentfromitsproportionmeasuredasofJune30,2015.

54



NOTE8. PensionsandOtherPostemploymentBenefits(continued)Pensionexpenseanddeferredoutflows/inflowsofresources:FortheyearendedJune30,2017,theDistrictrecognizedpensionexpenseforASRSof$664,187.AtJune30,2017,theDistrictreporteddeferred outflows of resources and deferred inflows of resources related to pensions from thefollowingsources:

Deferredoutflowsofresources

Deferredinflowsofresources

Differencesbetweenexpectedandactualexperience 46,435$ 525,655$

Netdifferencebetweenprojectedandactualearningsonpensionplaninvestments 828,046 ‐

Changesinproportionanddifferencesbetweendistrictcontributionsandproportionateshareofcontributions 499,794 6,577

Changesinassumptions ‐ 404,278

Districtcontributionssubsequenttothemeasurementdate 528,148 ‐

Total $1,902,423 $936,510

55



NOTE8. PensionsandOtherPostemploymentBenefits(continued)The$528,148 reportedasdeferredoutflowsof resources related toASRSpensions resulting fromdistrictcontributionssubsequenttothemeasurementdatewillberecognizedasareductionofthenetpensionliabilityintheyearendingJune30,2017.Otheramountsreportedasdeferredoutflowsof resources and deferred inflows of resources related to ASRS pensions will be recognized inpensionexpenseasfollows:

YearendedJune30, Amount2018 (81,981)$2019 (81,592)2020 369,1562021 232,182

Actuarial assumptions: The significant actuarial assumptions used tomeasure the total pensionliabilityareasfollows:

Actuarialvaluationdate June30,2015Actuarialrollforwarddate June30,2016Actuarialcostmethod EntryagenormalAssetvaluation FairvalueInvestmentrateofreturn 8%Projectedsalaryincreases 3–6.75%Inflation 3%Permanentbenefitincrease IncludedMortalityrates 1994GAMScaleBB

ActuarialassumptionsusedintheJune30,2015,valuationwerebasedontheresultsofanactuarialexperiencestudyforthe5‐yearperiodendedJune30,2012.Thelong‐termexpectedrateofreturnonASRSpensionplaninvestmentswasdeterminedtobe8.75percentusingabuilding‐blockmethodinwhichbest‐estimaterangesofexpectedfuturerealratesofreturn (expectedreturns,netofpensionplan investmentexpenseand inflation)aredeveloped foreachmajorassetclass.Theserangesarecombinedtoproducethelong‐termexpectedrateofreturnbyweightingtheexpectedfuturerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinflation.Thetargetallocationandbestestimatesofarithmeticrealratesofreturnforeachmajorassetclassaresummarizedinthefollowingtable:

Target Long‐termexpectedAssetclass allocation realrateofreturnEquity 58% 6.73%Fixedincome 25% 3.70%Realestate 10% 4.25%Multi‐asset 5% 3.41%Commodities 2% 3.84%Total 100%

56



NOTE8. PensionsandOtherPostemploymentBenefits(continued)Discountrate: Thediscount rate used tomeasure theASRS total pension liabilitywas8percent,whichislessthanthelong‐termexpectedrateofreturnof8.75percent.Theprojectionofcashflowsusedtodeterminethediscountrateassumedthatcontributionsfromparticipatingemployerswillbemade basedon the actuarially determined rates based on theASRSBoard’s funding policy,whichestablishesthecontractuallyrequiredrateunderArizonastatute.Basedonthoseassumptions, thepension plan’s fiduciary net position was projected to be available to make all projected futurebenefit payments of current plan members. Therefore, the long‐term expected rate of return onpensionplaninvestmentswasappliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalpensionliability.SensitivityoftheDistrict’sproportionateshareoftheASRSnetpensionliabilitytochangesinthediscountrate:ThefollowingtablepresentstheDistrict’sproportionateshareofthenetpensionliabilitycalculatedusingthediscountrateof8percent,aswellaswhattheDistrict’sproportionateshare of the net pension liability would be if it were calculated using a discount rate that is 1percentagepointlower(7percent)or1percentagepointhigher(9percent)thanthecurrentrate:

1%Decrease(7%)

Currentdiscountrate

(8%)1%Increase

(9%)District'sproportionateshareofthenetpensionliability 9,743,048$ 7,641,154$ 5,955,890$

Pensionplan fiduciarynetposition:Detailed informationabout thepensionplan’s fiduciarynetpositionisavailableintheseparatelyissuedASRSfinancialreport.Pension contributions payable: The District’s accrued payroll and employee benefits included$10,850ofoutstandingpensioncontributionamountspayabletoASRSfortheyearendedJune30,2017.

NOTE9. InterfundBalancesandActivityAlloftheDistrict’stransfersbetweenfundswererelatedtotheindirectcostchargedtotheFederalProjectFunds,whicharetransferredintotheGeneralFund.Thetotalamountofthesetransferswas$191,923totheGeneralFundfromOtherGovernmentalFunds.

NOTE10. SubsequentEventsThe District entered into two new bond agreements subsequent to year end. The SchoolImprovement Bonds, Project of 2014, Series C (2017) (“Improvement Bonds”) were closed onSeptember 6, 2017 in the amount of $10,235,000with an interest rate from4.00% to 5.00%andmaturing on July 1, 2025. And the Refunding Bonds, Series 2017 (2020 Crossover) (“RefundingBonds”)wereclosedonSeptember6,2017intheamountof$4,510,000withaninterestratefrom4.00%to5.00%andmaturingonJuly1,2029.Thedate towhicheventsoccurringafter June30,2017, thedateof themostrecentbalancesheet,havebeenevaluated forpossibleadjustment to the financial statementordisclosures isMarch22,2018whichisthedateonwhichthefinancialstatementswereissued.

57



NOTE11. AgreementsThe District has an intergovernmental agreement with the Maricopa County on behalf of theMaricopaCountyEducationServiceAgency(MCESA)forthemanagementandsupportoftheSchoolDistrict Financial System. MCESA will host the Financial System. MCESA will invoice and receivereimbursementfromtheDistrict.The District has an agreement with the Estrella Educational Foundation, an Arizona non‐profitcorporation. TheDistrict agrees to allow the Foundation to utilize portions of the newMIT STEMMagnetSchool.TheFoundationagreestopaytheDistrictanannualfeeintheamountof10%oftherevenuesreceivedfromtheFoundation.

NOTE12. OtherRequiredIndividualFundDisclosuresGenerally accepted accounting principles require disclosures of certain information concerningindividual funds including deficit fund balance of individual funds. The District had the followingfundsthatmaintaineddeficitfundbalanceatJune30,2017:NonmajorFunds

TitleISchoolImprovementPriority&Focus 135$ESEATitleII‐TeacherQuality 381EnglishLanguageLearners 546IDEABasicEntitlementPartB 40IDEAPreschoolGrant 22PreschoolDevelopmentGrant 12,674FirstThingsFirst‐ValleyoftheSun 168StateTutoringGrantSpring 28StateTutoringGrantFall 13

14,007$

NOTE13. ContingentLiabilities

Federalgrants‐Inthenormalcourseofoperations,theDistrictreceivesgrantfundsfromvariousfederal agencies. The grant programs are subject to audit by agents of the granting authority, thepurpose ofwhich is to insure compliancewith conditionsprecedent to the granting of funds.AnyliabilityforreimbursementwhichmayariseastheresultofauditsofgrantfundsisnotbelievedbyDistrictofficialstobematerial.Litigation ‐Eachyear theDistrictreceivesnoticesofclaimsfordamagesoccurringgenerally fromnegligence, bodily injury, breach of contract, and other legal matters. The filing of such claimscommences a statutory period for initiating a lawsuit against the District arising there from. TheDistricthascomprehensivegeneralliabilityinsurancewiththeArizonaSchoolRiskRetentionTrust.TheDistrictisnotawareofanylitigationthatmightresultinamateriallyadverseoutcome.

58



NOTE14. NetPositionRestatement

The District has a prior period adjustment of $713,276 which was required for correcting priorperiodbalanceofcapitalassets.ManagementfeesforconstructionprojectswerenotrecordedasandhasbeenaddedasofJune30,2017.SeeNote4formoreinformation.

NOTE15. SubsequentPronouncements

InJune2015,GASBStatementNo.75AccountingandFinancialReportingforPostemploymentBenefitsOtherThanPensions,was issued.EffectiveDate: Theprovisionsof thisStatementareeffective forfiscalyearsbeginningafterJune15,2017.ThestandardwillbeimplementedduringthefiscalyearendedJune30,2018.TheDistrictdoesnotexpectthispronouncementtohaveamaterialeffectonthefinancialstatementsastheydonotparticipateinsuchaplan.

InMarch 2016, GASB StatementNo. 81 Irrevocable Split‐InterestAgreements was issued. EffectiveDate: The requirements of this Statement are effective for reporting periods beginning afterDecember 15, 2016. Earlier application is encouraged. The District is still evaluating how thispronouncementwillaffectthefinancialstatements.

In November 2016, GASB Statement No. 83, Certain Asset Retirement Obligations was issued.EffectiveDate:TherequirementsofthisStatementareeffectiveforreportingperiodsbeginningafterJune 15, 2018. Earlier application is encouraged. The District is still evaluating how thispronouncementwillaffectthefinancialstatements.In January 2017, GASB Statement No. 84 Fiduciary Activities was issued. Effective Date: Therequirements of this Statement are effective for reporting periods beginning after December 15,2018.Earlierapplicationisencouraged.TheDistrictisstillevaluatinghowthispronouncementwillaffectthefinancialstatements.InMarch2017,GASBStatementNo.85Omnibus2017wasissued.EffectiveDate:Therequirementsof this Statement are effective for reporting periods beginning after June 15, 2017. Earlierapplication isencouraged. ThisStatementaddressesavarietyof topics including issuesrelated toblendingcomponentunits,goodwill, fairvaluemeasurementandapplication,andpostemploymentbenefits(pensionsandotherpostemploymentbenefits[OPEB]). TheDistrictisstillevaluatinghowthispronouncementwillaffectthefinancialstatements.InMay2017,GASBStatementNo.86CertainDebtExtinguishmentIssueswasissued.EffectiveDate:TherequirementsofthisStatementareeffectiveforreportingperiodsbeginningafterJune15,2017.Earlierapplicationisencouraged.TheDistrictisstillevaluatinghowthispronouncementwillaffectthefinancialstatements.In June2017,GASBStatementNo. 87Leaseswas issued. EffectiveDate:The requirementsof thisStatementareeffectiveforreportingperiodsbeginningafterDecember15,2019.Earlierapplicationis encouraged. The District is still evaluating how this pronouncement will affect the financialstatements.

59


60

REQUIREDSUPPLEMENTARYINFORMATION

61

STATEOFARIZONA ScheduleI

Original Final ActualAmountsRevenuesPropertytaxes ‐$ ‐$ 5,529,337$ 5,529,337$Intergovernmentalgrantsandaid:Federal ‐ ‐ 41,348 41,348State ‐ ‐ 55,112 55,112Local ‐ ‐ 10,319 10,319

Paymentinlieuoftaxes‐SRP ‐ ‐ 65,423 65,423InvestmentIncome ‐ ‐ 3,831 3,831Miscellaneous ‐ ‐ 48,050 48,050Totalrevenues ‐ ‐ 5,753,420 5,753,420

ExpendituresCurrentInstruction 2,910,686 2,705,066 2,401,347 303,719Supportservices:Students 429,901 452,251 426,423 25,828Instruction 299,215 373,813 366,416 7,397Generaladminstration 223,332 253,844 250,382 3,462Schooladministration 280,555 300,734 307,833 (7,099)Centralandothersupportservices 784,115 790,495 740,575 49,920Operationandmaintenanceofplant 1,133,515 1,018,410 781,546 236,864Studenttransportation 381,446 362,046 309,208 52,838

Operationofnoninstructionalservices 1,133 6,997 6,508 489Debtservice:Principal ‐ ‐ ‐ ‐Interest ‐ ‐ ‐ ‐Bondissuancecosts ‐ ‐ ‐ ‐

Capitaloutlay 50 250 152,863 (152,613)Totalexpenditures 6,443,948 6,263,906 5,743,101 520,805

Excess(deficiency)ofrevenuesoverexpenditures (6,443,948) (6,263,906) 10,319 6,274,225

Otherfinancingsources(uses):Transfersin ‐ ‐ 191,923 191,923Transfersout ‐ ‐ ‐ ‐Totalotherfinancingsources(uses) ‐ ‐ 191,923 191,923

Netchangeinfundbalance (6,443,948) (6,263,906) 202,242 6,466,148

Fundbalance‐beginningofyear 461,463 461,463 461,463 ‐

Fundbalance‐endofyear (5,982,485)$ (5,802,443)$ 663,705$ 6,466,148$


BudgetedAmounts

RiversideElementarySchoolDistrictNo.2BudgetaryComparisonSchedule‐GeneralFund

VarianceswithFinalBudgetPositive(Negative)


62


NotestoRequiredSupplementaryInformationBudgetaryComparisonSchedule

June30,2017

NOTE1. BudgetingandBudgetaryControl

TheDistrictadoptsanannualoperatingbudgetforexpendituresforallgovernmentalfundtypes.TheGoverningBoardpresentsaproposedbudgettotheSuperintendentofPublicInstructionandCountySchoolSuperintendentonorbyJuly5.TheGoverningBoardlegallyadoptsthefinalbudgetbyJuly15,afterapublichearinghasbeenheld.Onceadopted,thebudgetcanbeincreasedordecreasedonlyforspecificreasonssetforthinArizonaRevisedStatutes.Budgetarycontroloverexpendituresisexercisedatthefundlevel.However,forbudgetarycontrol,thegeneral fund includesonly themaintenanceandoperation fundasdefinedbyArizonaRevisedStatutes, which is budgeted within three subsections titled regular education programs, specialeducation programs, and pupil transportation, any of which may be overexpended with theGoverningBoard’spriorapprovalatapublicmeeting,providingtheexpendituresforallsubsectionsdonotexceedthegeneralfund'stotalbudget.TheDistrictcanaddressthestatutoryrequirementtoreportM&OFundexpendituresbysubsectionbyusingtheassignedprogramcodeintheUniformSystemofFinancialRecordsChartofAccounts.However, theDistrictmust totaland reportM&OFundexpenditures coded toprograms100,550,600,700,800,and900astheregulareducationsubsection.RiversideElementarySchoolDistrictNo.2doesnotreportexpenditurescodedtoprogramcodes700,800,or900astheDistrictdoesnothaveany adult/continuing education programs, community college education programs, or communityservicesprograms.TheDistrict isnot requiredby theStateofArizona topreparea revenuebudget.Forpresentationpurposesthebudgetedrevenuesareshownaszero.

NOTE2. BudgetaryBasisofAccounting

TheDistrictbudgetispreparedonabasisconsistentwithgenerallyacceptedaccountingprinciples,exceptforthefollowingitems:

CertainactivitiesreportedinthegeneralfundarebudgetedinseparatefundsinaccordancewithArizonaRevisedStatutes.

Prepaiditemsarebudgetedintheyearprepaid.

Netchangesinthefairvalueofinvestmentsisnotbudgeted.

Present value of netminimum capital lease payments is not budgeted at the inception of theagreement.

USDA‐donatedcommoditiesarenotbudgetedasanexpenditure.

63

STATEOFARIZONA ScheduleIIRiversideElementarySchoolDistrictNo.2

ScheduleofDistrict'sProportionateShareoftheNetPensionLiabilityJune30,2017

2017(2016)

2016(2015)

2015(2014)

2014through2007

District'sproportionofthenetpensionliability 0.0473% 0.0400% 0.0400%

District'sproportionateshareofthenetpensionliability 7,641,154$ 6,893,085$ 6,190,510$

District'scoveredpayroll 4,429,879$ 4,172,385$ 3,828,339$

District'sproportionateshareofthenetpensionliabilityasapercentageofitscoveredpayroll 172.49% 165.21% 161.70%

Planfiduciarynetpositionasapercentageofthetotalpensionliability 67.06% 68.35% 69.49%

Informationnotavailable

Reportingfiscalyear(measurementdate)

Seeindependentauditors'report.

64

STATEOFARIZONA ScheduleIIIRiversideElementarySchoolDistrictNo.2ScheduleofDistrictPensionContributions

June30,2017

2017 2016 2015 2014

2013through2007

Statutorilyrequiredcontributions 528,148$ 500,676$ 473,661$ 434,809$Informationnotavailable

District'scontributionsinrelationtothestatutorilyrequiredcontribution 528,148 500,676 473,661 434,809

District'scontributiondeficiency(excess) ‐$ ‐$ ‐$ ‐$

District'scoveredpayroll 4,381,838$ 4,429,879$ 4,172,385$ 3,828,339$

District'scontributionasapercentageofcoveredpayroll 12.05% 11.30% 11.35% 11.36%

Reportingfiscalyear


65


66

SUPPLEMENTARY INFORMATION

67

STATEOFARIZONA ScheduleIV

Original Final ActualAmountsRevenuesPropertytaxes ‐$ ‐$ 5,529,337$ 5,529,337$Intergovernmentalgrantsandaid:Federal ‐ ‐ ‐ ‐State ‐ ‐ 55,112 55,112Local ‐ ‐ 10,284 10,284

Paymentinlieuoftaxes‐SRP ‐ ‐ 65,423 65,423InvestmentIncome ‐ ‐ 3,126 3,126Miscellaneous ‐ ‐ (267) (267)Totalrevenues ‐ ‐ 5,663,015 5,663,015

ExpendituresCurrentInstruction 2,768,274 2,472,478 2,422,311 50,167Supportservices:Students 399,885 425,269 418,248 7,021Instruction 295,869 365,653 360,212 5,441Generaladminstration 222,323 248,448 245,226 3,222Schooladministration 278,793 292,778 299,983 (7,205)Centralandothersupportservices 746,116 741,149 713,217 27,932Operationandmaintenanceofplant 805,436 710,470 737,907 (27,437)Studenttransportation 372,705 353,220 300,421 52,799

Operationofnoninstructionalservices ‐ ‐ ‐ ‐Capitaloutlay ‐ ‐ ‐ ‐Totalexpenditures 5,889,401 5,609,465 5,497,525 111,940

Excess(deficiency)ofrevenuesoverexpenditures (5,889,401) (5,609,465) 165,490 5,774,955

Otherfinancingsources(uses):Transfersin ‐ ‐ ‐ ‐Transfersout ‐ ‐ ‐ ‐Totalotherfinancingsources(uses) ‐ ‐ ‐ ‐

Netchangeinfundbalance (5,889,401) (5,609,465) 165,490 5,774,955

Fundbalance‐beginningofyear 230,168 230,168 230,168 ‐

Fundbalance‐endofyear (5,659,233)$ (5,379,297)$ 395,658$ 5,774,955$

RiversideElementarySchoolDistrictNo.2BudgetaryComparisonSchedule‐MaintenanceandOperationFund


BudgetedAmounts

VarianceswithFinalBudgetPositive(Negative)


68

STATEOFARIZONA

Note1‐GeneralFundCombiningSchedule

FundNumber FundDescription Assets

LiabilitiesandDeferredInflowsofResources

FundBalance

Revenuesand

TransfersIn Expenditures

001 Maintenance&Operation 610,626$ 214,968$ 395,658$ 5,663,015$ 5,497,525$290 MedicaidReimbursement 7,247 ‐ 7,247 (664) ‐374 E‐Rate 44,176 ‐ 44,176 42,012 15,413515 CivicCenter 32,554 ‐ 32,554 19,493 2,509530 GiftsandDonations 25,131 613 24,518 29,463 12,219555 Textbooks 77 ‐ 77 1 ‐570 IndirectCosts 159,898 5,594 154,304 191,938 213,881575 UnemploymentInsurance 5,552 381 5,171 85 1,554

Totalallfunds 885,261$ 221,556$ 663,705$ 5,945,343$ 5,743,101$

RiversideElementarySchoolDistrictNo.2NotetoSupplementaryInformationFortheYearEndedJune30,2017

The Arizona Department of Education provides a Chart of Accounts that all Arizona school districts must follow. As suchthe District is required to place revenues in certain funds. By definition per GASB 54 a special revenue fund is a specificrevenue with the expenditures substantially restricted. The following table provides the funds that do not havesubstantialrestrictionsthatweregroupedtogetherwiththeDistrict'sMaintenanceandOperationFund.

69


70

STATISTICAL SECTION

(Unaudited)

71

STATEOFARIZONA ScheduleV

FiscalYear A.D.M.(a)2016‐2017 8922015‐2016 8462014‐2015 8402013‐2014 8102012‐2013 7572011‐2012 7452010‐2011 676

Source:TheArizonaDepartmentofEducationandtheDistrict.

LastSevenFiscalYearsAverageDailyMembership(Unaudited)RiversideElementarySchoolDistrictNo.2

(a) A.D.M. means average daily membership, and is computed by taking the average number of students enrolled overthefirst100daysoftheschoolyear.

72

STATEOFARIZONA ScheduleVI

2011‐2012 2012‐2013 2013‐2014Secondary Secondary SecondaryAssessed Assessed Assessed

PropertyClassification(a) Valuation Valuation Valuation

Mining,Utilities,CommercialandIndustrial(b) 375,143,771$ 336,951,854$ 302,841,974$AgricultureandVacantLand(b) 12,379,375 10,417,085 9,207,770OwnerOccupiedResidential 11,664,032 9,456,223 7,195,616LeasedorRentedResidential 2,652,563 3,245,453 4,271,059Railroad 585,280 892,153 917,403HistoricalProperty 1,065,915 434,136 907,825

Totals 403,490,936$ 361,396,904$ 325,341,647$

2014‐2015 2015‐2016 2016‐2017Secondary Secondary SecondaryAssessed Assessed Assessed

PropertyClassification(a) Valuation Valuation Valuation

Mining,Utilities,CommercialandIndustrial(b) 317,823,003$ 340,331,057$ 310,602,700$AgricultureandVacantLand(b) 9,426,233 9,061,286 7,306,935OwnerOccupiedResidential 8,393,509 10,706,073 8,165,665LeasedorRentedResidential 5,621,170 7,528,183 5,510,554Railroad 1,006,900 951,393 845,643HistoricalProperty 3,630,816 5,232,260 4,747,899

Totals 345,901,631$ 373,810,252$ 337,179,396$

Source:InformationisanabstractoftheStateandCountyAssessmentRoll,ArizonaDepartmentofRevenue.

LastSixFiscalYearsSecondaryAssessedValuationByPropertyClassification(Unaudited)


(b) For tax year 2014, full cash values up to $141,385 on commercial, industrial and agricultural personal property areexempt from taxation. This exemption is indexed annually for inflation. Any portion of the full cash value in excess of thatamount will be assessed at the applicable rate. The assessment ratio for mining, utilities, commercial and industrialproperty will be reduced to 18.5% for tax year 2015 and further reduced one‐half of one percent for each year to 18%for tax year 2016 and thereafter. The assessment ratio for agricultural and vacant property will be reduced to 15% fortaxyear2016andthereafter.

(a)Additionalclassesofpropertyexist,butseldomamounttoasignificantportionofamunicipalbody'stotalvaluation.

73

STATEOFARIZONA ScheduleVII

PercentageofSecondary District'sNetAssessed AssessedValuation Valuation

ArizonaPublicServiceCompany 64,330,419$ 19.08%SouthwestGasCompany 41,980,495 12.45%WESTERNCREITAZLLC 8,111,240 2.41%Generation3InvestmentsILLC 4,608,915 1.37%IconOwnerPool1West/SouthwestLLC 3,505,491 1.04%EXETER4570WLOWERBUCKEYELLC 3,327,514 0.99%RoadwayPackageSystemsInc. 3,102,548 0.92%MirefRiversideLLC 3,016,357 0.89%Exeter5555WLowerBuckeyeLLC 2,847,178 0.84%MarshallsofMAInc 2,765,232 0.82%

Total 137,595,389$ 40.81%

Source:OfficeoftheAssessoroftheCounty.

(a) Some of such taxpayers or their parent companies are subject to the informational requirements of the SecuritiesExchange Act of 1934, as amended, and in accordance therewith file reports, proxy statements and other informationwith the Securities and Exchange Commission (the “Commission”). Such reports, proxy statements and otherinformation (collectively, the “Filings”) may be inspected and copied at the public reference facilities maintained by theCommission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission’s regional offices andNorthwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the Filings can beobtained from the public reference section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 atprescribed rates. In addition, the Filings may also be inspected at the offices of the New York Stock Exchange at 20 BroadStreet, New York, New York 10005. The Filings may also be obtained through the Internet on the Commission’s EDGARdatabase at http://www.sec.gov. None of the District, the Underwriter or their respective agents or consultants hasexamined the information set forth in the Filings for accuracy or completeness, nor do they assume responsibility for thesame.

MajorTaxpayer(a)

June30,2017AssessedValuationofMajorTaxpayers(Unaudited)


2016‐2017

74

STATEOFARIZONA ScheduleVIII

TaxesLevied CollectionsinFiscalYear forthe Percentage Subsequent Percentage

Ended6/30/16 FiscalYear Amount ofLevy FiscalYears Amount ofLevy

2017 12,679,907$ 12,580,600$ 99.22% N/A 12,580,600$ 99.22%2016 12,212,589 12,137,104 99.38% 72,471$ 12,209,574 99.98%2015 11,623,866 11,475,219 98.72% 84,149 11,620,668 99.97%2014 11,108,878 10,918,695 98.29% 156,394 11,106,485 99.98%2013 11,551,355 11,444,729 99.08% 104,706 11,549,701 99.99%2012 11,150,072 11,025,413 98.88% 116,361 11,143,163 99.94%2011 8,435,411 8,297,856 98.37% 137,555 8,435,411 100.00%

Source:ThesourceofthisinformationistheMaricopaCountyTreasurer'srecords.

Note1:Amountscollectedareonacashbasis.


CurrentCollections CollectionstoDate

Note2:Unsecuredpersonalpropertytaxesarenotincludedinthisschedulebecausethedatesofthemonthlyrollsvaryeachyear.Ontheaverage,90%ofunsecuredpropertytaxesarecollectedwithin90daysaftertheduedate.

LastSevenFiscalYearsPropertyTaxLeviesandCollections(Unaudited)

$‐

$5,000,000

$10,000,000

$15,000,000

2017 2016 2015 2014 2013 2012 2011

Property Tax Levies

75

STATEOFARIZONA ScheduleIX

GeneralObligationBonded Approximate NetDebt

OverlappingJurisdiction Debt(b) Percent AmountStateofArizona None 0.71% None

MaricopaCounty None 1.16% NoneMaricopaCountyCommunityCollegeDistrict 654,190,000$ 1.16% 7,588,604MaricopaCountyFloodControlDistrict None 1.31% NoneCityofPhoenix 1,336,715,000 3.19% 42,641,209LaveenMeadowsVolunteerFireDistrict None 4.90% NonePhoenixUnionHighSchoolDistrictNo.210 273,636,188 9.18% 25,119,802RiversideElementarySchoolDistrictNo.2 37,940,000 100.00% 37,940,000

NetDirectandOverlappingGeneralObligationBondedDebt 113,289,615$

(a)ProportionapplicabletotheDistrictiscomputedontheratioofsecondaryassessedvaluationfor2015‐2016.

(b) Includes total stated principal amount of general obligation bonds outstanding. Does not include outstandingprincipal amount of certificates of participation, revenue obligations or loan obligations outstanding for thejurisdictions listed above. Does not include outstanding principal amounts of various County improvement districts, asthe bonds of these districts are presently being paid from special assessments against property within the variousimprovementdistricts.

June30,2017DirectandOverlappingGovernmentalActivitiesDebt(Unaudited)


totheDistrict(a)ProportionApplicable

76

STATEOFARIZONA ScheduleX

LegalDebtMarginCalculationforFiscalYear2017:

NetAssessedFullCashValue 404,887,281$15%

DebtLimit(15%ofAssessedValue) 60,733,092$Less:NetDebtApplicabletolimit 37,940,000LegalDebtMargin 22,793,092$

ClassBBondLegalDebtMarginCalculationforFiscalYear2017:

SecondaryAssessedValuation 404,887,281$10%

DebtLimit(10%ofAssessedValue) 40,488,728$Less:NetDebtApplicabletoLimit 37,940,000LegalDebtMargin 2,548,728$

Source:InformationobtainedfromtheDistrict'sFinancialRecords.

CurrentFiscalYearLegalDebtMarginInformation(Unaudited)RiversideElementarySchoolDistrictNo.2

77

STATEOFARIZONA ScheduleXI

2016‐20172016‐2017 2016‐2017 TotalTaxSecondary Primary RatePer$100Assessed Assessed Assessed

OverlappingJurisdiction Valuation Valuation ValuationStateofArizona 56,589,592,481$ 56,589,592,481$ None

MaricopaCounty(a) 36,135,494,474 36,135,494,474 1.8884MaricopaCountyCommunityCollegeDistrict 36,135,494,474 36,135,494,474 1.4651MaricopaCountyFireDistrict(b) 36,135,494,474 N/A 0.0112MaricopaCountyLibraryDistrict(b) 36,135,494,474 N/A 0.0556MaricopaCountySpecialHealthCareDistrictMaintandOper.(b) 36,198,108,538 N/A 0.1955MaricopaCountySpecialHealthCareDistrictBondInt/Princ(b) 36,198,108,538 N/A 0.1098MaricopaCountyFloodControlDistrict(b) 32,624,765,419 N/A 0.1792CentralArizonaWaterConservationDistrict(b) 36,198,108,538 N/A 0.1400

LaveenMeadowsFireDistrict(b) 39,559,414 N/A 2.7748

CityofPhoenix 10,982,150,871 10,982,150,871 2.1700

PhoenixunionHighSchoolNo.210 4,328,567,331 4,328,567,331 5.0684RiversideElementarySchoolDistrictNo.2 337,179,396 337,179,396 3.7219

Source:PropertyTaxRatesandAssessedValuesMaricopaCounty,theArizonaDepartmentofRevenue

June30,2017DirectandOverlappingAssessedValuationsandTaxRates(Unaudited)

RiversideElementarySchoolDistrictno.2

(a) Includes the “State Equalization Assistance Property Tax.” The State Equalization Assistance Property Tax iscomputedpursuanttoArizonaRevisedStatutes,Section41‐1276.

(b) The assessed valuation of the flood control district does not include the personal property assessed valuation of theCounty. All levies for fire districts, library districts, flood control districts, water conservation districts and special healthcaredistrictsareleviedonthesecondaryassessedvaluationasshownhere.

78

STATEOFARIZONA ScheduleXII

Riverside PhoenixUnionFiscal Elementary HighSchool Cityof Maricopa StateofYear DistrictNo.2 DistrictNo.210 Phoenix County Arizona

2016‐2017 337,179,396$ 4,328,567,331$ 10,982,150,871$ 36,135,494,474$ 56,589,592,481$2015‐2016 373,810,252 5,088,747,539 12,783,575,022 41,124,639,380 54,841,866,0092014‐2015 345,901,631 4,372,062,126 10,818,634,186 35,079,646,593 55,349,948,1202013‐2014 325,341,647 4,573,470,147 10,849,743,656 34,400,455,716 56,271,814,5832012‐2013 361,396,904 5,325,305,098 12,343,773,555 38,760,296,714 61,700,292,9152011‐2012 403,490,936 7,071,398,209 16,092,308,323 49,707,952,123 75,643,290,6562010‐2011 459,278,276 8,292,780,584 18,861,238,355 57,984,051,718 86,538,111,171

Source:InformationisanabstractoftheStateandCountyAssessmentRoll,ArizonaDepartmentofRevenue.

LastSevenFiscalYearsComparitiveSecondaryAssessedValuations(Unaudited)


79

STATEOFARIZONA ScheduleXIII

EstimatedFiscal NetFullYear CashValue(a)

2016‐2017 2,118,895,254$2015‐2016 2,283,339,2142014‐2015 1,940,119,6292013‐2014 1,742,148,9112012‐2013 1,890,909,4612011‐2012 2,111,362,100

Source:StateandCountyAbstractoftheAssessmentRoll

LastSixFiscalYearsEstimatedFullCashValueHistory(Unaudited)RiversideElementarySchoolDistrictNo.2

(a)EstimatednetfullcashvalueisthetotalmarketvalueofthepropertywithintheDistrictlesstheexempt.

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COMPLIANCESECTION

81

REPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIAL

STATEMENTSPERFORMEDINACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS

INDEPENDENTAUDITORS’REPORT

TheGoverningBoardofRiversideElementarySchoolDistrictNo.2Phoenix,ArizonaWehaveaudited,inaccordancewiththeauditingstandardsgenerallyacceptedintheUnitedStatesofAmericaand the standardsapplicable to financial audits contained inGovernmentAuditingStandards issuedby theComptrollerGeneraloftheUnitedStates,thefinancialstatementsofthegovernmentalactivities,eachmajorfund,and theaggregate remaining fund informationof theRiversideElementarySchoolDistrictNo.2 (the“District”),asofandfortheyearendedJune30,2017,andtherelatednotestothefinancialstatements,whichcollectivelycomprisetheDistrict’sbasicfinancialstatements,andhaveissuedourreportthereondatedMarch22,2018.InternalControlOverFinancialReportingInplanningandperformingourauditofthefinancialstatements,weconsideredtheDistrict’sinternalcontrolover financial reporting (internal control) to determine the audit procedures that are appropriate in thecircumstancesforthepurposeofexpressingouropinionsonthefinancialstatements,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheDistrict’sinternalcontrol.Accordingly,wedonotexpressanopinionontheeffectivenessoftheDistrict’sinternalcontrol.Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedintheprecedingparagraphandwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbematerialweaknessesorsignificantdeficienciesandtherefore,materialweaknessesorsignificantdeficienciesmayexistthatwerenotidentified.However,asdescribedintheaccompanyingscheduleoffindingsandquestionedcosts,weidentifiedacertaindeficiencyininternalcontrolthatweconsidertobeamaterialweakness.Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallowmanagementoremployees, in the normal course of performing their assigned functions, to prevent, or detect and correctmisstatementsonatimelybasis.Amaterialweaknessisadeficiency,oracombinationofdeficiencies,ininternalcontrol such that there is a reasonable possibility that a material misstatement of the entity’s financialstatementswill not beprevented, ordetected and correctedona timely basis.We consider thedeficiencydescribedintheaccompanyingscheduleoffindingsandquestionedcostsasitemFS2017‐001tobeamaterialweakness.

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ComplianceandOtherMattersAs part of obtaining reasonable assurance aboutwhether the District’s financial statements are free frommaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts,andgrantagreements,noncompliancewithwhichcouldhaveadirectandmaterialeffecton thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisionswasnotanobjectiveofouraudit,andaccordingly,wedonotexpresssuchanopinion.TheresultsofourtestsdisclosednoinstancesofnoncomplianceorothermattersthatarerequiredtobereportedunderGovernmentAuditingStandards.WenotedcertainmattersthatwereportedtomanagementofRiversideElementarySchoolDistrictNo.2inaseparate document entitled Uniform System of Financial Records (USFR) Compliance Questionnaire datedMarch22,2018.District’sResponsetoFindingTheDistrict’sresponsetothefindingidentifiedinourauditisdescribedintheaccompanyingscheduleoffindingsandquestionedcosts.TheDistrict’sresponsewasnotsubjectedtotheauditingproceduresappliedintheauditofthefinancialstatementsand,accordingly,weexpressnoopiniononit.PurposeofthisReportThepurposeofthisreportissolelytodescribethescopeofourtestingofinternalcontrolandcomplianceandtheresultsofthattesting,andnottoprovideanopinionontheeffectivenessoftheDistrict’sinternalcontroloroncompliance.ThisreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandardsinconsideringtheDistrict’sinternalcontrolandcompliance.Accordingly,thiscommunicationisnotsuitableforanyotherpurpose.


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84

FEDERALFINANCIALASSISTANCE

85

REPORTONCOMPLIANCEFOREACHMAJORPROGRAMANDONINTERNALCONTROLOVERCOMPLIANCEREQUIREDBYTHEUNIFORMGUIDANCE

INDEPENDENTAUDITORS’REPORT

TheGoverningBoardofRiversideElementarySchoolDistrictNo.2Phoenix,ArizonaReportonCompliancefortheMajorFederalProgramWehaveauditedRiversideElementarySchoolDistrictNo.2’s (the “District”)compliancewith the typesofcompliancerequirementsdescribedintheOMBComplianceSupplementthatcouldhaveadirectandmaterialeffectontheDistrict’smajorfederalprogramfortheyearendedJune30,2017.TheDistrict’smajorfederalprogramisidentifiedinthesummaryofauditors’resultssectionoftheaccompanyingscheduleoffindingsandquestionedcosts.Management’sResponsibilityManagementisresponsibleforcompliancewithfederalstatutes,regulations,andthetermsandconditionsofitsfederalawardsapplicabletoitsfederalprograms.Auditors’ResponsibilityOurresponsibilityistoexpressanopiniononcompliancefortheDistrict’smajorfederalprogrambasedonourauditof the typesofcompliancerequirementsreferredtoabove.Weconductedourauditofcompliance inaccordance with auditing standards generally accepted in the United States of America; the standardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates;andtheauditrequirementsofTitle2U.S.CodeofFederalRegulationsPart200,UniformAdministrativeRequirements,CostPrinciples,andAuditRequirementsforFederalAwards(UniformGuidance).ThosestandardsandtheUniformGuidancerequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethernoncompliancewiththetypesofcompliancerequirementsreferredtoabovethatcouldhaveadirectandmaterialeffectonamajorfederalprogramoccurred.Anauditincludesexamining,onatest basis, evidence about the District’s compliance with those requirements and performing such otherproceduresasweconsiderednecessaryinthecircumstances.Webelieve thatourauditprovidesareasonablebasis forouropiniononcompliance for themajor federalprogram.However,ourauditdoesnotprovidealegaldeterminationoftheDistrict’scompliance.OpiniononEachMajorFederalProgramIn our opinion, the District complied, in all material respects, with the types of compliance requirementsreferredtoabovethatcouldhaveadirectandmaterialeffectonitsmajorfederalprogramfortheyearendedJune30,2017.

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ReportonInternalControlOverComplianceManagement of the District is responsible for establishing andmaintaining effective internal control overcompliancewiththetypesofcompliancerequirementsreferredtoabove.Inplanningandperformingourauditofcompliance,weconsideredtheDistrict’sinternalcontrolovercompliancewiththetypesofrequirementsthatcouldhaveadirectandmaterialeffectonthemajorfederalprogramtodeterminetheauditingproceduresthatareappropriateinthecircumstancesforthepurposeofexpressinganopiniononcomplianceforthemajorfederalprogramandtotestandreportoninternalcontrolovercomplianceinaccordancewiththeUniformGuidance, but not for the purpose of expressing an opinion on the effectiveness of internal control overcompliance.Accordingly,wedonotexpressanopinionontheeffectivenessoftheDistrict’sinternalcontrolovercompliance.Adeficiencyininternalcontrolovercomplianceexistswhenthedesignoroperationofacontrolovercompliancedoesnotallowmanagementoremployees, in thenormalcourseofperforming theirassigned functions, toprevent,ordetectandcorrect,noncompliancewithatypeofcompliancerequirementofafederalprogramona timely basis. Amaterialweakness in internal control over compliance is a deficiency, or combination ofdeficiencies, in internal control over compliance, such that there is a reasonable possibility that materialnoncompliancewithatypeofcompliancerequirementofafederalprogramwillnotbeprevented,ordetectedandcorrected,onatimelybasis.Asignificantdeficiencyininternalcontrolovercomplianceisadeficiency,oracombinationofdeficiencies,ininternalcontrolovercompliancewithatypeofcompliancerequirementofafederalprogramthatislessseverethanamaterialweaknessininternalcontrolovercompliance,yetimportantenoughtomeritattentionbythosechargedwithgovernance.Our consideration of internal control over compliance was for the limited purpose described in the firstparagraphofthissectionandwasnotdesignedtoidentifyalldeficienciesininternalcontrolovercompliancethatmightbematerialweaknessesorsignificantdeficiencies.Wedidnotidentifyanydeficienciesininternalcontrolovercompliancethatweconsidertobematerialweaknesses.However,materialweaknessesmayexistthathavenotbeenidentified.Thepurposeofthisreportoninternalcontrolovercomplianceissolelytodescribethescopeofourtestingofinternal control over complianceand the resultsof that testingbasedon the requirementsof theUniformGuidance.Accordingly,thisreportisnotsuitableforanyotherpurpose.


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STATEOFARIZONARiversideElementarySchoolDistrictNo.2ScheduleofExpendituresofFederalAwards


PassThru

Number

FederalCFDANumber

FederalExpenditures

FundsProvidedtoSubrecipient

NoncashAssistance

U.S.DepartmentofEducationPassedthroughArizonaDepartmentofEducationTitleIGrantsClusterTitleIGrantstoLocalEducationalAgencies 101 84.010 293,602$ ‐$ ‐$SchoolImprovementGrants 117&118 84.377 2,259 ‐ ‐TotalTitleICluster 295,861 ‐ ‐

SpecialEducationClusterSpecialEducationGrantstoStates 220 84.027 117,830 ‐ ‐SpecialEducationPreschoolGrants 222 84.173 586 ‐ ‐SpecialEducationGrantstoStates 227 84.027 303,068 ‐ ‐TotalSpecialEducationCluster 421,484 ‐ ‐

SupportingEffectiveInstructionStateGrants 141 84.367 17,983 ‐ ‐EnglishLanguageAcquisitionStateGrants 194 84.365 19,710 ‐ ‐PreschoolDevelopmentGrant * 320 84.419 184,707Subtotal‐PassedthroughArizonaDepartmentofEducation 939,745 ‐ ‐

TotalU.S.DepartmentofEducation 939,745 ‐ ‐

U.S.DepartmentofAgriculturePassedthroughArizonaDepartmentofEducationSchoolBreakfastProgram * 510 10.553 347,579 ‐ ‐NationalSchoolLunchProgram * 510 10.555 52,660 ‐ 52,660NationalSchoolLunchProgram * 510 10.555 342,516 ‐ ‐

TotalU.S.DepartmentofAgriculture 742,755 ‐ 52,660

TotalFederalFinancialAssistance 1,682,500$ ‐$ 52,660$

*DenotesMajorFederalFinancialAssistanceProgram

FederalGrantororPass‐ThroughGrantor/ProgramTitle

Seeindependentauditors'report.Seenotestoscheduleofexpendituresoffedearlawards.

88

ScheduleXIV

NotestoScheduleofExpendituresofFederalAwards

BasisofPresentation

Loans

TheDistrictdidnotexpendfederalawardsrelatedtoloansorloanguaranteesduringtheyear.

SummaryofSignificantAccountingPolicies

CatalogofFederalDomesticAssistance(CFDA)Number

IndirectCostRate

FederallyFundedInsurance

5.

3.

The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the Riverside ElementarySchool District No. 2's federal grant activity for the year ended June 30, 2017. The information in this schedule ispresented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations (CFR) Part 200,UniformAdministrativeRequirements,CostsPrinciples,andAuditRequirementsforFederalAwards (Uniform

Expenditures reported on the schedule are reported on the modified accrual basis of accounting. Such expendituresare recognized following the cost principles contained in the Uniform Guidance, wherein certain types ofexpenditures are not allowable or are limited as to reimbursement. Therefore, some amounts presented in thisschedulemaydifferfromamountspresentedin,orusedinthepreparationof,thefinancialstatements.

The program titles and CFDA numbers were obtained from the federal or pass‐through grantor or the 2016 Catalogof Federal Domestic Assistance. When no CFDA number had been assigned to a program, the two‐digit federalagency identifier and the federal contract number were used. When there was no federal contract number, the two‐digitfederalagencyidentifierandtheword“unknown”wereused.

2.

1.

4.

TheDistrictdidnotelecttousethe10percentdeminimisindirectcostrateascoveredin2CFR§200.414.

6.

TheDistricthasnofederallyfundedinsurance.


89

STATEOFARIZONARiversideElementarySchoolDistrictNo.2ScheduleofFindingsandQuestionedCosts


ScheduleXVPage1of2

SECTIONI–SUMMARYOFAUDITORS’RESULTS

FinancialStatements:

1. Typeofauditors’reportissued Unmodified

2. Internalcontroloverfinancialreporting:

a. Materialweaknessesidentified? Yesb. Significantdeficienciesidentifiednotconsideredtobematerialweaknesses? Nonenotedc. Noncompliancematerialtothefinancialstatements? Nonenoted

FederalAwards:

1. Typeofauditors’reportissuedoncomplianceformajorprograms Unmodified2. Internalcontrolovermajorprograms:

a. Materialweaknessesidentified? Nonenotedb. Significantdeficienciesidentifiednotconsideredtobematerialweaknesses? Nonenoted

3. Anyauditfindingsdisclosedthatarerequiredtobereportedinaccordance

with2CFRsection200.516(a) Nonenoted4. Identificationofmajorprograms:

CFDA Number FederalProgram 10.553&10.555 ChildNutritionCluster 84.419 PreschoolDevelopmentGrant

5. DollarthresholdusedtodistinguishbetweentypeAandtypeBprograms: $750,000

6. Auditeequalifiedaslow‐riskauditee?

No

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STATEOFARIZONARiversideElementarySchoolDistrictNo.2ScheduleofFindingsandQuestionedCosts


ScheduleXVPage2of2

SECTIONII–FINANCIALSTATEMENTFINDINGSFS2017‐001–PriorPeriodRestatement–MaterialWeaknessCondition: The Capital Asset listing provided by theDistrict for the year ended June 30, 2017 did not contain thefollowing:

$713,273ofprioryearand$527,650ofcurrentyearsalaryandprofessionalfeesfortheprojectmanagementofconstructionprojectsintheBondBuildingFund.

Criteria: The Codification of Statements of Auditing Standards AU Section 110.03 states that “management isresponsible for adopting sound accounting policies and for establishing andmaintaining internal control thatwill,amongother things, initiate, authorize, record, process, and report transactions (aswell as events and conditions)consistentwithmanagement’s assertions embodied in the financial statements. The entity’s transactions and therelatedassets,liabilities,andequityarewithinthedirectknowledgeandcontrolofmanagement.”Effect: The Capital Asset listing provided by theDistrict did not capitalize the salary and professional fees for themanagementofconstructionprojects,resultinginanunderstatedequity.Cause:TheDistrictwas not capitalizing salary and professional fees for themanagement of construction projects,instead itwas expensing the costs. This required the auditor topropose that theDistrict capitalize prior year andcurrentyearsalaryandprofessionfeeswhichwerebeingexpensedintheBondBuildingFund.Auditors’ Recommendation: The District should capitalize all salary and professional fees related to projectmanagementonallconstructionprojects.ViewsofResponsibleOfficialsandPlannedCorrectiveActions:TheDistrictconcurswiththisrecommendationandhascorrectedandcapitalizedprioryearandcurrentyearsalaryandprofessionalfeeswhichwerebeingexpendedintheBondBuildingfund.ThisresultedintheadjustmentandrestatementofthecapitalassetsactivityfortheyearendedJune 30, 2017. The District has also implemented additional internal controls to ensure all future salaries andprofessionalfeesrelatedtoprojectmanagementonallconstructionprojectsarecapitalized.SECTIONIII–FEDERALAWARDFINDINGSNonenotedSECTIONIV–PRIORYEARAUDITFINDINGSNonenoted

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Documents

State of Arizona Riverside Elementary School District No. 2€¦ · Other Matters Required Supplementary Information Accounting principles generally accepted in the United States