Skokie School District 73½ Skokie, Illinois Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2009

Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

The discussion and analysis of Skokie School District 73-1/2’s (the "District") financial performance provides an overall review of the District’s financial activities for the year ended June 30, 2008. The management of the District encourages readers to consider the information presented herein in conjunction with the basic financial statements to enhance their understanding of the District’s financial performance. Certain comparative information between the current year and the prior is required to be presented in the Management’s Discussion and Analysis (the “MD&A”). Financial Highlights •

On a full accrual basis, general revenues, which include property taxes and general state aid, accounted for $14,812,151 or 85.1% of all revenues. Program specific revenues in the form of categorical reimbursements and grants and changes for services accounted for $2,602,403 or 14.9% of total revenues of $17,414,554.



The District’s total expenses were $14,536,093. Student instructional services accounted for 62.6% of total expenses and administration, transportation, building operations, and other sources accounted for 37.4% of total expenses.



In total, net assets increased by $2,878,461, or 18.5%. This increase is primarily due to a combination of paying down long-term debt and the investment for improvement of the building facilities, specifically the McCracken Middle School addition project.

Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The basic financial statements are comprised of three components: • • •

Government-wide financial statements, Fund financial statements, and Notes to the basic financial statements.

This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the District’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

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Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

The statement of activities presents information showing how the government’s net assets changed during the fiscal year being reported. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government-wide financial statements present the functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities). The District has no business-type activities; that is, functions that are intended to recover all or a significant portion of their costs through user fees and charges. The District’s governmental activities include instructional services (regular education, special education, and other), supporting services, operations and maintenance of facilities, and transportation services. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds (the District maintains no proprietary funds). Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on nearterm inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a school district’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains seven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the Educational Fund, Operations and Maintenance Fund, Transportation Fund, IMRF/Social Security Fund, Working Cash Fund, Bond and Interest Fund, and Fire Prevention and Life Safety Fund, all of which are considered to be major funds. The District adopts an annual budget for each of the funds listed above. A budgetary comparison schedule has been provided for each fund to demonstrate compliance with this budget. Fiduciary funds are used to account for resources held for the benefit of parties outside the School District. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District’s own programs. The -4-

Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

accounting used for fiduciary funds is much like that for the government-wide financial statements. Notes to the basic financial statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District’s progress in funding its obligation to provide pension benefits to its noncertified employees. District-Wide Financial Analysis The District’s combined net assets were higher on June 30, 2008 than they were the year before, increasing 18.5% to $18,428,445. The increase in net assets is primarily due to the combination of investment for the improvement of building facilities and paying down of long-term debt. TABLE 1: Condensed Statements of Net Assets 2007

2008

$26,669,602 8,837,737

$25,800,754 12,273,789

Total Assets

35,507,329

38,074,543

Liabilities: Current liabilities Long-term debt outstanding

7,140,554 12,816,791

7,790,126 11,876,791

Total Liabilities

19,957,345

19,646,098

4,409,347 1,998,689 9,141,948

4,882,565 2,643,187 10,902,693

$15,549,984

$18,428,445

Assets: Current and other assets Capital assets

Net Assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets

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Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

TABLE 2: Changes in Net Assets 2007

2008

$ 729,608 1,498,046

$ 816,590 1,785,813

12,784,307 414,001 932,914

13,442,305 453,785 916,061

16,358,876

17,414,554

7,086,109 1,054,824 2,313,014 389,212 1,265,204 949,072

8,059,300 1,039,511 3,213,549 345,555 992,434 885,744

Total expenses

13,057,435

14,536,093

Increase in net assets

$3,301,441

$2,878,461

Revenues: Program Revenues: Charges for services Operating grants and contributions General Revenues: Taxes General state aid Other Total revenues Expenses: Instruction Pupil and instructional staff services Administration and business Transportation Operations and maintenance Other

On an accrual basis, revenues in the governmental funds were $17,414,554, and exceeded expenses by $2,878,461. Property taxes and replacement taxes accounted for the largest portion of the District’s revenues, contributing 77.2 %. The remainder of revenues came from state and federal grants and other sources. The District’s total expenses were $14,536,093. Student instructional services accounted for 62.6% of the total expenses. 37.4% of total expenses were used for administration, transportation, building operations, and other sources.

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Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

District-Wide Revenues by Source

Operat ing Grants & Contribut ions 10.25%

Charges for Services Other 4.69% 5.26%

General Sate Aid 2.61%

T axes 77.19%

District-Wide Expenses by Source

Operations & Maintenance 6.83%

Administration & Business 22.11%

Other 6.09%

Transportation 2.38%

Pupil & Instructional Staff Services 7.15%

Instruction 55.44%

Financial Analysis of the District’s Funds Highlights of the District’s major funds, excluding the general fund, are as follows: The District’s Governmental Funds balance decreased from $19,532,381 to $18,025,092 in 2008. The expenditures for the McCracken Middle School Addition project were dispersed in 2008 however the Limited School Tax Bonds to fund this building project were issued at the end of fiscal 2007. -7-

Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

All other fund balances were in a positive position. General Fund Budgetary Highlights The General Fund (Educational) provides the resources for our educational program. The District’s budget anticipated that expenditures would exceed revenues and other sources by $556,014. The actual results for the year show an excess of revenues over expenditures and other uses of $1,482,990. Revenue was budgeted at $11,922,683 and actual revenue was $12,573,939, which is 5.5% higher than budgeted. The actual Local revenue was 2.7% higher than budgeted which was mainly due to conservative budgeting. Expenditures for the General Fund (Educational) were budgeted at $11,366,669 and actual expenditures were $11,090,949, or $275,720 (2.4%) less than anticipated. This was primarily because expenditures for legal services and special education services were lower than anticipated. Capital Assets and Debt Administration Capital assets By the end of 2008, the District had compiled a total investment of $12,273,789, net of accumulated depreciation, in a broad range of capital assets including buildings, land, and equipment. Total depreciation expense for the year was $383,578. Facility projects that were in progress or completed in fiscal year 2008 included: • Building Addition at McCracken Middle School which includes: three science lab classrooms, a band room, a flexible multi-purpose exercise room, Spanish classroom, a technology/computer lab, a technology studio and technology server room. • Installation of an Automation System for all of the major mechanicals at all three schools. • New paved parking area at Meyer School. More detailed information about capital assets can be found in Note D of the basic financial statements. TABLE 3: Capital Assets (net of depreciation) 2007 Land Improvements other than buildings Buildings Equipment and vehicles Construction in progress

$

Total

$ 8,837,727 -8-

369,846 257,563 7,078,934 1,131,384 -

2008 $

369,846 247,817 7,165,648 1,066,441 3,424,037

$12,273,789

Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

Long-term debt The District has $11,330,000 outstanding in long-term bonded debt. More detailed information on long-term debt can be found in Note F of the basic financial statements. TABLE 4: Outstanding Long-Term Debt 2007

2008

General obligation bonds Certificates of participation Compensated absences Other

$12,220,000 430,000 36,043 130,748

$11,330,000 380,000 32,503 113,469

Total

$12,816,791

$11,855,972

Long-term debt is decreasing because the district is paying down outstanding general obligation bonds and certificates of participation debt. Factors bearing on the District’s Future At the time these financial statements were prepared and audited, the District was aware of the following circumstances that will significantly affect the financial operations in the future: •

Currently, the District is in a strong financial position due to additional resources generated from the successful referendum which passed in March 2004.



A new three year agreement was negotiated with the District’s Teachers Association for 2008 through 2011. The teachers’ average pay raise will increase 5.396% in 2008-2009, 5.174% in 2009-2010 and 5.1996% in 2010-2011.



The District continues to refund property tax collections for previous tax years due to tax rate objections, Property Tax Appeal Board (PTAB) decisions, and Circuit Court decisions. Since 2001, these refunds total approximately $2.1 million dollars.



The effect of tax caps (Property Tax Extension Limitation law-PTELL) will continue to limit the tax extensions for the District. A significant percentage of the District’s revenue comes from property taxes, this limitation of the inflation rate or 5 percent, whichever is less, will restrict future revenue growth of the District.



Health insurance costs have increased over recent years and will continue to increase for the foreseeable future.

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Skokie School District 73-1/2 Management’s Discussion and Analysis For the Year Ended June 30, 2008

Requests for Information This financial report is designed to provide the District’s citizens, taxpayers, and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the: Business Manager, Skokie School District No. 73-1/2, 8000 East Prairie Road, Skokie, Illinois 60076.

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Comprehensive Annual Financial Report (CAFR) 2008-09.pdf ...

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