Van Dyke Public Schools Van Dyke Public Schools Financial Report with Supplemental Information by jolinmilioncherie

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									Van Dyke Public Schools

       Financial Report
 with Supplemental Information
         June 30, 2009
Van Dyke Public Schools
                                                                              Contents


Report Letter                                                                     1-2

Management’s Discussion and Analysis                                             3-11

Basic Financial Statements

  District-wide Financial Statements:
     Statement of Net Assets                                                      12
     Statement of Activities                                                      13

  Fund Financial Statements:
    Governmental Funds:
         Balance Sheet                                                            14
         Reconciliation of the Balance Sheet of Governmental Funds to the
            Statement of Net Assets                                               15
         Statement of Revenue, Expenditures, and Changes in Fund Balances         16
         Reconciliation of the Statement of Revenue, Expenditures, and
            Changes in Fund Balances of Governmental Funds to the Statement
            of Activities                                                         17

     Fiduciary Fund - Statement of Fiduciary Assets and Liabilities               18

  Notes to Financial Statements                                                  19-35

Required Supplemental Information                                                 36

  Budgetary Comparison Schedule - General Fund                                    37

Other Supplemental Information                                                    38

  Nonmajor Governmental Funds:
    Combining Balance Sheet                                                       39
    Combining Statement of Revenue, Expenditures, and Changes in Fund
      Balances                                                                    40

  Schedule of Bonded Indebtedness                                                 41

  Federal Awards Supplemental Information                                     Issued Under
                                                                                 Separate
                                                                                  Cover
                                  Independent Auditor’s Report


To the Board of Education
Van Dyke Public Schools

We have audited the accompanying financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of Van Dyke Public Schools as of and
for the year ended June 30, 2009, which collectively comprise the School District’s basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
Van Dyke Public Schools’ management. Our responsibility is to express opinions on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of Van Dyke Public Schools as of June 30, 2009 and the
respective changes in financial position for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.

The management’s discussion and analysis and budgetary comparison schedule (identified in the
table of contents) are not required parts of the basic financial statements but are supplemental
information required by accounting principles generally accepted in the United States of
America. We have applied certain limited procedures, which consisted principally of inquiries of
management, regarding the methods of measurement and presentation of the required
supplemental information. However, we did not audit the information and express no opinion
on it.




                                                 1
To the Board of Education
Van Dyke Public Schools


Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise Van Dyke Public Schools’ basic financial statements. The accompanying
other supplemental information, as identified in the table of contents, is presented for the
purpose of additional analysis and is not a required part of the basic financial statements. The
other supplemental information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued our report dated
September 15, 2009 on our consideration of Van Dyke Public Schools’ internal control over
financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, grant agreements, and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide opinions on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be considered in assessing the results of our audit.




September 15, 2009




                                                   2
Van Dyke Public Schools
                                                 Management’s Discussion and Analysis


This section of the 2009 annual financial report presents management’s discussion and analysis of
Van Dyke Public Schools’ (the “School District”) financial performance during the year ended
June 30, 2009. Please read it in conjunction with the School District’s financial statements, which
immediately follow this section.

Van Dyke Public Schools is a suburban public school district located one mile north of the city of
Detroit. It is a fiscally independent school district governed by a seven-member elected Board
of Education. During the 2008-2009 school year, there were four elementary schools, one
middle school which also housed grade 6 elementary, one high school, an alternative school
(grades 7-12), an administration building, and maintenance and transportation facilities.

The management’s discussion and analysis, a requirement of GASB No. 34, is intended to be Van
Dyke Public Schools’ discussion and analysis of the financial results of the fiscal year ended
June 30, 2009.

Using this Annual Report

This annual report consists of a series of financial statements and notes to those statements.
These statements are organized so the reader can understand Van Dyke Public Schools
financially as a whole. The district-wide financial statements provide information about the
activities of the whole School District, presenting both an aggregate view of the School District’s
finances and a longer-term view of those finances. The fund financial statements provide the
next level of detail. For governmental activities, these statements tell how services were
financed in the short term as well as what remains for future spending. The fund financial
statements look at the School District’s operations in more detail than the district-wide financial
statements by providing information about the School District’s most significant funds, the
General Fund and the 2008 School Building and Site Fund, with all other funds presented in one
column as nonmajor funds. The remaining statement, the statement of fiduciary assets and
liabilities, presents financial information about activities for which the School District acts solely
as an agent for the benefit of students and parents. The annual report includes the following:

                         Management’s Discussion and Analysis (MD&A)
                             (Required Supplemental Information)
                                    Basic Financial Statements
                District-wide Financial Statements        Fund Financial Statements
                             Notes to the Basic Financial Statements
                              (Required Supplemental Information)
                             Budgetary Information for General Fund
                                 Other Supplemental Information



                                                  3
Van Dyke Public Schools
                               Management’s Discussion and Analysis (Continued)


Reporting the School District as a Whole - District-wide Financial Statements

One of the most important questions asked about the School District is, “As a whole, what is the
School District’s financial condition as a result of the year’s activities?” The statement of net
assets and the statement of activities, which appear first in the School District’s financial
statements, report information on the School District as a whole and its activities in a way that
helps answer this question. These statements include all assets and liabilities, prepared using the
accrual basis of accounting. This method is similar to the accounting used by most private sector
companies. All of the current year’s revenues and expenses are taken into account regardless of
when cash is received or paid.

These two statements report the School District’s net assets - the difference between assets and
liabilities, as reported in the statement of net assets - as one way to measure the School
District’s financial health or financial position. Over time, increases or decreases in the School
District’s net assets - as reported in the statement of activities - are indicators of whether the
School District’s financial health is improving or deteriorating. The relationship between
revenues and expenses is the School District’s operating results. However, the School District’s
goal is to provide services to its students, not to generate profits as commercial entities do.
Other nonfinancial factors, such as the quality of the education provided and the safety of the
schools, must also be considered to assess the overall health of the School District.

The statement of net assets and the statement of activities report the governmental activities for
the School District, which encompass all of the School District’s instruction and instructional
support services, utilities, operations and maintenance, transportation, community services,
athletics, and food services. Property taxes, unrestricted state aid, and state and federal grants
finance most of these activities.

Reporting the School District’s Most Significant Funds - Fund Financial Statements

The School District’s fund financial statements provide detailed information about the most
significant funds, the General Fund, 2008 School Building and Site Fund, and remaining nonmajor
funds, not the School District as a whole. Some funds are required by state law and by bond
covenants. However, the School District establishes many other funds to help it control and
manage money for particular purposes or to show that it is meeting legal responsibilities for
using certain taxes, grants, and other money. The governmental funds of the School District use
the following accounting approach:




                                                4
Van Dyke Public Schools
                                   Management’s Discussion and Analysis (Continued)


    Governmental funds - All of the School District’s services are reported in governmental
    funds. Governmental fund reporting focuses on showing how money flows into and
    out of funds and the balances left at year end that are available for spending in future
    years. The accounting method used is called modified accrual accounting, which
    measures cash and all other financial assets that can readily be converted to cash. The
    governmental fund statements provide a detailed short-term view of the operations of
    the School District and the services it provides. Governmental fund information helps
    determine whether there are more or fewer financial resources that can be spent in the
    near future to finance the School District’s programs. The relationship between
    governmental activities (reported in the statement of net assets and the statement of
    activities) and governmental funds is explained in the reconciliation statements.
The School District as Trustee - Reporting the School District’s Fiduciary Responsibilities
The School District is the trustee, or fiduciary, for its student activity funds. All of the School
District’s fiduciary activities are reported in a separate statement of fiduciary assets and liabilities.
These activities are excluded from the School District’s other financial statements because the
School District cannot use these assets to finance its operations. The School District is
responsible for ensuring that the assets reported in these funds are used for their intended
purposes.
The School District as a Whole
The statement of net assets provides the perspective of the School District as a whole. Table 1
provides a summary of the School District’s net assets as of June 30, 2009 and 2008:

TABLE 1 - Condensed Statement of Net Assets                                   Governmental Activities
                                                                                2009        2008
                                                                                      (in millions)
Assets
   Current and other assets                                                   $      49.5 $           53.2
   Capital assets                                                                    28.0             25.0
               Total assets                                                          77.5             78.2
Liabilities
   Current liabilities                                                                8.1              7.2
   Long-term liabilities                                                             41.5             44.4
               Total liabilities                                                     49.6             51.6
Net Assets
  Invested in property and equipment - Net of related debt                           21.3             18.3
  Restricted                                                                          2.5              2.0
  Unrestricted                                                                        4.1              6.3
               Total net assets                                               $     27.9      $       26.6


                                                   5
Van Dyke Public Schools
                               Management’s Discussion and Analysis (Continued)


The School District’s net assets were $27.9 million at June 30, 2009. Capital assets, net of
related debt, makes up $21.3 million. It compares the original cost, less depreciation of the
School District’s capital assets, to long-term debt used to finance the acquisition of those assets.
Most of the debt will be repaid from voter-approved property taxes collected as the debt
service comes due. Restricted net assets of $2.5 million are reported separately to show legal
constraints from debt covenants and enabling legislation that limit the School District’s ability to
use those net assets for day-to-day operations.

The $4.1 million in unrestricted net assets of governmental activities represents the accumulated
results of all past years’ operations. The operating results of the General Fund will have a
significant impact on the change in unrestricted net assets from year to year.

The results of operations for the School District as a whole are reported in the statement of
activities, which shows the changes in net assets for fiscal years 2009 and 2008 (see Table 2):

TABLE 2 - Changes in Net Assets from Operating Results

                                                                         Governmental Activities
                                                                           2009        2008
                                                                                 (in millions)
Revenue
  Program revenue:
     Charges for services                                                $       0.5 $            0.5
     Operating grants                                                           12.2              9.7
  General revenue:
     Property taxes                                                              9.7             10.0
     State foundation allowance                                                 19.2             20.5
     Special item - Impairment and loss on disposal of
         capital assets                                                          -               (0.1)
     Other                                                                       2.3              1.7

              Total revenue                                                     43.9             42.3




                                                 6
Van Dyke Public Schools
                               Management’s Discussion and Analysis (Continued)


TABLE 2 - Changes in Net Assets from Operating Results (Continued)

                                                                        Governmental Activities
                                                                          2009        2008
                                                                                (in millions)
Functions/Program Expenses
  Instruction                                                           $      20.9 $           21.8
  Support services                                                             15.8             15.8
  Food services                                                                 1.7              1.6
  Athletics                                                                     0.5              0.6
  Community services                                                            0.2              0.2
  Interest on long-term debt and other                                          1.9              0.6
  Transfers to other governmental units                                         0.3              0.2
  Depreciation (unallocated)                                                    1.3              1.4

              Total functions/program expenses                                 42.6             42.2

Increase in Net Assets                                                  $       1.3     $       0.1


As reported in the statement of activities, the cost of all governmental activities this year was
$42.6 million. Certain activities were partially funded from those who benefited from the
programs, $0.5 million, or by other governments and organizations that subsidized certain
programs with grants and contributions, $12.2 million. The remaining public benefit portion of
the School District’s governmental activities was paid with $9.7 million in taxes, $19.2 million in
state foundation allowance, and $2.3 million through other revenue sources. The School District
experienced an increase in net assets of $1.3 million.

As discussed above, the net cost shows the financial burden that was placed on the State and the
School District’s taxpayers by each of these functions. Since property taxes for operations and
unrestricted state aid constitute the vast majority of the School District’s operating revenue
sources, the Board of Education and administration must annually evaluate the needs of the
School District and balance those needs with state-prescribed available unrestricted resources.

The School District’s Funds

The School District uses funds to control and manage money for particular purposes. The
School District maintains separate funds for general operations, athletics, community education
programs, food service, debt service, and capital projects. Each fund statement provides
information about the current year’s revenues and expenditures as well as overall financial
status.




                                                7
Van Dyke Public Schools
                              Management’s Discussion and Analysis (Continued)


As the School District completed this year, the governmental funds reported a combined fund
balance of approximately $44 million, which is a decrease of approximately $3.6 million from last
year. The primary reasons for the decrease are the net impact of the following:

•   In the General Fund, the School District’s principal operating fund, the fund balance
    increased approximately $2.8 million to $5.3 million. This is due to a one-time operating
    transfer from the 2004 Building and Site Fund to the General Fund. General Fund fund
    balance is available to fund costs related to allowable school operating purposes. See
    General Fund budgetary highlights for additional explanation.

•   Overall, Special Revenue Funds remained stable from prior years, showing a net increase of
    approximately $38,000.

•   In the Debt Service Fund, the fund balance increased approximately $71,000 to $780,000.
    The Qualified Zone Academy Debt Service Fund, which accumulates escrow deposits for
    the liability associated with the Qualified Zone Academy Bond, increased by $61,900 to
    $275,500. An additional $15,800 was transferred from the General Fund to make up for
    lower interest earnings in the escrow account.

•   The combined Capital Projects Fund balances decreased by approximately $6.6 million,
    which was primarily a result of use of bond proceeds for construction projects. In the
    current fiscal year, the School District collected $1.1 million in voter-approved sinking fund
    millage. This millage is available for specific capital projects as allowed by state law and
    approved by the voters. The Sinking Fund has enabled the School District to make capital
    improvements and repairs which would have otherwise been expenditures in the General
    Fund.

General Fund Budgetary Highlights

Over the course of the year, the School District revises its budget as it attempts to deal with
unexpected changes in revenues and expenditures. State law requires that the budget be
amended to ensure that expenditures do not exceed appropriations. The final amendment to
the budget was adopted in June. A schedule showing the School District’s original and final
budget amounts compared with amounts actually paid and received is provided in required
supplemental information of these financial statements.

The 2008-2009 General Fund budget was revised twice during the year to reflect changes in
projections. In June, State funding was reduced by $370 per pupil. This was supplemented
through the Federal American Recovery and Reinvestment Act (ARRA) stabilization fund.
Therefore, there was a shift in funding from state sources to federal.

At year end, the School District experienced a net favorable variance of approximately
$1.6 million. This was due to revenues exceeding projections by approximately 1 percent and
actual expenditures being 3 percent lower than the amount appropriated. There were no
significant budget variances.
                                                8
Van Dyke Public Schools
                                Management’s Discussion and Analysis (Continued)


Capital Assets and Debt Administration

Capital Assets

As of June 30, 2009, the School District had approximately $28.0 million invested in a broad
range of capital assets, including construction in progress, land, buildings, vehicles, furniture, and
equipment. This amount represents a net increase from 2008 (including additions, disposals, and
depreciation) of approximately $3 million.

TABLE 3 - Capital Assets (net of depreciation, in millions of dollars)
                                                                                            Percent
                                                                    2009          2008      Change

Land                                                            $       0.3 $        0.3        -
Work in progress                                                        3.6          -       100.00
Site and site improvements                                              5.3          5.2       1.92
Building and building improvements                                     34.8         34.4       1.16
Furniture and equipment                                                10.7         10.5       1.90
School buses and other vehicles                                         1.3          1.3        -

               Total capital assets                                    56.0         51.7        8.32

               Less accumulated depreciation                           28.0         26.7        4.87

               Net capital assets                               $     28.0    $     25.0      12.00

The School District’s total capital assets increased by approximately $4 million. The School
District added approximately $4 million to capital assets through improvements made through
the 2008 Building & Site, Sinking, and Durant Funds. About $30,000 of capital assets were
disposed during the year.

The net capital assets reflect an increase of $3 million. This is due to depreciation and disposals.

Debt

As of June 30, 2009, the School District had $40.2 million in bonds outstanding versus
$42.1 million in the previous year. This net decrease of $1.9 million is the result of the
retirement of outstanding 2005 Refunding Bonds.




                                                  9
Van Dyke Public Schools
                               Management’s Discussion and Analysis (Continued)


TABLE 4 - Outstanding Debt (in millions of dollars)
                                                                                         Percent
                                                                  2009         2008      Change

Bonds                                                         $     40.2 $       42.1         (4.5)
Bus installment purchase obligations                                 0.5          0.6        (16.7)
Other obligations                                                    3.7          4.0         (7.5)

              Total long-term debt                            $    44.4    $     46.7       (4.93)

The School District’s general obligation bond rating is A. The State limits the amount of general
obligation debt that schools can issue to 15 percent of the assessed value of all taxable property
within the School District’s boundaries. If the School District issues “qualified debt,” i.e., debt
backed by the State of Michigan, such obligations are not subject to this debt limit. The School
District’s outstanding unqualified general obligation debt is significantly below the statutorily
imposed limit.

Other obligations include accrued sick leave and future insurance claims for items that have been
incurred but not yet reported. More detailed information about the School District’s long-term
liabilities is provided in the notes to the financial statements.

Economic Factors and Next Year’s Budgets and Rates

The School District’s elected officials and administration consider many factors when setting the
2009-2010 fiscal year budget. One of the most significant factors is the revenue the School
District receives from the state membership foundation allowance. This revenue comprises
approximately 55 percent of the School District’s total General Fund operating revenues. The
state foundation revenue is determined by multiplying the blended student count by the
foundation allowance per pupil. The blended formula of the 2010 fiscal year is 25 percent of the
February 2009 student count and 75 percent of the September 2009 student count. The 2009-
2010 budget was adopted in June 2009 based on a blended count of 3,062.65, which is 228.27
less than the 2008-2009 student membership count. The budget was developed on the
assumption that the foundation allowance per student count would remain at the 2008-2009
funding level of $8,198. There were reductions made in staffing levels given the projected
decline in enrollment. Additionally, several reductions were made to non-instructional areas.
Under state law, the School District cannot assess additional property tax revenue for general
obligations.

In addition to declining enrollment, other issues facing the School District include decreases in
federal funding, new state mandates (new high school graduation requirements), volatile energy
costs, rising healthcare costs, and an eroding fund balance.




                                                10
Van Dyke Public Schools
                              Management’s Discussion and Analysis (Continued)


Once the final student count and related per pupil funding are validated, state law requires the
School District to amend the budget if actual School District resources are not sufficient to fund
original appropriations.

Contacting the School District’s Financial Management

This financial report is designed to provide the School District’s citizens, taxpayers, customers,
investors, and creditors with a general overview of the School District’s finances and to
demonstrate its accountability for the money it receives. If you have questions about this report
or need additional financial information, contact the business department at 23500 MacArthur,
Warren, MI 48089.




                                               11
Van Dyke Public Schools
                                                       Statement of Net Assets
                                                                 June 30, 2009


                                                                  Governmental
                                                                    Activities

Assets
   Cash and investments (Notes 3 and 8)                          $   43,098,695
   Receivables - Net (Note 4)                                         5,577,590
   Inventories                                                            6,371
   Prepaid costs                                                        857,877
   Capital assets - Net (Note 5)                                     28,013,065

               Total assets                                          77,553,598

Liabilities
   Accounts payable                                                   1,333,628
   Accrued payroll and other liabilities                              3,448,149
   Deferred revenue (Note 4)                                            238,080
   Due to student groups and other                                        1,148
   Due to other governments                                             239,244
   Long-term liabilities (Note 7):
       Due within one year                                            2,851,050
       Due in more than one year                                     41,531,349

               Total liabilities                                     49,642,648

Net Assets
  Investment in capital assets - Net of related debt                 21,326,657
  Restricted:
     Debt service                                                     1,055,711
     Capital projects                                                 1,459,304
  Unrestricted                                                        4,069,278

               Total net assets                                  $   27,910,950




The Notes to the Financial Statements are an   12
  Integral Part of this Statement.
Van Dyke Public Schools
                                                                                     Statement of Activities
                                                                                   Year Ended June 30, 2009


                                                                           Program Revenues
                                                                                                       Governmental
                                                                                                       Activities - Net
                                                                                                         (Expense)
                                                                                                        Revenue and
                                                                     Charges for   Operating Grants/     Changes in
                                                   Expenses           Services      Contributions        Net Assets

Functions/Programs

Primary government - Governmental
  activities:
    Instruction                              $      20,902,558 $           13,021 $       8,046,318 $      (12,843,219)
    Support services                                15,761,264                 -          2,726,570        (13,034,694)
    Food services                                    1,661,672            350,000         1,354,293             42,621
    Athletics                                          553,622             21,972                -            (531,650)
    Community services                                 213,502            103,428            74,551            (35,523)
    Interest on long-term debt and other             1,892,285                 -                 -          (1,892,285)
    Transfers to other governmental units              288,874                 -                 -            (288,874)
    Depreciation (unallocated)                       1,345,831                 -                 -          (1,345,831)

                Total primary government -
                 Governmental activities       $   42,619,608    $       488,421   $    12,201,732         (29,929,455)

                                             General revenues:
                                              Taxes:
                                                Property taxes, levied for general purposes                 4,988,422
                                                Property taxes, levied for debt services                    3,600,067
                                                Property taxes, levied for capital projects                 1,120,563
                                              State aid not restricted to specific purposes                19,183,281
                                              Interest and investment earnings                              1,932,339
                                              Other                                                           368,231

                                                         Total general revenues                            31,192,903

                                             Change in Net Assets                                            1,263,448

                                             Net Assets - Beginning of year                                26,647,502

                                             Net Assets - End of year                                  $   27,910,950




The Notes to the Financial Statements are an              13
  Integral Part of this Statement.
Van Dyke Public Schools
                                                                                               Governmental Funds
                                                                                                     Balance Sheet
                                                                                                     June 30, 2009


                                                                                                       Other
                                                                                 2008 School         Nonmajor          Total
                                                                   General      Building and Site   Governmental    Governmental
                                                                    Fund              Fund             Funds           Funds


                                  Assets

  Cash and investments (Note 3)                               $     3,479,596   $    34,549,617     $   5,069,482   $   43,098,695
  Receivables - Net (Note 4):
       Taxes receivable                                                54,953                -            81,801           136,754
       Accounts receivable                                            101,958           402,846           15,119           519,923
       Due from other governmental units                            4,910,933                -                -          4,910,933
       Due from student groups and other                                9,701                -               279             9,980
  Due from other funds (Note 6)                                        22,032                -            31,166            53,198
  Inventories                                                              -                 -             6,371             6,371
  Prepaid costs and other                                             857,877                -                -            857,877

                        Total assets                          $    9,437,050    $   34,952,463      $ 5,204,218     $ 49,593,731

                    Liabilities and Fund Balances

   Liabilities
        Accounts payable                                      $       402,069   $       875,531     $     56,028    $    1,333,628
        Accrued payroll and other liabilities                       3,216,539                -                -          3,216,539
        Due to other governmental units                               238,532                -               712           239,244
        Due to student groups and other                                 1,148                -                -              1,148
        Due to other funds (Note 6)                                    31,166            22,032               -             53,198
        Deferred revenue (Note 4)                                     293,032                -            81,801           374,833

                        Total liabilities                           4,182,486           897,563          138,541         5,218,590

   Fund Balances
       Reserved:
           Encumbrances                                               230,530           668,892            46,300          945,722
           Debt Service Funds                                              -                 -          1,055,711        1,055,711
           Inventories                                                     -                 -              6,371            6,371
           Prepaids                                                   768,877                -                 -           768,877
           Capital Projects Funds                                          -         33,386,008         1,608,454       34,994,462
       Unreserved:
           Designated for anticipated shortfall                       576,234                 -                -           576,234
           Designated for health insurance                            298,700                 -                -           298,700
           Designated for capital projects                                 -                  -         2,296,010        2,296,010
           Designated for compensated absences                      3,380,223                 -                -         3,380,223
           Undesignated, reported in Special Revenue Funds                 -                  -            52,831           52,831


                        Total fund balances                         5,254,564        34,054,900         5,065,677       44,375,141

                        Total liabilities and fund balances   $    9,437,050    $   34,952,463      $ 5,204,218     $ 49,593,731




The Notes to the Financial Statements are an                  14
  Integral Part of this Statement.
Van Dyke Public Schools
                                                            Governmental Funds
                     Reconciliation of the Balance Sheet of Governmental Funds
                                                 to the Statement of Net Assets
                                                                  June 30, 2009


Fund Balance - Total Governmental Funds                                    $   44,375,141

Amounts reported for governmental activities in the
  statement of net assets are different because:
       Capital assets used in governmental activities
         that are not financial resources and are
         reported in the governmental funds:
              Cost of capital assets                      $ 56,021,174
              Accumulated depreciation                      (28,008,109)       28,013,065

       Other long-term assets not available to
          pay current period expenditures are therefore
          deferred in the governmental funds                                      136,753

       Long-term liabilities are not due and payable
          in the current period and are not reported
          in the governmental funds:
              Bonds and notes payable                                          (40,703,476)
              Compensated absences                                              (3,678,923)

       Accrued interest payable is not included as a
          liability in governmental funds                                        (231,610)

Net Assets - Governmental Activities                                       $ 27,910,950




The Notes to the Financial Statements are an   15
  Integral Part of this Statement.
Van Dyke Public Schools
                                                                   Governmental Funds
                                               Statement of Revenue, Expenditures, and
                                                              Changes in Fund Balances
                                                              Year Ended June 30, 2009


                                                                                              Other
                                                                          2008 School       Nonmajor            Total
                                                                         Building and Site Governmental      Governmental
                                                       General Fund            Fund           Funds             Funds
Revenue
    Local sources                                      $    5,692,783    $    1,708,593    $   5,343,590     $   12,744,966
    State sources                                          24,179,410                -            93,357         24,272,767
    Federal sources                                         4,132,271                -         1,260,936          5,393,207
    Interdistrict sources                                   1,719,039                -                -           1,719,039

               Total revenue                               35,723,503         1,708,593        6,697,883         44,129,979

Expenditures
    Current:
         Instruction                                       20,854,551                -                -          20,854,551
         Support services                                  15,845,834                -                -          15,845,834
         Community services                                    75,300                -           138,202            213,502
         Food service                                              -                 -         1,661,672          1,661,672
         Athletics                                                 -                 -           553,622            553,622
    Debt service:
         Principal                                           117,462                 -         1,900,000          2,017,462
         Interest                                             32,165                 -         1,671,935          1,704,100
         Other                                                    -                  -             8,627              8,627
    Capital outlay:
         Capitalized                                          56,983          3,676,315          609,991          4,343,289
         Not capitalized                                       5,101                 -           240,236            245,337
    Transfers to other governmental units                    288,874                 -                -             288,874

               Total expenditures                          37,276,270         3,676,315        6,784,285         47,736,870

Deficiency of Revenue Under Expenditures                   (1,552,767)       (1,967,722)         (86,402)        (3,606,891)

Other Financing Sources (Uses)
   Transfers in                                             5,007,385                -            645,656         5,653,041
   Transfers out                                             (645,656)               -         (5,007,385)       (5,653,041)

               Total other financing sources
                  (uses)                                    4,361,729                -         (4,361,729)              -

Net Change in Fund Balances                                 2,808,962        (1,967,722)       (4,448,131)       (3,606,891)

Fund Balances - Beginning of year                           2,445,602        36,022,622        9,513,808         47,982,032

Fund Balances - End of year                            $ 5,254,564       $ 34,054,900      $ 5,065,677       $ 44,375,141




The Notes to the Financial Statements are an      16
  Integral Part of this Statement.
Van Dyke Public Schools
                                                            Governmental Funds
                      Reconciliation of the Statement of Revenue, Expenditures,
                          and Changes in Fund Balances of Governmental Funds
                                                  to the Statement of Activities
                                                      Year Ended June 30, 2009


Net Change in Fund Balances - Total Governmental Funds                                     $   (3,606,891)

Amounts reported for governmental activities in the statement
  of activities are different because:

       Governmental funds report capital outlay as expenditures;
          in the statement of activities, certain costs are allocated
          over their estimated useful lives as depreciation:
              Depreciation expense                                         $ (1,345,831)
              Capitalized capital outlay                                      4,343,289        2,997,458

       Proceeds from the sale of capital assets are reported as revenues
          in the governmental funds, but not reported in the statement
          activities where losses are reported instead                                             (3,051)

       Revenue is reported in the statement of activities at
          the time it is earned, without regard to timeliness
          of collection                                                                         (243,873)

       Interest expense is recorded in the statement of
           activities when incurred; it is not reported in
           governmental funds until paid                                                        (179,557)

       Repayment of bond principal is an expenditure in the
          governmental funds, but not in the statement of
          activities (where it reduces long-term debt)                                         2,017,462

       Compensated absences, as well as estimated self-insured
         liability claims, are recorded when earned in the
         statement of activities                                                                 281,900

Change in Net Assets of Governmental Activities                                            $ 1,263,448




The Notes to the Financial Statements are an        17
  Integral Part of this Statement.
Van Dyke Public Schools
                                                                      Fiduciary Fund
                                         Statement of Fiduciary Assets and Liabilities
                                                                       June 30, 2009


                                                                              Student
                                                                         Activities Agency
                                                                                Fund

Assets
   Cash and investments (Note 3)                                         $       158,342
   Due from other funds (Note 6)                                                   1,148

               Total assets                                              $      159,490


Liabilities
   Accounts payable                                                      $           368
   Due to other funds (Note 6)                                                     9,980
   Due to student groups                                                         149,142

               Total liabilities                                         $      159,490




The Notes to the Financial Statements are an   18
  Integral Part of this Statement.
Van Dyke Public Schools
                                                         Notes to Financial Statements
                                                                         June 30, 2009


Note 1 - Summary of Significant Accounting Policies

         The accounting policies of Van Dyke Public Schools (the “School District”) conform
         to accounting principles generally accepted in the United States of America (GAAP)
         as applicable to governmental units. The following is a summary of the significant
         accounting policies used by the School District:

         Reporting Entity

         The School District is governed by an elected seven-member Board of Education.
         The accompanying financial statements have been prepared in accordance with
         criteria established by the Governmental Accounting Standards Board for
         determining the various governmental organizations to be included in the reporting
         entity. These criteria include significant operational financial relationships that
         determine which of the governmental organizations are a part of the School
         District’s reporting entity, and which organizations are legally separate, component
         units of the School District. Based on the application of the criteria, the School
         District does not contain any component units.

         District-wide and Fund Financial Statements

         The district-wide financial statements (i.e., the statement of net assets and the
         statement of activities) report information on all of the nonfiduciary activities of the
         School District. For the most part, the effect of interfund activity has been removed
         from these statements. Governmental activities, which normally are supported by
         taxes and intergovernmental revenues, are reported separately from business-type
         activities, which rely to a significant extent on fees and charges for support. All of the
         School District’s district-wide activities are considered governmental activities.

         The statement of activities demonstrates the degree to which the direct expenses of
         a given function or segment are offset by program revenues. Direct expenses are
         those that are clearly identifiable with a specific function. Program revenue includes
         (1) charges to customers or applicants who purchase, use, or directly benefit from
         goods, services, or privileges provided by a given function and (2) grants and
         contributions that are restricted to meeting the operational or capital requirements
         of a particular function. Taxes, intergovernmental payments, and other items not
         properly included among program revenues are reported instead as general
         revenue.

         Separate financial statements are provided for governmental funds and fiduciary
         funds, even though the latter are excluded from the district-wide financial
         statements. Major individual governmental funds are reported as separate columns
         in the fund financial statements.


                                              19
Van Dyke Public Schools
                                                       Notes to Financial Statements
                                                                       June 30, 2009


Note 1 - Summary of Significant Accounting Policies (Continued)

        Measurement Focus, Basis of Accounting, and Financial Statement
        Presentation

        District-wide Financial Statements - The district-wide financial statements are
        reported using the economic resources measurement focus and the accrual basis of
        accounting. Revenue is recorded when earned and expenses are recorded when a
        liability is incurred, regardless of the timing of related cash flows. Property taxes are
        recognized as revenue in the year for which they are levied. Grants, categorical aid,
        and similar items are recognized as revenue as soon as all eligibility requirements
        imposed by the provider have been met.

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

        Amounts reported as program revenue include (1) charges to customers or
        applicants for goods, services, or privileges provided, (2) operating grants and
        contributions, and (3) capital grants and contributions. Internally dedicated resources
        are reported as general revenue rather than as program revenue. Likewise, general
        revenue includes all taxes and unrestricted state aid.

        Fund Financial Statements - Governmental fund financial statements are reported
        using the current financial resources measurement focus and the modified accrual
        basis of accounting. Revenue is recognized as soon as it is both measurable and
        available. Revenue is considered to be available if it is collected within the current
        period or soon enough thereafter to pay liabilities of the current period. For this
        purpose, the School District considers revenues to be available if they are collected
        within 60 days of the end of the current fiscal period. Expenditures generally are
        recorded when a liability is incurred, as under accrual accounting. However, debt
        service expenditures, as well as expenditures related to compensated absences and
        claims and judgments, are recorded only when payment is due.

        Property taxes, unrestricted state aid, intergovernmental grants, and interest
        associated with the current fiscal period are all considered to be susceptible to
        accrual and so have been recognized as revenue of the current fiscal period. All
        other revenue items are considered to be available only when cash is received by the
        School District.




                                             20
Van Dyke Public Schools
                                                       Notes to Financial Statements
                                                                       June 30, 2009


Note 1 - Summary of Significant Accounting Policies (Continued)

        Fiduciary fund statements are also reported using the economic resources
        measurement focus and the accrual basis of accounting. All revenue and expenses
        not meeting this definition are reported as nonoperating revenue and expenses.

        The School District reports the following major governmental funds:

        General Fund - The General Fund is the School District’s primary operating fund.
        It accounts for all financial resources of the School District, except those required to
        be accounted for in another fund.

        2008 School Building and Site Fund - The 2008 School Building and Site Fund is
        used to record revenue from bond issuance and disbursements of invoices
        specifically designated for improvements and remodeling of current school buildings
        as well as erecting a new career center building.

        Additionally, the School District reports the following nonmajor fund types:

        Special Revenue Funds - Special Revenue Funds are used to account for the
        proceeds of specific revenue sources that are restricted to expend for specified
        purposes. The School District’s Special Revenue Funds include the Food Services,
        Athletics, and Community Service Funds. Any operating deficit generated by these
        funds is the responsibility of the General Fund.

        Debt Service Fund - The Debt Service Fund is used to record tax, interest, and
        other revenue for payment of interest, principal, and other expenditures on long-
        term debt.

        Qualified Zone Academy Bond Debt Service Fund - The Qualified Zone
        Academy Bond Debt Service Fund (QZAB) is used to accumulate deposits
        transferred from the General Fund to be placed in a restricted escrow until the
        maturity of the bond in 2018.

        Durant Capital Projects Fund - The Durant Capital Projects Fund is used to
        record proceeds of the Durant settlement or other revenue and the disbursement
        of invoices specifically designated for acquiring new school sites, buildings,
        equipment, and for remodeling.

        Sinking Fund - The Sinking Fund reports capital project activities funded with
        Sinking Fund millage.




                                            21
Van Dyke Public Schools
                                                      Notes to Financial Statements
                                                                      June 30, 2009


Note 1 - Summary of Significant Accounting Policies (Continued)

        Trust and Agency Fund - The Agency Fund is used to record the transactions of
        student, staff, and School District groups for schools and school-related purposes.
        The fund is segregated and held in trust for the groups and is not available for School
        District purposes.

        Assets, Liabilities, and Net Assets or Equity

        Cash and Investments - Cash and investments include cash on hand, demand
        deposits, and investments with varying maturities. Investments are stated at fair
        value.

        Receivables and Payables - In general, outstanding balances between funds are
        reported as “due to/from other funds.” Activities between funds that are
        representative of lending/borrowing arrangements outstanding at the end of the
        fiscal year are referred to as “transfers to/from other funds.”

        All trade and property tax receivables are shown net of an allowance for
        uncollectible amounts. The School District considers all accounts receivable to be
        fully collectible; accordingly, no allowance for uncollectible amounts is recorded.
        Property taxes are assessed as of December 31 and the related property taxes
        become a lien on December 1 of the following year. These taxes are billed on July 1
        for approximately 50 percent of the taxes and on December 1 for the remainder of
        the property taxes. Taxes are considered delinquent on March 1 the following year.
        At this time, penalties and interest are assessed and the total obligation is added to
        the county tax rolls.

        Inventories and Prepaid Costs - Inventories are valued at cost, on a first-in, first-
        out basis. Inventories of governmental funds are recorded as expenditures when
        consumed. Certain payments to vendors reflect costs applicable to future fiscal years
        and are recorded as prepaid costs in both district-wide and fund financial statements.

        Restricted Assets - The unspent bond proceeds and related interest of the Bonded
        Capital Projects and Debt Service Funds require amounts to be set aside for
        construction and repayment of debt. These amounts represent restricted assets.




                                            22
Van Dyke Public Schools
                                                       Notes to Financial Statements
                                                                       June 30, 2009


Note 1 - Summary of Significant Accounting Policies (Continued)

        Capital Assets - Capital assets, which include work in progress, land, buildings,
        equipment, and vehicles, are reported in the applicable governmental column in the
        district-wide financial statements. Capital assets are defined by the School District as
        assets with an initial individual cost of more than $5,000 and an estimated useful life
        in excess of one year. Such assets are recorded at historical cost or estimated
        historical cost if purchased or constructed. Donated capital assets are recorded at
        estimated fair market value at the date of donation. Costs of normal repair and
        maintenance that do not add to the value or materially extend asset life are not
        capitalized. The School District does not have infrastructure-type assets.

        Buildings, equipment, and vehicles are depreciated using the straight-line method
        over the following useful lives:

         Buildings, building improvements, and site improvements                    20-50 years
         School buses and other vehicles                                                8 years
         Furniture and equipment                                                     5-15 years

        Compensated Absences - The liability for compensated absences reported in the
        district-wide statements consists of earned but unused accumulated sick leave. A
        liability for these amounts is reported in governmental funds as it comes due for
        payment. The liability has been calculated using the vesting method, in which leave
        amounts for both employees who are currently eligible to receive termination
        payments at normal retirement age and other employees who are expected to
        become eligible in the future to receive such payments upon normal retirement are
        included.

        Long-term Obligations - In the district-wide financial statements, long-term debt
        and other long-term obligations are reported as liabilities in the statement of net
        assets.

        In the fund financial statements, governmental fund types recognize bond proceeds,
        premiums, and discounts, as well as bond issuances costs, during the current period.

        The face amount of debt issued is reported as other financing sources. Premiums
        received on debt issuances are also reported as other financing sources. Issuance
        costs are reported as debt service expenditures.

        Fund Equity - In the fund financial statements, governmental funds report
        reservations of fund balance for amounts that are not available for appropriation or
        are legally restricted by outside parties for use for a specific purpose. Designations
        of fund balance represent tentative management plans that are subject to change.


                                            23
Van Dyke Public Schools
                                                     Notes to Financial Statements
                                                                     June 30, 2009


Note 1 - Summary of Significant Accounting Policies (Continued)

        Comparative Data - Comparative data is not included in the School District’s
        financial statements.

Note 2 - Stewardship, Compliance, and Accountability

        Budgetary Information - Annual budgets are adopted on a basis consistent with
        accounting principles generally accepted in the United States of America and state
        law for the General and Special Revenue Funds. All annual appropriations lapse at
        fiscal year end.

        The budget document presents information by fund and function. The legal level of
        budgetary control adopted by the governing body (i.e., the level at which
        expenditures may not legally exceed appropriations) is the function level. State law
        requires the School District to have its budget in place by July 1. Expenditures in
        excess of amounts budgeted are a violation of Michigan law. State law permits
        districts to amend their budgets during the year. Two amendments were made to
        adjust for charges in estimated revenues; however, neither amendment was
        significant.

        Encumbrance accounting is employed in governmental funds. Encumbrances (e.g.,
        purchase orders, contracts) outstanding at year end are reported as reservations of
        fund balances and do not constitute expenditures or liabilities because the goods or
        services have not been received as of year end; the commitments will be
        reappropriated and honored during the subsequent year.

        Capital Projects Fund Compliance - The 2008 School Building and Site Fund
        includes capital project activities funded with bonds issued June 18, 2008. For this
        capital project, the School District has complied with the applicable revisions of
        §1351a of the State of Michigan School Code.

        Sinking Fund Compliance - The District’s Sinking Fund includes activities funded
        by a sinking fund millage. For this fund, the School District has complied with the
        provisions of Sec. 1212(1) of the State of Michigan School Code.




                                          24
Van Dyke Public Schools
                                                        Notes to Financial Statements
                                                                        June 30, 2009


Note 3 - Deposits and Investments

        State statutes and the School District’s investment policy authorize the School
        District to make deposits in the accounts of federally insured banks, credit unions,
        and savings and loan associations that have offices in Michigan. The School District is
        allowed to invest in U.S. Treasury or agency obligations, U.S. government
        repurchase agreements, bankers’ acceptances, commercial paper rated prime at the
        time of purchase that matures not more than 270 days after the date of purchase,
        mutual funds, and investment pools that are composed of authorized investment
        vehicles. The School District’s deposits are in accordance with statutory authority.

        The School District has designated six banks (credit unions or savings and loan
        associations) for the deposit of its funds.

        The School District’s cash and investments are subject to several types of risk, which
        are examined in more detail below:

        Custodial Credit Risk of Bank Deposits

        Custodial credit risk is the risk that in the event of a bank failure, the School
        District’s deposits may not be returned to it. The School District’s investment policy
        requires that financial institutions be evaluated and only those with an acceptable risk
        level be used for the School District’s deposits for custodial credit risk. At year end,
        the School District’s deposit balance of $11,254,862 had $5,762,981 of bank
        deposits (certificates of deposit, checking, savings, and money market accounts) that
        were uninsured and uncollateralized.

        The School District believes that due to the dollar amounts of cash deposits and the
        limits of FDIC insurance, it is impractical to insure all deposits. As a result, the
        School District evaluates each financial institution with which it deposits funds and
        assesses the level of risk of each institution; only those institutions with an acceptable
        estimated risk level are used as depositories.




                                             25
Van Dyke Public Schools
                                                         Notes to Financial Statements
                                                                         June 30, 2009


Note 3 - Deposits and Investments (Continued)

        Custodial Credit Risk of Investments

        Custodial credit risk is the risk that, in the event of the failure of the counterparty,
        the School District will not be able to recover the value of its investments or
        collateral securities that are in the possession of an outside party. The School
        District’s investment policy states custodial credit risk will be minimized by pre-
        qualifying the financial institutions, broker/dealers, intermediaries, and advisors with
        which the School District will do business using the criteria established in the
        investment policy. The following investment securities were uninsured and
        unregistered and held in the following manner:

               Investment Type                        Carrying                   How Held

         U.S. government bonds                    $    4,266,294               Counterparty
         U.S. agency bonds                            27,923,459               Counterparty

                 Total investments                $   32,189,753

        Interest Rate Risk

        Interest rate risk is the risk that the value of investments will decrease as a result of a
        rise in interest rates. The School District’s investment policy does not restrict
        investment maturities, other than commercial paper which can only be purchased
        with a 365-day maturity. The School District’s policy minimizes interest rate risk by
        requiring the structuring of the investment portfolio so that securities mature to
        meet cash requirements for ongoing operations, thereby avoiding the need to sell
        securities in the open market; and investing operating funds primarily in shorter-
        term securities, liquid asset funds, money market mutual funds, or similar investment
        pools and limiting the average maturity in accordance with the School District’s cash
        requirements.

        Credit Risk

        State law limits investments in commercial paper to the top two ratings issued by
        nationally recognized statistical rating organizations. The School District’s investment
        policy does not further limit its investment choices.




                                             26
Van Dyke Public Schools
                                                            Notes to Financial Statements
                                                                            June 30, 2009


Note 3 - Deposits and Investments (Continued)

        At year end, the maturities of investments and the credit quality ratings of debt
        securities are as follows:

                                                                                     Rating
              Investment            Fair Value              Maturities    Rating   Organization

         U.S. Treasury note     $       986,383        August 15, 2011    N/A      Not required
         U.S. Treasury note           1,501,318        October 15, 2009   N/A      Not required
         U.S. Treasury note             516,796        August 31, 2011    N/A      Not required
         U.S. Treasury note           1,261,797       November 15, 2009   N/A      Not required
         Freddie Mac                  5,263,198          July 15, 2009    AAA          S&P
         Freddie Mac                  1,761,207          July 12, 2010    AAA          S&P
         Freddie Mac                  1,009,033        October 18, 2010   AAA          S&P
         Fannie Mae                   2,723,318          May 15, 2010     AAA          S&P
         Fannie Mae                   4,816,913       February 15, 2011   AAA          S&P
         Fannie Mae                   1,205,441       February 15, 2010   AAA          S&P
         Fannie Mae                   3,689,033        August 15, 2010    AAA          S&P
         Fannie Mae                   1,888,191       December 15, 2010   AAA          S&P
         Fannie Mae                     145,927        October 15, 2011   AAA          S&P
         Fannie Mae                   2,554,323       December 15, 2009   AAA          S&P
         Fannie Mae                   2,866,875         March 12, 2010    AAA          S&P

            Total investments   $    32,189,753

        Concentration of Credit Risk

        The School District places no limit on the amount the School District may invest in
        any one issuer. As of June 30, 2009, the following investments exceed 5 percent of
        total investments:

                                                                                     Percent
                   Investment                               Fair Value               of Total

         U.S. Treasury notes                            $     4,266,294                         13
         Freddie Mac                                         87,033,438                         25
         Fannie Mae                                          19,890,021                         62




                                                 27
Van Dyke Public Schools
                                                       Notes to Financial Statements
                                                                       June 30, 2009


Note 3 - Deposits and Investments (Continued)

        Foreign Currency Risk

        Foreign currency risk is the risk that an investment denominated in the currency of a
        foreign country could reduce its U.S. dollar value, as a result of changes in foreign
        currency exchange rates. State law and the School District’s policy prohibit
        investment in foreign currency.

Note 4 - Receivables

        Receivables as of year end for the School District’s individual major funds and the
        nonmajor and fiduciary funds in the aggregate, including the applicable allowances for
        uncollectible accounts, are as follows:


                                                       Capital
                                                      Projects
                                        General     2008 Building Nonmajor
                                         Fund       and Site Fund  Funds            Total

         Receivables:
          Taxes                     $      54,953 $          -  $      81,801 $   136,754
          Accounts                        111,659       402,846        15,398     529,903
          Intergovernmental             4,910,933            -             -    4,910,933
                Net receivables     $   5,077,545 $     402,846 $      97,199 $ 5,577,590

         Governmental funds report deferred revenue in connection with receivables for
         revenue that is not considered to be available to liquidate liabilities of the current
         period. Governmental funds also defer revenue recognition in connection with
         resources that have been received but not yet earned. At the end of the current
         fiscal year, the various components of deferred revenue are as follows:

                                                                   Unavailable    Unearned

         Delinquent property taxes                                $   136,753 $             -
         Grant and categorical aid payment received
            prior to meeting all eligibility requirements                   -         238,080

                       Total                                      $   136,753 $       238,080



                                             28
Van Dyke Public Schools
                                                                     Notes to Financial Statements
                                                                                     June 30, 2009


Note 5 - Capital Assets

         Capital asset activity of the School District was as follows:

                                                       Balance                                               Balance
                                                     July 1, 2008        Additions        Disposals        June 30, 2009
         Capital assets not being depreciated:
           Land                                  $         265,821   $           -    $           -    $         265,821
           Work in progress                                     -         3,617,365               -            3,617,365

                           Subtotal                        265,821        3,617,365               -            3,883,186

         Capital assets being depreciated:
           Site and site improvements                   5,202,590            95,756               -            5,298,346
           Building and building
              improvements                             34,430,157           362,051               -           34,792,208
           Furniture and equipment                     10,481,444           268,117                           10,749,561
           School buses and other vehicles              1,328,368                -            30,495           1,297,873

                           Subtotal                    51,442,559           725,924           30,495          52,137,988

                           Total                       51,708,380         4,343,289           30,495          56,021,174

         Accumulated depreciation:
           Site and site improvements                   2,969,055           169,348               -            3,138,403
           Building and building
              improvements                             15,371,666           765,897               -           16,137,563
           Furniture and equipment                      7,747,100           282,892               -            8,029,992
           School buses and other vehicles                601,902           127,694           27,445             702,151

                           Subtotal                    26,689,723         1,345,831           27,445          28,008,109

         Net governmental capital assets         $     25,018,657    $    2,997,458   $        3,050   $      28,013,065


         Depreciation expense was not charged to activities as the School District considers
         its assets to impact multiple activities and allocation is not practical.

Note 6 - Interfund Receivables, Payables, and Transfers

         Interfund balances between the General Fund and nonmajor governmental funds,
         totaling $31,166, are a result of purchases made from the General Fund on behalf of
         another fund. The interfund balance between the 2008 Building and Site Fund and
         the General Fund, totaling $22,032, resulted from purchases of capital assets initially
         paid out of the General Fund which are the responsibility of the Building and Site
         Fund. Interfund balances and temporary cash flow assistance from the General Fund
         are routine.


                                                      29
Van Dyke Public Schools
                                                         Notes to Financial Statements
                                                                         June 30, 2009


Note 6 - Interfund Receivables, Payables, and Transfers (Continued)

         Interfund Transfers

                                                          Transfers Out
                                                                    Nonmajor
                                                      General    Governmental
                                                       Fund          Funds            Total

         Transfers in:
            General Fund                          $         -     $ 5,007,385 $      5,007,385
            Nonmajor governmental
               funds                                    645,656            -           645,656

                       Total                      $     645,656 $ 5,007,385 $        5,653,041

         General Fund transfers are used to support and maintain the operations of the funds
         for the purpose for which they were created. During 2008-2009, the General Fund
         transferred board-approved funds to the Food Services, Athletics, and Community
         Education Funds to support the operations of the funds, and to the QZAB Debt
         Service Fund to cover the annual QZAB payment. At the end of the previous year,
         the board approved the transfer of the remaining fund balance from the Capital
         Projects 2004 Building and Site Fund to the General Fund. This transfer was made
         during the year.

Note 7 - Long-term Debt

         The School District issues bonds, notes, and other contractual commitments to
         provide for the acquisition and construction of major capital facilities and the
         acquisition of certain equipment. General obligation bonds are direct obligations and
         pledge the full faith and credit of the School District. Notes and installment purchase
         agreements are also general obligations of the School District. Other long-term
         obligations include compensated absences, claims and judgments, termination
         benefits, and certain risk liabilities.




                                             30
Van Dyke Public Schools
                                                                 Notes to Financial Statements
                                                                                 June 30, 2009


Note 7 - Long-term Debt (Continued)

        Long-term obligation activity can be summarized as follows:
                                        Beginning                                       Ending        Due Within
                                        Balance            Additions    Reductions     Balance        One Year

        Governmental activities:
         Bonds                        $ 42,100,000     $         -     $ 1,900,000   $ 40,200,000    $ 2,135,000
         Bus installment purchase
           obligations                     620,938               -         117,462        503,476        316,050
         Other obligations               3,960,823          196,315        478,215      3,678,923        400,000

                Total governmental
                  activities          $ 46,681,761     $ 196,315       $ 2,495,677   $ 44,382,399    $ 2,851,050


        Annual debt service requirements to maturity for the above governmental bond and
        installment purchase obligations are as follows:

                                                         Governmental Activities
                                               Principal       Interest                             Total

              2010                        $          2,451,050 $             1,848,336 $             4,299,386
              2011                                   2,322,425               1,757,827               4,080,252
              2012                                     705,000               1,645,481               2,350,481
              2013                                     735,000               1,622,569               2,357,569
              2014                                     760,000               1,598,681               2,358,681
            2015-2020                                5,960,000               8,931,537              14,891,537
            2021-2025                                5,535,000               6,297,263              11,832,263
            2026-2030                                6,945,000               4,888,844              11,833,844
            2031-2035                                8,845,000               2,981,250              11,826,250
            2036-2038                                6,445,000                 655,000               7,100,000

                              Total       $         40,703,475 $           32,226,788 $             72,930,263




                                                  31
Van Dyke Public Schools
                                                         Notes to Financial Statements
                                                                         June 30, 2009


Note 7 - Long-term Debt (Continued)

        Governmental Activities

        General obligation bonds consist of the following:

        $35,700,000 serial and term bonds due in annual installments ranging
        from $235,000 to $2,255,000 through May 1, 2038; interest at 3.25
        percent to 5.0 percent                                                        $   35,700,000

        $10,010,000 serial bonds due in annual installments of $510,000 to
        $1,900,000 through May 1, 2011; interest at 3.0 percent to 5.0
        percent                                                                            3,800,000

        $700,000 Qualified Zone Academy Bonds; interest is not charged on
        the bond; annual escrow deposits of $40,041 are required to be
        placed into a restricted cash account until June 2018, at which point a
        principal payment of $700,000 will be required                                      700,000

                       Total                                                          $   40,200,000

        Installment purchase obligations consist of the following:

                                                                           Remaining to Maturity

                                                              Interest
                               Original                         Rate
              Date             Amount         Due Date       (Percent)     Interest       Principal

        January 2005      $      603,228    January 2010       5.18      $ 13,690 $ 264,284
        July 2005                432,727      July 2011        5.18        22,098   239,191

               Total      $    1,035,955                                 $ 35,788 $ 503,475

        Other long-term obligations include the following:

        Employee compensated absences                                                 $   3,380,223
        Risk liabilities                                                                    298,700

                       Total                                                          $   3,678,923




                                              32
Van Dyke Public Schools
                                                       Notes to Financial Statements
                                                                       June 30, 2009


Note 7 - Long-term Debt (Continued)

        Advance Refundings - In 2004-2005, the School District defeased the 1996 bonds
        by placing the proceeds of new bonds in an irrevocable trust to provide for all future
        debt service payments on the old bonds. Accordingly, the trust accounts assets and
        liabilities for the defeased bonds are not included in the basic financial statements.
        At June 30, 2009, $4,050,000 of bonds outstanding are considered defeased.

Note 8 - Restricted Assets

        The balances of the restricted asset accounts are as follows:

                                                                                Governmental
                                                                                 Activities

         Debt Service Funds                                                    $    1,036,239
         Capital Projects 2008 School Building and Site Fund                       34,549,617
         Capital Projects Sinking Fund                                              1,705,748

                      Total restricted assets                                  $   37,291,604

Note 9 - Risk Management

        The School District is exposed to various risks of loss related to property loss, torts,
        errors and omissions, and employee injuries (workers’ compensation), as well as
        medical benefits provided to employees. The School District has purchased
        commercial insurance for property loss claims and participates in the MAISL risk
        pool for claims relating to workers’ compensation and general liability. Settled
        claims relating to the commercial insurance have not exceeded the amount of
        insurance coverage in any of the past three fiscal years.

        The shared-risk pool program in which the School District participates operates as a
        common risk-sharing management program for school districts in Michigan; member
        premiums are used to purchase commercial excess insurance coverage and to pay
        member claims in excess of deductible amounts.

        Health and Dental Insurance - The School District is partially uninsured for health
        claims and self-insured for dental claims. The School District’s maximum loss is
        limited to an aggregate loss fund amount ($3,517,992 for contract year 2009). All
        claims filed on a calendar-year basis in excess of the loss fund are paid by an excess
        insurer. At June 30, 2009, the School District has reported a liability of $298,700 on
        the district-wide statement of net assets for claims incurred but not paid.



                                            33
Van Dyke Public Schools
                                                      Notes to Financial Statements
                                                                      June 30, 2009


Note 9 - Risk Management (Continued)

         Changes in the estimated liability for uninsured health and dental claims for the past
         two fiscal years are as follows:

                                                                    2009            2008

          Estimated liability - Beginning of year              $     335,396 $       287,147
          Estimated claims incurred - Including changes
              in estimates                                          2,924,566      3,725,695
          Claim payments                                           (2,961,262)    (3,677,446)

          Estimated liability - End of year                    $     298,700 $       335,396

Note 10 - Defined Benefit Pension Plan and Postemployment Benefits

         Plan Description - The School District participates in the Michigan Public School
         Employees’ Retirement System (MPSERS), a statewide, cost-sharing, multiple-
         employer defined benefit public employee retirement system governed by the
         State of Michigan that covers substantially all employees of the School District. The
         system provides retirement, survivor, and disability benefits to plan members and
         their beneficiaries. The system also provides postemployment healthcare benefits
         to retirees and beneficiaries who elect to receive those benefits.

         The Michigan Public School Employees’ Retirement System issues a publicly
         available financial report that includes financial statements and required
         supplementary information for the pension and postemployment healthcare plans.
         That report is available on the web at http://www.michigan.gov/orsschools, or by
         writing to the Office of Retirement System at 7150 Harris Drive, P.O. Box 30171,
         Lansing, MI 48909.

         Pension Benefits - Employer contributions to the pension system result from the
         implementing effects of the School Finance Reform Act. Under these procedures,
         each school district is required to contribute the full actuarial funding contribution
         amount to fund pension benefits. The employer contribution rate was 10.17
         percent of covered payroll for the period from July 1, 2008 through September 30,
         2008 and 9.73 percent for the period from October 1, 2008 through June 30,
         2009. Basic plan members make no contributions, but member investment plan
         members contribute at rates ranging from 3 percent to 4.3 percent of gross wages.
         The School District’s required and actual contributions to the plan for the years
         ended June 30, 2009, 2008, and 2007 were $2,287,358, $2,456,565, and
         $2,725,895, respectively.



                                              34
Van Dyke Public Schools
                                                     Notes to Financial Statements
                                                                     June 30, 2009



Note 10 - Defined Benefit Pension Plan and Postemployment Benefits
          (Continued)

         Postemployment Benefits - Under the MPSERS Act, all retirees participating in
         the MPSERS pension plan have the option of continuing health, dental, and vision
         coverage through MPSERS. Retirees electing this coverage contribute an amount
         equivalent to the monthly cost for Part B Medicare and 10 percent of the monthly
         premium amount for the health, dental, and vision coverage at the time of
         receiving the benefits. The MPSERS board of trustees annually sets the employer
         contribution rate to fund the benefits on a pay-as-you-go basis. Participating
         employers are required to contribute at that rate. The employer contribution rate
         was 6.55 percent of covered payroll for the period from July 1, 2008 through
         September 30, 2008 and 6.81 percent for the period from October 1, 2008
         through June 30, 2009. The School District’s required and actual contributions to
         the plan for retiree healthcare benefits for the years ended June 30, 2009, 2008,
         and 2007 were $1,567,910, $1,543,454, and $1,647,105, respectively.

Note 11 - Commitments and Contingencies

         As of June 30, 2009, the School District had not settled contract negotiations with
         the Professional Personnel of Van Dyke (PPVD) union for the 2008-2009 contract
         year. Other related unions have provisions which would allow for previous
         settlements to be overturned if the PPVD receives an increase in pay. As of the
         date of this report, the results of the negotiations are unknown but they may result
         in retroactive pay to the employees. The financial statements do not include the
         potential effects of this negotiation.




                                           35
Required Supplemental Information




                36
Van Dyke Public Schools
                                                   Required Supplemental Information
                                         Budgetary Comparison Schedule - General Fund
                                                            Year Ended June 30, 2009


                                              Original             Final                              Over (Under)
                                              Budget              Budget            Actual            Final Budget

Revenue
 Local sources                            $    5,481,933 $         5,558,155 $       5,692,783 $           134,628
 State sources                                24,566,660          24,057,737        24,179,410             121,673
 Federal sources                               2,697,005           4,105,301         4,132,271              26,970
 Interdistrict sources                         1,302,840           1,628,217         1,719,039              90,822

            Total revenue                     34,048,438          35,349,410        35,723,503             374,093
Expenditures - Current
 Instruction:
   Basic programs                             14,647,589          14,798,226        14,249,884            (548,342)
   Added needs                                 6,104,567           6,781,956         6,602,109            (179,847)
   Adult education                                31,051              30,505            50,787              20,282
 Support services:
   Pupil                                       4,502,073           4,807,633         4,686,980            (120,653)
   Instructional staff                         1,382,673           1,472,129         1,426,552             (45,577)
   General administration                        551,337             596,142           555,399             (40,743)
   School administration                       1,984,296           2,067,929         2,016,709             (51,220)
   Business and central services               1,573,619           1,572,371         1,468,875            (103,496)
   Transportation and maintenance              5,756,378           5,875,542         5,705,174            (170,368)
 Community services                               49,579              69,615            75,300               5,685
 Debt service                                    149,627             149,627           149,627                  -
 Transfers to other governmental units           270,000             279,654           288,874               9,220

            Total expenditures                37,002,789          38,501,329        37,276,270           (1,225,059)
Other Financing Sources (Uses)
 Transfers in                                  5,000,501           5,005,501         5,007,385               1,884
 Transfers out                                  (666,080)           (659,820)         (645,656)             14,164

            Total other financing
             sources (uses)                    4,334,421           4,345,681         4,361,729              16,048

Net Change in Fund Balance                     1,380,070           1,193,762         2,808,962           1,615,200

Fund Balance - July 1, 2008                    2,445,602           2,445,602         2,445,602                  -

Fund Balance - June 30, 2009              $ 3,825,672         $   3,639,364     $   5,254,564     $      1,615,200




                                                         37
Other Supplemental Information




              38
Van Dyke Public Schools
                                                                                                Other Supplemental Information
                                                                                                       Combining Balance Sheet
                                                                                                 Nonmajor Governmental Funds
                                                                                                                 June 30, 2009



                                                Special Revenue Funds                 Debt Service Funds           Capital Projects Funds
                                           Food                       Community   Bond Debt     QZAB Debt
                                          Services        Athletics    Service     Service       Service       Sinking Fund    Durant Fund          Total

               Assets

Cash and investments                  $     31,485    $          -    $     -     $   780,693   $   255,546    $   1,705,748   $   2,296,010    $   5,069,482
Receivables - Net:
     Taxes                                      -                -          -          57,655            -           24,146                 -         81,801
     Accounts                               15,119               -          -              -             -               -                  -         15,119
     Due from student groups                   279               -          -              -             -               -                  -            279
     Due from other funds                   10,724               -          -             337        20,000             105                 -         31,166
Inventories                                  6,371               -          -              -             -               -                  -          6,371

              Total assets            $ 63,978        $          -    $     -     $   838,685   $ 275,546      $ 1,729,999     $ 2,296,010      $ 5,204,218

   Liabilities and Fund Balances

Liabilities
     Accounts payable                 $      2,392    $          -    $     -     $       865   $          -   $     52,771    $            -   $     56,028
     Due to other funds                        712               -          -              -               -             -                  -            712
     Deferred revenue                           -                -          -          57,655              -         24,146                 -         81,801

              Total liabilities               3,104              -          -          58,520              -         76,917                 -        138,541

Fund Balances
    Reserved:
        Encumbrances                         1,672               -          -              -             -            44,628                           46,300
        Inventories                          6,371               -          -              -             -                -                 -           6,371
        Debt Service Funds                      -                -          -         780,165       275,546               -                 -       1,055,711
        Capital Projects Funds                  -                -          -              -             -         1,608,454                -       1,608,454
    Unreserved - Designated for:
        Capital Projects Funds                  -                -          -              -               -             -         2,296,010        2,296,010
        Special Revenue Funds               52,831               -          -              -               -             -                -            52,831

              Total fund balances           60,874               -          -         780,165       275,546        1,653,082       2,296,010        5,065,677

              Total liabilities and
                    fund balances     $ 63,978        $          -    $     -     $   838,685   $ 275,546      $ 1,729,999     $ 2,296,010      $ 5,204,218




                                                                            39
Van Dyke Public Schools
                                                                                      Other Supplemental Information
                                                                     Combining Statement of Revenue, Expenditures, and
                                                                                              Changes in Fund Balances
                                                                                        Nonmajor Governmental Funds
                                                                                              Year Ended June 30, 2009


                                               Special Revenue Funds                       Debt Service Funds                      Capital Projects Funds
                                                                                                                                           2004
                                                                      Community          Bond Debt      QZAB Debt                      Building and
                                     Food Services       Athletics     Service            Service        Service      Sinking Fund      Site Fund        Durant Fund          Total

Revenue
  Local                              $     350,365   $      21,972    $   103,428    $     3,652,049    $     1,821   $ 1,154,358     $        1,884     $     57,713     $   5,343,590
  State                                     93,357              -              -                  -              -             -                  -                -             93,357
  Federal                                1,260,936              -              -                  -              -             -                  -                -          1,260,936

       Total revenue                     1,704,658          21,972        103,428          3,652,049          1,821     1,154,358              1,884           57,713         6,697,883

Expenditures
  Current:
    Community services                          -               -         138,202                 -             -              -                  -                -            138,202
    Food services                        1,661,672              -              -                  -             -              -                  -                -          1,661,672
    Athletics                                   -          553,622             -                  -             -              -                  -                -            553,622
  Debt service:
    Principal                                  -                 -            -            1,900,000            -              -                  -                -          1,900,000
    Interest                                   -                 -            -            1,671,935            -              -                  -                -          1,671,935
    Other                                      -                 -            -                8,627            -              -                  -                -              8,627
  Capital outlay - Capitalized             19,204                -            -                   -             -         512,312                 -            78,475           609,991
  Capital outlay - Not capitalized             -                 -            -                   -             -         184,542                 -            55,694           240,236

       Total expenditures                1,680,876         553,622        138,202          3,580,562            -         696,854                 -           134,169         6,784,285


Excess of Revenue Over (Under)
  Expenditures                             23,782         (531,650)       (34,774)             71,487         1,821       457,504              1,884           (76,456)         (86,402)

Other Financing Sources (Uses)
  Transfers in                             19,191          531,650         34,774                 -          60,041            -                   -               -             645,656
  Transfers out                            (5,000)              -              -                  -              -             -           (5,002,385)             -          (5,007,385)

       Total other financing
         sources (uses)                    14,191          531,650         34,774                 -          60,041            -           (5,002,385)             -          (4,361,729)

Net Change in Fund Balances                37,973                -            -                71,487        61,862       457,504          (5,000,501)         (76,456)       (4,448,131)

Fund Balances - Beginning of year          22,901                -            -              708,678        213,684     1,195,578          5,000,501         2,372,466        9,513,808

Fund Balances - End of year          $     60,874    $          -     $       -      $      780,165     $ 275,546     $ 1,653,082      $          -      $ 2,296,010      $   5,065,677




                                                                                          40
Van Dyke Public Schools
                                                      Other Supplemental Information
                                                     Schedule of Bonded Indebtedness
                                                            Year Ended June 30, 2009


                                            2008 Building    2005 Refunding
                                           and Site Bonds        Bonds              QZAB
   June 30                                    Principal         Principal          Principal

     2010                                  $        235,000 $       1,900,000 $           -
     2011                                           235,000         1,900,000              -
     2012                                           705,000                -               -
     2013                                           735,000                -               -
     2014                                           760,000                -               -
     2015                                           795,000                -               -
     2016                                           820,000                -               -
     2017                                           850,000                -               -
     2018                                           890,000                -          600,615
   2019-2038                                     29,675,000                -               -
Interest earned                                          -                 -           99,385

                  Total                    $    35,700,000   $     3,800,000   $     700,000


                  Principal payments due         May 1             May 1           June 26

                  Interest payments due          May 1             May 1
                                               November 1        November 1

                  Interest rate            3.25% to 5.0%     3.0% to 5.0%            0%

                  Original issue           $    35,700,000   $    10,010,000   $     700,000




                                                41

								
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