FY11-ROE24-Fin-Full

              State of Illinois
GRUNDYIKENDALL COUNTIES
REGIONAL OFFICE OF EDUCATION #24
FINANCIAL AUDIT
(In Accordance with the Single Audit Act
and OMB Circular A-133)
For the Year Ended June 30, 2011
Performed as Special Assistant Auditors·
For the Office of the Auditor General
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
TABLE OF CONTENTS
JUNE 30, 2011
TABLE OF CONTENTS
Officials .
Compliance Report Summary .
Financial Statement Report Summary .
FINANCIAL SECTION
Independent Auditor's Report .
Independent Auditor's Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards .
Independent Auditor's Report on Compliance with Requirements That Could
Have a Direct and Material Effect on Each Major Program and on Internal
Control over Compliance in Accordance with OMB Circular A-133 .
Schedule of Findings and Questioned Costs
Section I - Summary ofAuditor's Results .
Section II - Financial Statement Findings .
Section III - Findings and Questioned Costs for Federal Awards .
Corrective Action Plan for Current Year Audit Findings .
Summary Schedule of Prior Audit Findings .
Management's Discussion and Analysis .
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement ofNet Assets ~ .
Statement of Activities .
Fund Financial Statements
Balance Sheet - Governmental Funds .
Reconciliation of the Governmental Funds Balance Sheet
to the Statement ofNet Assets - Governmental Funds .
Statement of Revenues, Expenditures and Changes in
Fund Balances - Governmental Funds '
Reconciliation ofthe Statement of Revenues, Expenditures and Changes in
Fund Balances to the Statement of Activities - Governmental Funds .
Statement ofNet Assets - Proprietary Funds ..: ~~ .
PAGE
1
2-3
4
5-6
7-8
9-10
11
12a-12d
13
14a-14b
15
16a-16g
17
18
19
20
21
22
23
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
TABLE OF CONTENTS
JUNE 30, 2011
Statement of Revenues, Expenses and Changes in
Fund Net Assets - Proprietary Funds......................... 24
Statement of Cash Flows - Proprietary Funds................................................ 25
Statement ?fFiduciary Net Assets - Fiduciary Funds.................................... 26
Statement of Changes in Fiduciary Net Assets - Fiduciary Funds................. 27
Notes to the Financial Statements 28-60
REQUIRED SUPPLEMENTAL INFORMATION
Illinois Municipal Retirement Fund Schedule of Funding Progress (unaudited) 61
Other Post Employment Benefits Schedule of Funding Progress (unaudited) 62
OTHER SUPPLEMENTAL INFORMATION
, Combining Schedule of Accounts
General Fund .
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances - General Fund Accounts ..
Budgetary Comparison Schedule - Regional Safe Schools ..
Combining Schedule of Accounts
Education Fund .
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balances - Education Fund Accounts .
Budgetary Comparison Schedules
Education Fund Accounts
ESN NFP WIA Grants .
Truants Alternative Optional Education .
Will County Truants Alternative Optional Education .
Combining Balance Sheet
Nonmajor Special Revenue Funds ..
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Nonmajor Special Revenue Funds .
Combining Statement of Fiduciary Net Assets
Agency Funds .
Combining Statement of Changes in Assets and Liabilities
Agency Funds .
Schedule of Disbursements to School District Treasurers and Others ..
63-65
66-68
69
70-71
72-73
74
75
76
77
78
79
80
. 81
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
TABLE OF CONTENTS
JUNE 30, 2011
FEDERAL COMPLIANCE SECTION
Schedule of Expenditures of Federal Awards ·........................ 82
Notes to the Schedule of Expenditures of Federal Awards 83
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
OFFICIALS
Regional Superintendent
(Current and during the Audit Period)
Assistant Regional Superintendent
(Current and during the Audit Period)
Office is located at:
1320 Union Street
Morris, Illinois 60450
1
Mr. Paul Nordstrom
Dr. Christopher Mehochko
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
COMPL~CEREPORTSU~Y
The compliance audit testing perfonned in this audit was conducted in accordance with Government
Auditing Standards and in accordance with the Illinois State Auditing Act.
AUDITOR'S REPORTS
The auditor's reports on compliance and on internal controls do not contain scope limitations,
disclaimers, or other significant non-standard language.
SUMMARY OF AUDIT FINDINGS
Number of
Audit findings
Repeated audit findings
Prior recommendations implemented
or not repeated
This Audit
2
2
Prior Audit
2
Details of audit findings are presented in a separate report section.
An additional two matters which are less than a significant deficiency or material weakness but luore
than inconsequential, have been reported in: a Management Letter of Comments to the Regional
Superintendent. In prior years, these issues may have been included as immaterial findings in the
auditor's reports.
SU~Y OF FINDINGS AND QUESTIONED COSTS
Item No. Description Finding Type
FINDINGS (GOVERNMENT AUDITING STANDARDS)
11-1
11-2
12a
12c
Inadequate Internal Controls
Over Financial Reporting
Controls Over Financial
Statement Preparation
Material Weakness
Material Weakness
FINDINGS AND QUESTIONED COSTS (FEDERAL COMPL~CE)
There are no findings on federal compliance.
2
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
COMPLIANCE REPORT SUMMARY (Concluded)
PRIOR FINDINGS NOT REPEATED (GOVERNMENT AUDITING STANDARDS)
None
PRIOR FINDINGS NOT REPEATED (FEDERAL COMPLIANCE)
There were no prior year federal compliance findings.
EXIT CONFERENCE
The findings and recommendations appearing in this report were discussed with Agency personnel at an
informal exit conference on September IS, 2011. Attending were Paul Nordstrom, Regional
Superintendent, Christopher Mehochko, Assistant Regional Superintendent, and Michelle D. Smith,
Manager, Kemper CPA Group LLP. Responses to the recommendations were provided by Paul
Nordstrom, Regional Superintendent.
3
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
FINANCIAL STATEMENT REPORT SUMMARY
The audit of the accompanying basic fmancial statements of the Grundy/Kendall Counties Regional
Office of Education #24 was performed by Kemper CPA Group LLP.
Based on their audit, the auditors expressed art unqualified opinion on the Grundy/Kendall Counties
Regional Office of Education #24' s basic fmancial statements.
4
KEM ER
.CPA GROUPLLP
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT
Honorable William G. Holland
Auditor General
State of Illinois
As Special Assistant Auditors for the Auditor General, we have audited the accompanying fmancial
statements of the governmental activities, the business-type activities, each major fund, and the
aggregate remaining fund information of the Grundy/Kendall Counties Regional Office of Education
#24, as of and for the year ended June 30, 2011, which collectively comprise the Grundy/Kendall
Counties Regional Office of Education #24's b~sic fmancial statements as listed in the table of contents.
These financial statements are the responsibility of the Grundy/Kendall Counties Regional Office of
Education #24' s 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, the business-type activities, each major fund,
and the aggregate remaining fund information of the Grundy/Kendall Counties Regional Office of
Education #24, as of June 30, 2011, and the respective changes in its financial position and its cash
flows, where applicable, for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
As described in Note 1, the Regional Office of Education #24 adopted GASB Statement No. 54, Fund
Balance Reporting and Governmental Fund Type Definitions during the year ended June 30, 2011. The
statement changed the classifications of governmental fund balances and clarified the definitions of
existing fund types. The adoption of this statement had no effect on any of the Regional Office of
Education #24' s governmental funds' assets or liabilities nor was there any effect to the total amount of
any of the Regional Office of Education #24's governmental fund balances as of and for the year ended
June 30, 2011.
5
7200 Eagle Crest Blvd. III Evansville, IN 47715-8154
Phone: (812)421-8000 Fax: (812)421-2292 kempercpa.com
In accordance with Government Auditing Standards, we have also issued a report dated January 10,
2012, on our consideration of the Grundy/Kendall Counties Regional Office of Education #24's internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe
the scope of our testing of internal control over fmancial reporting and .compliance and the results of that
testing, and not to provide an opinion on the internal control over fmancial 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.
The Management's Discussion and Analysis, Illinois Municipal Retirement Fund Schedule of Funding
Progress and Other Post Employment Benefits Schedule of Funding Progress on pages 16a-16g, 61 and
62 are not a required part ofthe basic financial statements but are supplementary 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 supplementary information. However, we did not audit
the information and express no opinion on it.
Our audit was conducted for the purpose of forming 0plillons on the financial statements that
collectively comprise the Grundy/Kendall Counties Regional Office of Education #24' s basic financial
statements. The combining and individual nonmajor fund financial statements, budgetary comparison
schedules and Schedule of Disbursements to School District Treasurers and Others are presented for
purposes of additional analysis and are not a required part of the basic financial statelnents. The
accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional
analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States,
Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial
statements. The combining and individual nonmajor fund fmancial statements, budgetary comparison
schedules, Schedule of Disbursements to School District Treasurers and Others, and the Schedule of
Expenditures of Federal Awards have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to
the basic financial statements taken as a whole.
Certified Public Accountants and Consultants
Evansville, Indiana
January 10,2012
6
KEM ER
-CPA GROUPLLP
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING
STANDARDS
Honorable William G. Holland
Auditor General
State of Illinois
As Special Assistant Auditors for the Auditor General, we have audited the financial statements of the
governmental activities, the business-type activities, each major fund, and the aggregate remaining fund
information of the Grundy/Kendall Counties Regional Office of Education #24, as of and for the year
ended June 30, 2011, which collectively comprise the Grundy/Kendall Counties Regional Office of
Education #24's basic financial statements and have issued our report thereon dated January 10, 2012.
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 ofthe United States.
Internal Control Over Financial Reporting
Management of the Grundy/Kendall Counties Regional Office of Education #24 is responsible for
establishing and maintaining effective internal control over financial reporting. In planning and
performing our audit, we considered the Grundy/Kendall Counties Regional Office of Education #24' s
internal control over financial reporting as a basis for designing our auditing procedures for the purpose
of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion
on the effectiveness of the Grundy/Kendall Counties Regional Office of Education #24's internal control
over fmancial reporting. Accordingly, we do not express an opinion on the effectiveness of the
GrundylKendall Counties Regional Office of Education #24' s internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in
the preceding paragraph and was not designed to identify all deficiencies in the internal control over
financial reporting that might be significant deficiencies or material weaknesses and therefore, there can
be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been
identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we
identified certain deficiencies in internal control over financial reporting that we consider to be material
weaknesses.
7
7200 Eagle Crest Blvd. IIllI Evansville, IN 47715-8154
Phone: (812)421-8000 Fax: (812)421-2292 kempercpa.com
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented, or detected and corrected on a
timely basis. We consider the deficiencies described in findings 11-1 and 11-2 in the accompanying
Schedule of Findings and Questioned Costs to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Grundy/Kendall Counties Regional Office
of Education #24' s financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance
with which could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our audit,
and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we reported to the management of the Grundy/Kendall Counties Regional
Office of Education #24 in a separate letter dated January 10,2012.
Grundy/Kendail Counties Regional Office of Education #24' s responses to the [mdings identified in our.
audit are described in the accompanying Schedule of Findings and Questioned Costs. We did not audit
the Grundy/Kendall Counties Regional Office of Education #24's responses and, accordingly, express no
opinion on them.
This report is intended solely for the information and use of the Auditor General, the General Assembly,
the Legislative Audit Commission, the Governor, agency management, others within the organization,
Illinois State Board of Education, federal awarding agencies and pass-through entities and is not
intended to be and should not be used by anyone other than these specified parties.
Certified Public Accountants and Consultants
Evansville, Indiana
January 10,2012
8
KEMPER
-CPA GROUPLLP
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT
COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH
MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE
WITH OMB CIRCULARA-133
Honorable William G. Holland
Auditor General
State of Illinois
Compliance
We have audited the Grundy/Kendall Counties Regional Office of Education #24' s compliance with the
types of compliance requirements described in the Us. Office of Management and Budget COMB)
Circular A-133 Compliance Supplement that could have a direct and material effect on each of the
Grundy/Kendall Counties Regional Office of Education #24's major federal program for the year ended
June 30, 2011. The Grundy/Kendall Counties Regional Office of Education #24's major federal
program is identified in the summary of auditor's results section of the accompanying Schedule of
Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and
grants applicable to its major federal program is the responsibility of the GrundylKendall Counties
Regional Office of Education #24' s management. Our responsibility is to express an opinion on the
Grundy/Kendall Counties Regional Office of Education #24' s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-I33
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect
on a major federal program occurred. An audit includes examining, on a test basis, evidence about the
Grundy/Kendall Counties Regional Office of Education #24's compliance with those requirements and
performing such other procedures as we considered necessary in the circumstances. We believe that ouT
audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of
the Grundy/Kendall Counties Regional Office ofEducation #24's compliance with those requirements.
9
7200 Eagle Crest Blvd. IlII Evansville, IN 47715-8154
Phone: (812)421-8000 Fax: (812)421-2292 kempercpa.com
In our opinion, Grundy/Kendall Counties Regional Office of Education #24 complied, in all material
respects, with the compliance requirements referred to above that could have a direct and material effect
on its major federal program for the year ended June 30, 2011.
Internal Control Over Compliance
Management of the Grundy/Kendall Counties Regional Office of Education #24 is responsible for
establishing and maintaining effective internal control over compliance with the requirements of laws,
regulations, contracts, and grants applicable to federal programs. In planning and performing our audit,
we considered the Grundy/Kendall Counties Regional Office of Education #24's internal control over
compliance with requirements that could have a direct and material effect on a major federal program to
determine the auditing procedures for the purpose of expressing our opinion on compliance and to test
and report on internal control over compliance in accordance with OMB Circular A-133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,
we do not express an opinion on the effectiveness of the Grundy/Kendall Counties Regional Office of
Education #24' s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defmed above.
This report is intended solely for the information and use of the Auditor General, the General Assembly,
the Legislative Audit Commission, the Governor, agency management, others within the entity, Illinois
State Board of Education, federal awarding agencies and pass-through entities and is not intended to be
and should not be used by anyone other than these specified parties.
Certified Public Accountants and Consultants
Evansville, Indiana
January 10, 2012
10
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
. SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION I - SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued:
Internal control over financial reporting:
• Material weakness(es) identified?
• Significant deficiency(ies) identified?
• Noncompliance material to financial statements noted?
Federal Awards
Internal control over major programs:
• Material weakness(es) identified?
• Significant deficiency(ies) identified?
Type of auditor's report issued on compliance for major programs:
Unqualified
Yes
No
No
No
No
Unqualified
Any audit findings disclosed that are required to be reported in accordance
with Section .510(a) ofOMB Circular A-133? No
Identification of major programs:
CFDA Number(s)
17.259
Name of Federal Program or Cluster
Workforce Investment Act Cluster
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as a low-risk auditee?
11
No
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS
Finding No. 11-1- Inadequate Internal Controls Over Financial Reporting (Repeat of Prior
Year Finding 10-1)
Criteria/Specific Requirement:
The Regional Office of Education is required to maintain a system of controls over the financial
reporting process to be able to initiate, authorize, record, process, and report financial data
reliably in accordance with generally accepted accounting principles (GAAP).
Condition:
The Regional Office of Education #24 does not have sufficient internal controls over the
financial reporting process. We noted the following deficiencies in internal control:
1) There are inadequate controls over cash disbursements. The Regional Office
of Education has four signature stamps and one of the individuals responsible
for printing checks has access to these stamps.
2) The Regional Office of Education maintains the general fund accounts in a
different accounting software program than what is used by Education Service
Network, Not for Profit, Inc. (ESN, NFP, Inc). ESN, NFP, Inc. is a blended
component unit of the Regional Office that provides various educational
services to the community. The accounting software program used for the
general fund accounts at the Regional Office is not being maintained using
separate accounts and the general ledger is not being closed at the end of the
accounting period. Additionally, the accounts within each fund are not being
properly classified as assets, liabilities, equity, revenues or expenses.
3) The general fund maintains one checking account and there is no allocation of
cash to each programJaccount.
Effect:
Management or employees in the normal course of performing their assigned functions may not
prevent or detect financial misstatements or possible fraudulent activity in a timely manner. The
Regional Office also may not be in compliance with laws, regulations, and contract provisions.
Cause:
The Regional Office of Education #24 did not consistently implement established internal
controls. Regional Office personnel are not always aware of what duties should be segregated in
order to have a more effective process.
12a
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS (Continued)
Finding No. 11-1- Inadequate Internal Controls Over Financial Reporting (Repeat of Prior
Year Finding 10-1) (Continued)
Recommendation:
While the Regional Office has made some improvements in the segregation of the accounting
responsibilities, there are areas that still need to be improved:
1) All signature stamps should be kept in a secure location and access should be
restricted to those who are independent ofthe cash disbursement process.
2) The Regional Office of Education should use one accounting system to record
the transactions of both the Regional Office and its blended component unit,
Education Service Network, Not for Profit, Inc. (ESN, NFP, Inc). The system
used by ESN, NFP, Inc. is better equipped to handle fund accounting. If the
Regional Office of Education chooses to continue to use its current
accounting system, a separate file should be created for each program/account
to ensure that each program and related expenses are segregated in the general
ledger. Additionally, the accounting records need to be properly closed at the
end of each fiscal year and each account should be properly classified as an,
asset, liability, equity,'revenue or expense.
3) The cash account should be allocated among the programs/accounts held
\\Tithin the general fund.
Management Response:
1) The Grundy/Kendall Regional Office of Education staff went to great lengths this past year
to see that this situationwas remedied. Our staff locked up the stamps and had them located
where the people writing checks did not have access to them. Unfortunately, the auditors
found one more situation which had not occurred to us. When our secretary in Morris goes
on vacation, our bookkeeper from the Yorkville office fills in for her as secretary, therefore
having access to the signature stamp. We discussed having the stamp in the Regional
Superintendent's office on days in which the Morris secretary is vacationing, therefore
eliminating access to the stamp by the other person filling in.
2) and 3) As recommended by the auditors, the ROE staff discussed this and came to the
conclusion that the ROE should convert all accounting records to the accounting software
program being used by ESN NFP Inc., and then work within that system to meet all of the
requests listed in these sections.
12b
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS (Continued)
Finding No. 11-2- Controls Over Financial Statement Preparation (Repeat of Prior Year
Finding 10-2)
Criteria/Specific Requirement:
The Regional Office of Education #24 is required to maintain a system of controls over the
preparation of financial statements in accordance with generally accepted accounting principles
(GAAP). Regional Office internal controls over GAAP financial reporting should include
adequately trained personnel with the knowledge and expertise to prepare and/or thoroughly
review GAAP based financial statements to ensure that they are free of material misstatements
and include all disclosures as required by the Governmental Accounting Standards Board
(GASB).
Condition:
The Regional Office of Education #24 does not have sufficient internal controls over the
financial reporting process. While the Regional Office maintains controls over the processing of
some accounting transactions, there are not sufficient controls over the preparation of the GAAP
based financial statements for management or employees in the normal course of performing
their assigned functions to prevent or detect fmancial statement misstatements and disclosure
omissions in a timely manner. For example, auditors, in their review of the Regional Office's
accounting records, noted that numerous adjusting entries were required to present the financial
statements in accordance with generally accepted accounting principles.
Effect:
Management or employees in the normal course of performing their assigned functions may not
prevent or detect financial statement misstatements and disclosure omissions in a timely manner.
Cause:
According to Regional Office officials, they did not have adequate funding to hire and/or train
their accounting personnel in order to comply with these requirements.
12c
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
. FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS (Concluded)
Finding No. 11-2- Controls Over Financial Statement Preparation (Repeat of Prior Year
Finding 10-2) (Concluded)
Recommendation:
As part of its internal control over the preparation of financial statements, including disclosures,
the Regional Office of Education #24 should implement a comprehensive preparation and/or
review procedure to ensure that the financial statements, including disclosures, are complete and
accurate. Such procedures should be performed by a properly trained individual(s) possessing a
thorough understanding of applicable generally accepted accounting principles, GASB
pronouncements, and knowledge ofthe Regional Office of Education's activities and operations.
Management's Response:
The Regional Superintendent contacted a local accounting firm to handle this recommendation,
but, in consultation with the auditing firm, was told that there would be no guarantee that this
would not be a finding regardless. The ROE would likely be spending tax money for this service
without any benefit. The decision was made to accept the finding.
12d
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION III - FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS:
INSTANCES OF NONCOMPLIANCE:
None
SIGNIFICANT DEFICIENCIES:
None
13
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
CORRECTIVE ACTION PLAN FOR CURRENT-YEAR AUDIT FINDINGS
JUNE 30, 2011
Corrective Action Plan
Finding No. 11-1- Inadequate Internal Controls Over Financial Reporting
Condition:
The Regional Office of Education #24 does not have sufficient internal controls over the fmancial
reporting process. We noted the following deficiencies in internal control:
1) There are inadequate controls over cash disbursements. The Regional Office of
Education has four signature stamps and one of the individuals responsible for
printing checks has access to these stamps.
2) The Regional Office of Education maintains the general fund accounts in a different
accounting software program than what is used by Education Service Network, Not
for Profit, Inc. (ESN, NFP, Inc). ESN, NFP, Inc. is a blended component unit of the
Regional Office that provides various educational services to the community. The
accounting software program used for the general fund accounts. at the Regional
Office is not being maintained using separate accounts and the general ledger is not
being closed at the end of the accounting period. Additionally, the accounts within
each fund are not being properly classified as assets, liabilities, equity, revenues or
expenses.
3) The general fund maintains one checking account and there is no allocation of cash to
each program/account.
Plan:
1) The Grundy/Kendall Regional Office of Education staff went to great lengths this past year to see
that this situation was remedied. Our staff locked up the stamps and had them located where' the
people writing checks did not have access to them. Unfortunately, the auditors found one more
situation which had not occurred to us. When our secretary in Morris goes on vacation, our
bookkeeper from the Yorkville office fills in for her as secretary, therefore having access to the
signature stamp. We discussed having the stamp in the Regional Superintendent's office on days in
which the Morris secretary is vacationing, therefore eliminating access to the stamp by the other
person filling in.
2) and 3) As recommended by the auditors, the ROE staff discussed this and came to the conclusion
that the ROE should convert all accounting records to the accounting software program being used
by ESN NFP Inc., and then work within that system to meet all of the requests listed in these
sections.
Anticipated Date of Completion: Immediately upon learning of the oversight.
Name of Contact Person:
Honorable Paul Nordstrom, Regional Superintendent of Schools
14a
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
CORRECTIVE ACTION PLAN FOR CURRENT-YEAR AUDIT FINDINGS
JUNE 30,2011
Corrective Action Plan (concluded)
Finding No. 11-2- Controls Over Financial Statement Preparation
Condition:
The Regional Office of Education #24 does not have sufficient internal controls over the fmancial
reporting process. While the Regional Office maintains controls over the processing of some
accounting transactions, there are not sufficient controls over the preparation of the GAAP based
financial statements for management or employees in the normal course of performing their assigned
functions to prevent or detect financial statement misstatements and disclosure omissions in a timely
manner. For example, auditors, in their review of the Regional Office's accounting records, noted
that numerous adjusting entries were required to present the financial statements in accordance with
generally accepted accounting principles.
Plan:
The Regional Superintendent contacted a local accounting firm to handle this recommendation, but,
in consultation with the auditing firm, was told that there would be no guarantee that this would not
be a finding regardless. The ROE would likely be spending tax money for this service without any
benefit. The decision was made to accept the finding.
Anticipated Date of Completion: NtA
Name of Contact Person:
Honorable Paul Nordstrom, Regional Superintendent of Schools
14b
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
SUMMARy SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
Finding
No.
10-1
10-2
Condition
Inadequate Internal Controls Over Financial Reporting
Controls Over Financial Statement Preparation
15
Current Status
Repeated as Finding 11-1
Repeated as Finding 11-2
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
The Regional Office of Education #24 provides this Management's Discussion and Analysis of its financial
statements. This narrative overview and analysis of the financial activities is for the fiscal year 2011 that ended
on June 30, 2011. Readers are encouraged to consider the information in conjunction with the Regional
Office's financial statements that follow.
During fiscal year 2011 the Regional Office of Education #24 implemented Governmental Accounting
Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type
Definitions, which required certain programs and funds to be reclassified and the restatement of beginning fund
balances as detailed in Note 13 to the financial statements. Because of these reclassifications the fund analysis
is not comparable between fiscal year 2010 and fiscal year 2011.
2011 FINANCIAL HIGHLIGHTS
CD Within the Governmental Funds, the General Fund revenues increased by $2,530,345 from $866,806 in
fiscal year 2010 to $3,397,151 in fiscal year 2011. General Fund expenditures increased by $2,019,702
from $779,451 in fiscal year 2010 to $2,799,153 in fiscal year 2011. The majority of the revenue and
expenditure increases are due to the reclassification of the Regional Safe Schools and State Aid to the
General Fund from the Education Fund.
.. Within the Governmental Funds, the Special Revenue Fund revenue decreased by $3,132,387 from
$4,534,533 in fiscal year 2010 to $1,402,146 in fiscal year 2011. The Special Revenue Fund
expenditures decreased by $2,775,263 from $4,213,734 in fiscal year 2010 to $1,438,471 in fiscal year
2011. The majority of the revenue and expenditure increases are due to the reclassification of the
Regional Safe Schools and State Aid to the General Food from the Education Fund.
USING TIDS REPORT
This report consists of a series of financial statements and other information, as follows:
CD Management's Discussion and Analysis introduces the basic financial statements and provides an
analytical overview of the Regional Office's financial activities.
CD The government-wide financial statements consist of a Statement of Net Assets and a Statement of
Activities. These provide information about the activities of the Regional Office of Education as a
whole and present an overall view ofthe Office's fmances.
CD Fund financial statements report the Regional Office's operations in more detail than the government-wide
statements by providing information about the most significant funds.
16a
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
USING TillS REPORT (CONCLUDED)
• Notes to the fmancial statements provide additional information that is needed for a full understanding of
the data provided in the basic financial statements.
• Required supplementary information further explains and supports the financial statements and
supplementary information provides detailed information for each category of funds and about the non­major
funds.
REPORTING THE OFFICE AS A WHOLE
The Statement of Net Assets and the Statement of Activities
The governn1ent-wide statements report information about the Regional Office of Education #24 as a whole.
The Statement of Net Assets includes all of the assets and liabilities. All of the current year revenues and
expenses are accounted for in the Statement of Activities regardless of when cash is received or paid, using
accounting methods similar to those used by private-sector companies.
The two government-wide statements report the Office's net assets and how they have changed. Net assets (the
difference between the assets and liabilities) are one way to measure the Office's financial health or position.
• Over time, increases or decreases in the net assets can be an indicator of whether financial position is
improving or deteriorating, respectively.
• To assess the Regional Office's overall health, additional non-[mancial factors, such as new laws, rules,
regulations, and actions by officials at the state level need to be considered.
The government-wide financial statements present the Office's activities as both governmental and busines.s­type
ac,tivities. Local, state and federal aid finance most ofthese activities.
The fund financial statements provide detailed information about the Grundy/Kendall County Regional Office's
funds, focusing on its most significant or "major" funds. Funds are· accounting devices that allow the tracking
of specific sources of funding and spending on particular programs. Some funds are required by state law. The
Regional Office of Education #24 established other funds to control and manage money for particular purposes.
The Office has three kinds of funds:
1) Governmental funds account for all of the Office's services. These focus on how cash and other
financial assets that can be readily converted to cash flow in and out and the balances left at year-end
that are available for spending. Consequently, the governmental fund statements provide a detailed
short-term view that helps determine whether there are more or fewer resources that can be spent in
the near future to finance the Office's programs. The Office's Governmental Funds include: the
General Fund, Education Fund, and various other non-major funds.
The governmental funds required financial statements include a Balance Sheet and a Statement of
Revenues, Expenditures, and Changes in Fund Balances.
16b
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
REPORTING THE OFFICE AS A WHOLE (CONCLUDED)
2) Fiduciary funds are used to accolillt for assets hel~ by the Regional Office of Education #24 in a
trust capacity or as an agent for individuals and private or governmental organizations. These funds
are custodial in nature (assets equal liabilities) and do not involve measurement of resuits of
operations.
The fiduciary funds' required financial statements include a Statement of Fiduciary Net Assets and a
Statement of Changes in Fiduciary Net Assets.
3) Proprietary funds account for activities where the ROE charges customers for services. These
funds are most similar to a business that operates for a profit. The ROE has three enterprise funds,
Criminal Backgrounds, Grundy County Summer School, and Will County Summer School fund.
The proprietary fund required financial statements include a Statement of Net Assets, Statement of
Revenues, Expenses, and Changes in Fund Net Assets, and a Statement of Cash Flows.
A summary reconciliation between the government-wide financial statements and the fund financial
statements follows the fund financial statements.
OFFICE-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve, when examined over time, as one indicator of the financial position of
the Regional Office. The net assets at the end of fiscal year 2011 totaled $1,491,186. At the end of fiscal year
2010, the net assets were $1,028,609. The analysis that follows provides a summary of the Office's net assets
as of June 30, 2011 and 2010, for the governmental and business-type activities.
16c
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities Business-TyPe Activities Total Primary Government
2011 2010 2011 2010 2011 2010
Assets
Current assets $ 1,481,466 $ 1,188,062 $ 36,063 $ 20,773 $ 1,517,529 $' 1,208,835
Capital assets,
being depreciated, net 46,969 57,810 46,969 57,810
Total Assets 1,528,435 1,245,872 36,063 20,773 1,564,498 1,266,645
Current Liabilities 56,312 238,036 17,000 73,312 238,036
Total Liabilities 56,312 238,036 17,000 73,312 238,036
Net assets:
Invested in capital assets,
net ofrelated debt 46,969 57,810 46,969 57,810
Unrestricted 1,213,411 756,203 19,063 20,773 1,232,474 776',976
Restricted for
educational purposes 211,743 193,823 211,743 193,823
Total Net Assets $ 1,472,123 $ 1,007,836 $ 19,063 $ 20,773 $ 1,491,186 $ 1,028,609
The Regional Office of Education's net assets increased by $462,577 from FYI0.
16d
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
CHANGES IN NET ASSETS
Governmental Activities Business-Type Activities Total Primary Government
2011 2010 2011 2010 2011 2010
Revenues:
Program Revenues
Charges for services $ $ $ 34,191 $ 34,732 $ 34,191 $ 34,732
Operating grants and
contributions 1,765,230 2,404,207 1,765,230 2,404,207
General Revenues
Local sources 281,334 246,442 281,334 246,442
State sources 1,946,250 1,667,636 1,946,250 1,667,636
Federal sources 127,044 571,492 127,044 571,492
Interest income 707 707
On-behalf payments 472,964 620,295 472,964 620,295
Loss on disposal of assets (4,289) (4,289)
Interest earnings returned,
net of earnings (4,366) (4,366)
Total revenues $ 4,593,529 $ 5,501,417 $ 34,191 $ 34,732 $ 4,627,720 $ 5,536,149
Expenses:
Program expenses
Salaries and benefits $ 2,369,618 $ 2,924,057 $ 21,841 $ 5,562 $ 2,391,459 $ 2,929,619
Purchased services 734,905 685,100 13,838 15,761 748,743 700,861
Supplies and materials 169,806 168,844 222 1,176 170,028 170,020
Payment to other governments 328,594 417,636 328,594 411,636
Capital Outlay 37,008 131,499 37,008 131,499
Depreciation expense 10,841 16,278 10,841 16,278
Other objects 5,506 18,473 5,506 18,473
Administration expenses
On-behalf payments 472,964 620,295 472,964 620,295
Total expenses $ 4,129,242 $ 4,982,182 $ 35,901 $ 22,499 $ 4,165,143 $ 5,004,681
Changes in net assets $ 464,287 $ 519,235 $ (1,710) $ 12,233 $ 462,577 $ 531,468 .
Net assets beginning ofyear 1,007,836 488,601 20,773 8,540 1,028,609 497,141
Net assets end ofyear $ 1,472,123 $ 1,007,836 $ 19,063 $ 20,773 $ 1,491,186 $ 1,028,609
16e
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
Governmental Activities
Revenues for governmental activities were $4,712,752 and expenses were $4,248,465 for the year ended June
30, 2011. Revenues for governmental activitieswere $5,501,417 and expenses were $4,982,182 for the year .
ended June 30, 2010. These decreases in·revenues and expenditures are due primarily to decreases in operating
grants within the Education Fund and subsequent decreases in services provided in those specific areas by the
Regional Office.
Financial analysis of the Regional Office of Education #24 Funds
As previously noted, the Regional Office of Education #24 uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. The Agency's Governmental Funds reported combined
fund balances of $1,472,123 at June 30, 2011 compared to fiscal year 2010's ending fund balance of
$1,007,836.
Budgetary Highlights
The Regional Office of Education #24 annually adopts budgets for several funds. The Regional Superintendent
annually prepares· an Office Operations Budget and submits it to the County Board for their approval. The
Office Operations Budget covers a fiscal year that runs from December 1 to November 30. All grant budgets
are prepared by the Regional Office of Education #24 and submitted to the granting agency for approval.
Amendments must be submitted under guidelines established by the granting agency.
Capital Assets
Capital assets of the Regional Office of Education #24 include office equipment, computers, audio-visual
equipment, office furniture, and building improvements. The Regional Office of Education #24 maintains an
inventory ·of capital assets that have been accumulated over time. During the year ended June 30, 2011,
Regional Office of Education #24 purchased no assets and deleted no assets, resulting in an ending balance of
$46,969. In addition, the Regional Office of Education #24 has adopted a depreciation schedule that reflects the
level of Net Governmental Activities Capital Assets. More detailed information about capital assets is available
.in Note 7 of the financial statements.
16f
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
Economic Factors and NextYear's Budget
At the time these financial statements were prepared and audited, the Regional Office of Education #24 was
aware of several existing circumstances that could affect its financial health in the future:
• ARRA Education Job Funds are being phased out.
• Teen Reach grants were discontinued by DHS.
• The balance in the ESN, NFP account, which funds the Alternative School in Grundy County, has
increased, making the likelihood of borrowing from a bank for operations, nearly nonexistent again in
FY'12.
• Interest rates earned on all accounts are at historical lows.
., Regional Superintendents and Assistants in Illinois recently went from July 1, 2011 to November 2011
without being paid, putting operations in question. Legislative action was taken to provide pay. The
need for Regional Offices is to be studied by the Illinois legislature.
Contacting the Regional Office's Financial Management
This fmancial report is designed to provide the Regional Office's citizens, taxpayers, clients, and other
constituents with a general overview of its finances and to demonstrate the accountability for the money it
receives. If the reader has questions concerning this report or needs additional financial information, please
contact The Regional Superintendent of the Regional Office of Education #24 at 1320 Union St., Morris, IL
60450.
16g
BASIC FINANCIAL STATEMENTS
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF NET ASSETS
JUNE 30, 2011
Primary Government
Governmental Business-Type
Activities Activities Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 924,023 $ 35,429 $ 959,452
Due from other governments:
Local 930 930
State 380,702 380,702
Federal 165,390 165,390
Prepaid expenses 10,421 634 11,055
Total current assets 1,481,466 36,063 1,517,529
NONCURRENT ASSETS:
Capital assets, net of depreciation 46,969 46,969
TOTAL ASSETS 1,528,435 36,063 1,564,498
LIABILITIES
CURRENT LIABILITIES:
Accounts payable 8,561 8,561
Accrued payroU·and employee benefits 40,676 40,676
Due to other governments:
State 1,032 1,032
Deferred revenue 6,043 17,000 23,043
Total current liabilities 56,312 17,000 73,312
TOTAL LIABILITIES 56,312 17,000 73,312
NET ASSETS
Invested in capital assets 46,969 46,969
Unrestricted 1,213,411 19,063 1,232,474
Restricted for educational purposes 211,743 211,743
TOTAL NET ASSETS $ 1,472,123 $ 19,063 $ 1,491,186
The notes to the financial statements are an integral part ofthis statement.
17
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF ACTNITIES
FOR THE YEAR ENDED JUNE 30, 2011
$ 2,367,923 $ - $ 1,507,354 $ (860,569) $ - $ (860,569)
736,766 - 179,968 (556,798) - (556,798)
169,883 - 12,223 (157,660) - (157,660)
5,337 - - (5,337) - (5,337)
10,841 - - (10,841) - (10,841)
37,008 - 37,008
328,520 - 29,506 (299,014) - (299,014)
472,964 - - (472,964) - (472,964)
4,129,242 - 1,766,059 (2,363,183) - (2,363,183)
12,617 15,758 - - 3,141 3,141
23,284 18,433 - - (4,851) (4,851)
35,901 34,191 - - (1,710) (1,710)
$ 4,165,143 $ 34,191 $ 1,766,059 (2,363,183) (1,710) (2,364,893)
General Revenues:
Local sources 281,334 - 281,334
State sources 1,945,421 - 1,945,421
Federal sources 127,044 - 127,044
On-behalf payments - State 472,964 - 472,964
Investment income 707 - 707
Total General Revenues 2,827,470 - 2,827,470
Change in net assets 464,287 (1,710) 462,577
Net Assets - beginning 1,007,836 20,773 1,028,609
Net Assets - ending $ 1,472,123 $ 19,063 $ 1,491,186
FUNCTIONSIPROGRAMS
PRIMARY GOVERNMENT:
Governmental Activities:
Instructional Services:
Salaries and benefits
Purchased services
Supplies and materials
Other objects
Depreciation
Capital outlay
Payments to other governments
Administrative:
On-behalf payments - State
Total Governmental Activities
Business-type Activities:
Registration fees
Tuition
Total Business-type Activities
Total Primary Government
Expenses
Program Revenues
Operating
Charges for Grants and
Services Contributions
Net (Expense) Revenue and
Changes in Net Assets
Primary Government
Governmental Business-Type
Activities Activities Total
The notes to the financial statements are an integral part ofthis statement.
18
The notes to the financial statements are an integral part ofthis statement.
19
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATE:MENT OF NET ASSETS
GOVERNMENTAL FUNDS
JUNE 30, 2011
Total fund balances - governmental funds
Amounts reported for governmental activities in the Statement ofNet
Assets are different because:
Capital assets used in governmental activities are not
financial resources and, therefore, are not reported in the funds.
Revenues in the Statement ofActivities that do not provide current
financial resources, and are not reported as revenues in the funds.
Net assets of governmental activities
$ 1,407,332
46,969
17,822
$ 1,472,123
The notes to the financial statements are an integral part ofthis statement.
20
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Other Total
General Education NonMajor Governmental
Fund Fund Funds Eliminations Funds
REVENUES
Local sources $ 198,630 $ 27,998 $ 54,706 $ $ 281,334
State sources 2,608,312 349,879 772 2,958,963
Federal sources 966,106 . 966,106
On-behalf payments - State 472,964 472,964
Total revenues 3,279,906 1,343,983 55,478 4,679,367
EXPENDITURES
fustructional Services
Salaries and benefits 1,152,794 1,215,129 2,367,923
. Purchased services 558,176 91,753 86,837 736,766
Supplies and materials 155,129 11,513 3,241 169,883
Other objects 4,972 365 5,337
Payments to other governments 311,968 16,552 328,520
On-behalf payments - State 472,964 472,964
Capital outlay 23,927 13,081 37,008
Total expenditures 2,679,930 1,348,028 90,443 4,118,401
Excess/(Deficiency) of revenues over expenditures 599,976 (4,045) (34,965) 560,966
OTHER FINANCING SOURCES (USES)
Transfer in 19,188 3,677 72,389 (95,254)
Transfer out (20,630) (2,235) (72,389) 95,254
futerest income (536) 1,243 707
Total Other Financing Sources (1,978) 1,442 1,243 707
Net change in fund balances 597,998 (2,603) . (33,722) 561,673
FUND BALANCES - BEGINNING (RESTATED, 600,704 12,537 232,418 845,659
See Note 13)
FUND BALANCES - ENDING $ 1,198,702 $ 9,934 $ 198,696 $ $ 1,407,332
The notes to the financial statements are an integral part ofthis statement.
21
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Net change in fund balances
Amounts reported for governmental activities in the Statement of
Activities are different because:
Governmental funds report capital outlays as expenditures. However,
in the Statement of Activities the cost ofthose assets is allocated over
their estimated useful lives and reported as depreciation expense.
Depreciation expense
Revenues in the Statement of Activities in the prior year that are
recognized as revenues in the funds in the current year
State sources
Revenues in the Statement of Activities that do not provide current
financial resources, and are not reported as revenues in the funds.
Deferred revenue
State sources
Federal
Change in net assets of governmental activities
$ 14,709
3,113
$ 561,673
(10,841)
(104,367)
17,822
$ 464,287
The notes to the financial statements are an integral part ofthis statement.
22
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
JUNE 30, 2011
Business-type
Activities -
Enterprise Funds
Nonmajor Proprietary Funds
Grundy
County
Criminal Summer Will County
Backgrounds School Summer School Totals
Assets
Current assets:
Cash and cash equivalents $ 27,663 $ 7,418 $ 348 $ 35,429
Prepaid expenses 634 634
Total current assets 28,297 7,418 348 36,063
Total Assets 28,297 7,418 348 36,063
Liabilities and Net Assets
Liabilities
Current liabilities:
Deferred revenue 17,000 17,000
Total current liabilities 17,000 17,000
Net Assets
Unrestricted 11,297 7,418 348 19,063
Total Net Assets $ 11,297 $ 7,418 $ 348 $ 19,063
The notes to the financial statements are an integral part ofthis statement.
23
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Business-Type
Activities -
Enterprise Funds
Nonmajor Proprietary Funds
Grundy
County
Criminal Swnmer Will County
Backgrounds School Swnmer School Totals
Operating Revenues
,Charges for services $ 15,758 $ 18,433 $ $ 34,191
Operating Expenses
Salaries and benefits 21,841 21,841
Purchased services 12,617 1,221 13,838
Supplies and materials 222 222
Total operating expenses 12,617 23,284 35,901
Operating Income (Loss) 3,141 (4,851) (1,710)
Change in Net Assets 3,141 (4,851) (1,710)
Net Assets - Beginning 8,156 12,269 348 20,773
Net Assets - Ending $ 11,297 $ 7,418 $ 348 $ 19,063
The notes to the financial statements are an integral part ofthis statement.
24
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30,2011
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and providers of goods and services
Payments to employees
Net cash provided by (used for) operating activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - Beginning
Cash and cash equivalents - Ending
Business-type
Activities-
Enterprise Funds
Nonmajor Proprietary Funds
Grundy
County
Criminal Summer Will County
Backgrounds School Summer School Totals
$ 32,758 $ 18,433 $ - $ 51,191
(13,251) (1,443) - (14,694)
(21,841) - (21,841)
19,507 (4,851) - 14,656
19,507 (4,851) - 14,656
8,156 12,269 348 20,773
$ 27,663 $ 7,418 $ 348 $ 35,429
Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:
Change in assets and liabilities:
Increase in prepaid expense
Increase in deferred revenue
Net cash provided by (used for) operating activities $
$ 3,141
(634)
17,000
19,507
$ (4,851)
$ (4,851)
$ $
$
(1,710)
(634)
17,000
14,656
The notes to the financial statements are an integral part of this statement.
25
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
JUNE 30, 2011
Private-Purpose Agency
Scholarship Fund Funds
ASSETS
Cash and cash equivalents $ 32,596 $ 89,740
TOTAL ASSETS 32,596 $ 89,740
LIABILITIES
Due to other governments $ $ 89,740
TOTAL LIABILITIES $ 89,740
NET ASSETS
Reserved for scholarships $ 32,596
The notes to the financial statements are an integral part of this statement.
26
GRUNDY/KENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Private-Purpose
Scholarship Fund
ADDITION
Interest
DEDUCTION
Scholarships and awards
CHANGE IN NET ASSETS
NET ASSETS, BEGINNING OF YEAR
. NET ASSETS, END OF YEAR
$
$
128
5,000 .
(4,872)
37,468
32,596
The notes to the fmancial statements are an integral part ofthis statement
27
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Grundy/Kendall Counties Regional Office of Education #24 was fonned under the
provisions ofthe State of Illinois, Illinois State Board of Education.
In 2011, the Regional Office of Education #24 implemented Governmental Accounting
Standards Board (GASB) Statement No.54, Fund Balance Reporting and Governmental Fund
Type Definitions, GASB Statement No. 59, Financial Instruments Omnibus, and GASB
Statement No. 62, Codification ofAccounting and Financial Reporting Guidance Contained in
Pre-November 30, 1989 FASB and AICPA Pronouncements. The Regional Office of Education
#24 implemented these standards during the current year; however, GASB Statements No. 59
and 62 had no impact on the financial statements. The implementation of GASB Statement No.
54 changed fund balance reporting for governmental funds by adding some additional fund
balance classifications, clarifying governmental fund type definitions, and providing some
additional disclosures on how fund balance constraints are imposed and may be modified or
eliminated.
A. DATE OF MANAGEMENT'S REVIEW
The Grundy/Kendall Counties Regional Office of Education #24 has evaluated subsequent events
through January 10,2012, the date which the financial statements were available to be issued.
B. FINANCIAL REPORTING ENTITY
The Regional Superintendent is charged with responsibility for township fund lands; registration
of the names of applicants for scholarships to State controlled universities; examinations and
related duties; visitation of public schools; direction of teachers and school officers; to serve as
the official advisor and assistant of school officers and teachers; to conduct teacher institutes as
well as to aid and encourage the formation of other teacher meetings and assist in their
management; evaluate the schools in the region; examine evidence ofindebtedness; file and keep
the returns of elections required to be refurned to the Regional Superintendent's office; and file
and keep the reports and statements returned by school treasurers and trustees.
The Regional Superintendent is also charged with the responsibilities of conducting a special
census, when required; providing notice of money distributed to treasurers, board presidents,
clerks, and secretaries of the school districts on or before each September 30; maintenance of a
map and numbering of the Grundy/Kendall Counties Regional Office of Education #24' s
districts; providing township treasurers with a list of district treasurers; to inspect and approve
building plans which comply with State law; to perform and report on annual building
inspections; investigate bus drivers for valid bus driver permits and take related action as may be
required; to maintain a list of unfilled teaching positions and to carry out other related duties
required or permitted by law.
28
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. FINANCIAL REPORTING ENTITY (Concluded)
The Regional Superintendent is responsible for inspection and approval or rejection of school
treasurers' bonds. The Regional Superintendent is also required to provide the State Board of
Education with an affidavit showing that the treasurers of school districts under his control are
properly bonded.
The Regional Superintendent is also responsible for apportionment and payment of funds
received from the State for the districts in the Grundy/Kendall Counties Regional Office of
Education #24, or see that no payments are made unless the treasurer has filed or renewed
appropriate bond and that the district has certified publication of the annual financial report. The
Regional Superintendent is required to provide opinions and advice related to controversies
under school law.
For the period ended June 30, 2011, the Grundy/Kendall Counties Regional Office of Education
#24 applied for, received, and administered numerous State and federal programs and grants in
assistance and support of the educational activities of the school districts in Grundy/Kendall
Counties Regional Office of Education #24. Such activities are reported as a single special
revenue fund (Education Fund).
C. SCOPE OF THE REPORTING ENTITY
The Grundy/Kendall Counties Regional Office of Education #24 reporting entity includes all
related organizations for which they exercise oversight responsibility.
The Grundy/Kendall Counties Regional Office of Education #24 has developed criteria to
determine whether outside agencies with activities which benefit the citizens of the
Grundy/Kendall Counties Regional Office of Education #24, including districts or joint
agreements which serve pupils from numerous regions, should be included in its financial
reporting entity. The criteria include, but are not limited to, whether the Grundy/Kendall
Counties Regional Office of Education #24 exercises oversight responsibility (which includes
financial interdependency, selection of governing authority, designation of management, ability
to- significantly influence operations, and accountability for fiscal matters), scope of public
service, and special financing relationships.
The following component units are entities which are legally separate from Grundy/Kendall
Counties Regional Office of Education #24, but are so intertwined with the region that they are,
in substance, the same as the region. They are reported as part of Grundy/Kendall Counties
Regional Office of Education #24 and blended into the appropriate funds.
29
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. SCOPE OF THE REPORTING ENTITY (Concluded)
Grundy/Kendall Counties Regional Office of Education #24 acts as the administrative agent for
the Grundy/Kendall Counties Regional Office of Education #24 Education Service Network
(Network), which oversees the operations of several educational programs in the region. The
Network has no governing body and all program budgets are approved by the Grundy/Kendall
Regional Office of Education #24.
Education Service Network, NFP, Inc. is a not-for-profit corporation in the State of Illinois that
is organized exclusively for charitable and educational purposes within the meaning of Section
501 (c)(3) of the Internal Revenue Code. Further, the Education Service Network NFP, Inc. is
organized and operated for purposes that are beneficial to the public interest, such as
advancement of education; combating community deterioration and juvenile delinquency; and
relief of the poor, distressed or underprivileged. Per the corporation's by-laws, the Regional
Superintendent·of Education for Grundy/Kendall Counties shall always serve as the President of
the Board of Directors and the Assistant Regional Superintendent of Education for
Grundy/Kendall Counties shall always serve as Vice-President.
Grundy/Kendall Counties Regional Office of Education #24 does not consider any other entities
to be part of its reporting entity. Additionally, Grundy/Kendall Counties Regional Office of
Education #24 does not consider itself to be a part of the Counties' or any other government's
reporting entity.
D. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Statement of Net Assets and the Statement of Activities are government-wide financial
statements. They report, information on all of the Grundy/Kendall Counties Regional Office of
Education #24' s activities with most of the interfund activities removed. Governmental activities
include programs supported primarily by State and federal grants and other intergovernmental
revenues. The Grundy/Kendall Counties Regional Office of Education #24 has three business­type
activities that rely on fees and charges for support.
The Grundy/Kendall Counties Regional Office of Education #24's government-wide financial
statements include a Statement of Net Assets and a Statement of Activities. These statements
present summaries of governmental and business-type activities for the Grundy/Kendall Counties
Regional Office of Education #24 accompanied by a total column. These statements are
presented on an "economic resources" measurement as prescribed by GASB Statement No. 34.
All of the Grundy/Kendall Counties Regional Office of Education #24's assets and liabilities,
including capital assets, are included in the accompanying Statement ofNet Assets.
30
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Concluded)
The Statement of Activities demonstrates the degree to which the direct expenses of a given
function are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function. Program revenues include 1) charges for services, and 2) grants and
contributions that are restricted to meeting operational or capital requirements of a particular
function.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government-wide fi!1ancial
statements. Major individual governmental funds are reported as separate columns in the fund
financial statements.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to
interfund activities, such as, payables, receivables and transfers. Interfund activities between
governmental funds and proprietary funds appear as due to/due from on the governmental fund
Balance Sheet and proprietary fund Statement of Net Assets and as other resources and other
uses on the governmental fund Statement of Revenues, Expenditures and Changes in Fund
Balances and on the proprietary fund Statement of Revenues, Expenses and Changes in Fund Net
Assets. All interfund transactions between governmental funds are eliminated on the
government-wide financial statements. Interfund activities between governmental funds and
business-type funds remain as due to/due from on the government-wide financial statements. All
internal balances in the Statement of Net Assets have been eliminated except those representing
balances between the governmental activities and the business-type activities. The purpose of
interfund borrowing and permanent transfers is to cover temporary or permanent short falls in
cash flow within grant programs and funds.
E. PROPRIETARY FUND FINANCIAL STATEMENTS
Proprietary fund financial statements include a Statement of Net Assets, a Statement of
Revenues, Expenses and Changes in Fund Net Assets, and a Statement of.Cash Flows for each
nonmajor fund.
Proprietary funds are accounted for using the "economic resources" measurement focus and the
accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent)
are included on the Statement ofNet Assets. The Statement of Revenues, Expenses and Changes
in Fund Net Assets present increases (revenues) and decreases (expenses) in total net assets.
Under the accrual basis of accounting, revenues are recognized in the period in which they are
earned while expenses are recognized in the period in which the liability is incurred.
31
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Operating revenues in the proprietary funds are those revenues that are generated from the
primary operations of the fund. All other revenues are reported as non-operating revenues.
Operating expenses are those expenses that are essential to the primary operations of the fund.
All other expenses are reported as non-operating expenses.
F. GOVERNMENTAL FUND FINANCIAL STATEMENTS
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and nonmajor
funds aggregated. An accompanying schedule is presented to reconcile and explain the
differences in fund balances and changes in fund balances as presented in these statements to the
net assets and changes in net assets presented in the government-wide financial statements.
The governmental fund financial statements have been prepared in accordance with generally
accepted accounting principles on the modified accrual basis. Under modified accrual basis of
accounting, revenues are recorded when susceptible to accrual i.e., both measurable and
available. Available means collectible within the current period or soon enough thereafter to be
used to pay liabilities of the current period, typically 60 days. Expenditures are recognized in the
accounting period in which the fund liability is incurred, if measurable, except expenditures for
prepaid expenses and other long-term obligations, which are recognized when paid. Revenues
received more than 60 days after the end of the current period are deferred revenue in the
governmental fund financial statements, but are recognized as current revenues in the
government-wide financial statements.
G. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues·are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Grants and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the grantor have been met.
The governmental funds financial statements focus on the measurement of spending or "financial
flow" and the determination of changes in financial position, rather than upon net income
determination. This means that only current assets and current liabilities are generally included
on their balance sheets. Their reported fund balance (net current assets) is considered a measure
of "available spendable resources." Governmental fund operating statements present increases
(revenues and other fmancing sources) and decreases (expenditures and other financing uses) in
net current assets. Accordingly, they are said to present a summary of sources and uses of
"available spendable resources" during a period.
32
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
G. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING (Concluded)
In applying the susceptible to accrual concept to intergovernmental revenues, the legal and
contractual requirements of the numerous individual programs are used as guidance~ There are
however, essentially two types of these revenues. In one, monies must be expended on the
specific purpose or project before any amounts will be paid to the GrundylKendall Counties
Regional Office of Education #24; therefore, revenues are recognized based upon the
expenditures recorded. In the other, monies are virtually unrestricted as to purpose of
expenditure and are usually recoverable only for failure to comply with prescribed compliance
requirements. These resources are reflected as revenues at the time of receipt or earlier if the
susceptible to accrual criteria are met.
Under the terms of grant agreements, GrundylKendall Counties Regional Office of Education
#24 funds certain programs by a combination of specific cost-reimbursement grants and general
revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted
funding resources available to finance the program. It is the Grundy/Kendall Counties Regional
Office of Education #24's policy to first apply restricted funds, then unrestricted. For unrestricted
funds, committed funds are used first, then assigned funds, then unassigned if any.
H. FUND ACCOUNTING
The Grundy/Kendall Counties Regional Office of Education #24 uses funds to maintain its·
financial records during the year. .A fund is defined as a fiscal and accounting entity with a self­balancing
set of accounts. The Grundy/Kendall Counties Regional Office of Education #24 uses
govermnental, proprietary, and fiduciary funds.
33
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS
Governmental funds are those through which most governmental functions typically are reported.
Governmental funds reporting focuses on the sources, uses and balances of current financial
resources. Expendable assets are assigned to the various governmental funds according to the
purpose for which they mayor must be used. Current liabilities are assigned to the fund from
which they will be paid. The difference between governmental fund assets and liabilities is
reported as a fund balance.
As prescribed by GASB Statement No. 34, governmental fund reporting focuses on the major
funds, rather than on the fund type. There is a two-step process for determining if a fund should
be reported as a major fund: 1) total assets, liabilities, revenues, or expenditures/expenses
(excluding extraordinary items) of an individual fund are at least 10% of the corresponding total
for the fund type, and 2) total assets, liabilities, revenues, or expenditures/expenses (excluding
extraordinary items) of an individual fund are at least 5% of the corresponding total for the total
of all governmental and proprietary funds combined. Funds that do not meet the major fund
determination requirements are reported in aggregate as nonmajor funds. The Grundy/Kendall
Counties Regional Office of Education #24 has presented all major funds that met the above
qualifications. The Grundy/Kendall Counties Regional Office of Education #24 reports the
following major governmental funds:
General Fund - The General Fund is used to account for resources traditionally associated with
government which are not required, legally or by sound financial management, to be accounted
for in another fund. The General Fund is always considered a maj or fund. The following
accounts are included in the General Fund:
General School Fund - To account for the general operating fund. It has been used to
record transactions in connection with general administrative activities.
ESN NFP, Inc. - To account for monies received for, and payment of, expenditures in
connection with general administrative activities of Education Service Network
NFP, Inc. (ESN NFP, Inc.) a blended component unit.
Payroll- To account for income received for and expenses paid for the payroll for certain
employees who are paid by Grundy and Kendall Counties.
34
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Continued)
Interest - This fund accounts for interest revenue earned on the Regional Office's bank
accounts.
Illinois Tobacco - This fund accounts for revenues and expenditures associated with the
curriculum and materials for tobacco prevention for youth and for incentives for
the stop smoking program for youth.
Grundy/Kendall Counties State Aid - To account for grant monies received for, and
payment of expenditures for the unrestricted State grant-in aid to school districts
which are directly received from the Illinois State Board of Education.
Will County General State Aid - To account for grant monies received for, and payment
of expenditures for the unrestricted State grant-in aid to school districts which are
received from and passed through the Will County Regional Office of Education
No. 56.
Regional Safe Schools - To account for the administration of monies to be used for the
Regional Safe Schools Program Fund received from the Illinois State Board of
Education. This fund is an alternative schooling program for disruptive youth,
creating alternative placement for those students who are suspended and/or are
deemed ineligible.
Will County Alternative Program - To account for grant monies received for, and
payment of expenditures for, Regional Safe Schools Program under Will County.
RAJ HIV/MC Bowling - To account for funds collected from students at the Morris
campus to pay to take those students bowling
Will/Grundy Counties Local Area Network - To account for the revenue and expenses
associated with the Will/Grundy Counties Local Area Network fund.
Local Revenues .. This fund accounts for revenues and expenditures associated with
various miscellaneous local revenues.
Parent University Fairmont 21 st Century - This fund accounts for a stipend received in
fiscal year 2008 for a Regional Office employee to perform counseling at
Fairmont School.
35
)
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
. GOVERNMENTAL FUNDS (Continued)
Department of Commerce and Economic Opportunity - This fund accounts for revenues
received from Chestnut Health System, a local organization, to pay salary
expens~s for one employee from the Regional Office to work for In-Touch Local
programs.
No Tolerance Task Force - This fund accounts for donations received from individuals
for the No Tolerance Task Force program.
Grundy County Teen Reach - This fund accounts donations received from local parents to
pay for the purchase of food and snacks for the kids participating in the teen reach
program.
Will County Prevention Consortium - Local - This fund accounts for revenues from local
businesses and other counties and is used to fund a graduation banquet each year.
In Touch Local - This fund accounts for revenues and expenditures related to a youth
group fundraiser that was held in fiscal year 2009.
Cash Fund - This fund accounts for amounts withheld from employee payroll checks to
pay the employee's portion of health insurance premiums.
Engaging Youth for Positive Change - This fund accounts for a grant received in fiscal
year 2006 that was received from the University ofIllinois.
WIA Recycling - To account for funds collected on the recycling of old ink cartridges.
Special Revenue Funds are used to account for the proceeds of specific revenue sources (other
than fiduciary or major capital projects) that are restricted to expenditures for specified purposes.
Major special revenue funds include the following:
Education - The Education Fund includes proceeds for varIOUS grants supporting
education enhancement programs as follows:
ESN NFP Workforce Investment Act (WIA) Grants - To account for federal
monies received and paYment of expenditures by the Education Service
Network (ESN NFP, Inc., a blended component unit) for the Workforce
Investment Act passed through Kane and Will Counties. Training
programs include tutoring, mentoring, and study skills training for
underprivileged youth.
36
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNlFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Continued)
Truants Alternative Optional Education Program (TAOEP) - To account for grant
monies received for, and payment of expenditures for TAOEP. This
program provides assistance to students and families when students have
excessive absenteeism.
Will County Truants Alternative Optional Education Program - To account for
State grant mqnies received from Will County for payment of expenditures
for the TAOEP.
Chemical Abuse Services Program - To account for the grant monies received for,
and payment of expenditures incurred for the Parent Involvement
Strategies in relation to Botvin's LifeSkills program.
No Tolerance Task Force - To account for monies received for, and payment of
expenditures for the No Tolerance Task Force. This program is a
community partnership for zero tolerance against drug abuse and gangs.
Teen Reach/Gear Up - To account for federal monies received for, and payment of
expenditures for, the Teen Reach and Gear Up programs. These programs
consist of educational, recreational, and vocational activities designed to
improve youth's chances for success.
McKinney-Vento Education for Homeless Children and Youth - To account for
grant monies received for and payment of expenditures associated with a
federal program designed to provide counseling and educational support to
homeless children and their families. The programs are funded by a
Federal Stewart B. McKinney Education for Homeless Children and
Youth Grant passed through the Will County Regional Office of Education
No. 56.
American Reinvestment and Recovery Act (ARRA) - Education Jobs Fund
Program - To account for federal funding passed through the State to
. provide assistance to save or create education jobs for the 2010-2011
school year.
Title I Reading First Part B SEA - To account for monies received from the State
(federal dollars) for expenditures incurred providing reading assistance to
Reading First districts and buildings.
37
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Continued)
Fairmont Literacy Program - To account for grant monies received for and
payment of expenses to improve the students' reading and ·literacy
achievements in the Fairmont School District.
Will County - American Reinvestment and Recovery Act (ARRA) - Education
Jobs Fund Program - To account for federal funding received from Will
County to provide assistance to save or create education jobs for the 2010­2011
school year for the Regional Safe Schools program.
The Grundy/Kendall Counties Regional Office of Education #24 reports the following nonmajor
governmental funds:
School Bus Driver Training - This fund accounts for bus drivers' permit fees. which may
be expended for bus drivers' refresher courses.
General Education Development - To account for the Regional Office of Education's
administration of the GED Testing Program. Revenues are received from testing
and diploma fees.
Institute - This fund accounts for teacher certificate registration, issuance and evaluation
fees for processing certificates, and expenses of meetings of a professional nature.
All funds generated remain restricted until expended only on the aforementioned
activities.
PROPRIETARY FUNDS
Proprietary funds are those which account for resources from fees charged directly to those
entities or individuals that use its services. Proprietary funds are as follows:
Criminal Backgrounds - This fund accounts for revenues and expenditures associated
with criminal background checks conducted by the Regional Office.
Grundy County Summer School - This fund accounts for revenues and expenditures
associated with summer school programs conducted by the Grundy/Kendall
Counties Regional Office of Educatioh #24.
Will County Summer School - This fund accounts for revenues and expenditures
associated with Will County summer school programs conducted by the
Grundy/Kendall Counties Regional Office of Education #24.
38
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FIDUCIARY FUNDS
Fiduciary Funds are used to account for assets held by the Grundy/Kendall Counties Regional
Office of Education #24 in a trustee capacity or as an agent for individuals, private organizations,
other governmental units, and/or other funds. The Fiduciary Funds include the following:
Private-Purpose Scholarship Fund - To account for all other trust arrangements under
which principal and income benefit individuals, private organizations, or other
governments. It includes the Martha Slyther Scholarship fund which was received
from an estate to be used for the purpose of providing scholarships to students in
Kendall County.
Agency Funds - Agency funds are custodial in nature (assets equal liabilities) and do not'
involve measurement of results of operations. Agency Funds include the
following:
Distributive - To account for funds received and disbursed as a result of the
Superintendent's responsibility to receive and distribute to treasurers of
school districts and other agencies, monies due them from general State
aid, State categorical grants, and various other sources. Interest earned on
Distributive Fund assets is used to fund existing programs.
Outdoor Education Cooperative - To account for funds received and disbursed for
the Outdoor Education Cooperative.
1. GOVERNMENTAL FUND BALANCES
Fund Balance is the difference between assets and liabilities in a Governmental Fund. The
following types of fund balances may be presented in the Governmental Funds Balance Sheet
and Governmental Funds Combining Schedule of Accounts:
Nonspendable Fund Balance - the portion of a Governmental Fund's net assets that are not
available to be spent, either short term or long term, in either form or through legal restrictions.
A portion of the fund balance for the General School Fund is presented as nonspendable. This
nonspendable fund balance is for prepaid insurance.
Restricted Fund Balance - the portion of a Governmental Fund's net assets that are subject to
external enforceable legal restrictions. The following fund balances are restricted by grant
agreements or contracts: No Tolerance Task Force and Fairmont Literacy Program. The
following funds are restricted by Illinois Statute: School Bus Driver Training, General Education
Development, and Institute.
39
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. GOVERNMENTAL FUND BALANCES
Committed Fund Balance - the Portion of a Governmental Fund's net assets with self-imposed
constraints or limitations that have been placed at the highest level of decision making. There are
no accounts presenting a committed fund balance.
Assigned Fund Balance - the Portion of a Governmental Fund's net assets to denote an intended
use of resources. The accounts presented with assigned fund balances are specified for a
particular purpose by the Regional Superintendent. The following accounts comprise assigned
fund balance: Illinois Tobacco, Grundy/Kendall Counties State Aid, HAJ HIV/MC Bowling, No
Tolerance Task Force, Grundy County Teen Reach, and Will County Prevention Consortium­Local.
Unassigned Fund Balance - available expendable resources in a governmental fund that are not
designated for a specific purpose. The unassigned fund balance is made up of the following:
General School Fund, Payroll, Interest~ Will County General State Aid, Regional Safe Schools,
Local Revenues, Department of Commerce and Economic Opportunity, In Touch Local, WIA
Recycling, and ESN NFP WIA Grants.
1. NET ASSETS
Equity is classified as net assets and displayed in three components:
Invested in capital assets - Consists of capital assets, net of accumulated depreciation.
Restricted net assets - Consists of net assets with constraints placed on the use either by
(1) external groups such as creditors, grantors, contributors, or laws or regulations of
other governments; or (2) law through constitutional provisions or enabling legislation.
Unrestricted net assets - All other net assets that do not meet the defmition of "restricted"
or "invested in capital assets."
K. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of cash on deposit. The Grundy/Kendall Counties Regional
Office of Education #24 considers all liquid investments with a maturity of three months or less
when purchased to be cash equivalents. Investments with original maturities of more than three
months are reported as investments.
L. INVENTORY
Inventory is not recorded. The cost is recorded as an expenditure at the time individual inventory
items are purchased.
40
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
M. CAPITAL ASSETS
Capital assets purchased or acquired with an original cost of $5,000 or more are reported at
historical cost or estimated historical cost. Contributed assets are reported at fair market value as
of the date received.
Additions, improvements and other capital outlays that significantly extend the useful life of an
asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.
Depreciation on all assets is provided on the straight-line basis over the following estimated
useful lives:
Office Equipment and Furniture
Building Improvements
N. COMPENSATED ABSENCES
5 -10 years
15 years
Non-certified and certified employees who work 12 calendar months earn up to 20 vacation days
for a full year of service. The accumulated total of vacation days may never exceed 30 days. In
the event that a program terminates, no vacation days will be honored past the ending date of the
program. Certified employees who work less than 12 calendar months per year do not earn
vacation days, and therefore, no liability is accrued. "
Employees receive up to 12 sick days annually and the unused portion is accumulated up to 180
days and carried forward. Employee sick leave is recorded when paid. Upon termination,
employees do not receive any accumulated sick leave pay, and therefore, no liability is accrued.
O. ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those estimates.
P. DEFERRED REVENUE
The Regional Office of Education #24 reports unearned revenue in the governmental fund
Balance Sheet. Deferred revenue arises when potential revenue does not meet both the
measurable and available criteria for recognition in the current period or when grant funds
received are unexpended or obligated at year end.
41
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTESTOTHEFmANC~STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)
Q. BUDGET INFORMATION
The Grundy/Kendall Counties Regional Office of Education #24 acts as the administrative agent
for certain grant programs that are accounted for in the General and Education Fund. Certain
programs have separate budgets and are required to report to the Illinois State Board of
Education, however, none of the annual budgets have been legally adopted nor are they required
to do so. Comparisons of budgeted and actual results are presented as supplemental infonnation.
Budgetary comparison schedules have been provided in supplementary schedules for the
following funds: Regional Safe Schools, ESN NFP WIA Grants, Truants Alternative Optional
Education Program (TAOEP), and Will County Truants Alternative Optional Education
(TAOEP).
R. REVENUE FROM FEDERAL AND STATE GRANTS
Revenues from federal and State grant awards are recorded net of the amount due to the State or
federal agency for unused portion of the grant or the amount carried over to the following fiscal
year project. Amounts due to the State or federal agency are carried over to the following year
project and are recorded as liabilities.
NOTE 2 - DEPOSITS AND INVESTMENTS
.The Illinois Compiled Statutes authorize the GrundylKendall Counties Regional Office of
Education #24 to make deposits and invest in u.S. Government, State of Illinois and municipal
securities, certificates of deposit or time savings deposits insured by the FDIC, mortgage notes,
bonds, or debentures issued by the Federal Housing Administration, bonds and other obligations
of the Federal National Mortgage Association, commercial paper rated within the three highest
classifications by at least two standard rating services, credit union shares, and the Illinois Public
Treasurer's Investment Pool.
A. DEPOSITS
At June 30, 2011, the carrying amount ofthe GrundylKendall Counties Regional Office of
Education #24's government-wide and agency deposits were $959,452 and $122,336,
respectively. The government-wide and agency bank balances were $1,019,079 and $122,738,
respectively. Of the total bank balances as of June 30, 2011, $906,608 and $84,192 was secured
by federal depository.
42
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 2 - DEPOSITS AND INVESTMENTS (Continued)
CUSTODIAL CREDIT RISK
Custodial credit risk for deposits with financial institutions is the risk that, in the· event of bank
failure, the ROE's deposits may not be returned to it. To guard against custodial credit risk for
deposits with financial institutions, the Grundy/Kendall Counties Regional Office of Education
#24' s investment policy requires that deposits with financial institutions in excess ofFDIC limits
be secured by some form of collateral, by a written agreement, and held at an independent, third­party
institution in the name of the Grundy/Kendall Counties Regional Office of Education
#24's.
B. INVESTMENTS
The GrundylKendall Counties Regional Office of Education #24 does not have a formal
investment policy but requires that funds be invested solely in investments authorized by the
Public Funds Investment Act, 30 ILCS 235/2
As of June 30, 2011, the carrying and fair value Grundy/Kendall Counties Regional Office of
Education #24's government-wide and agency investments as follows:
Invested in Illinois Funds investment pool
Invested in money market funds
Invested in certificates of deposit
CREDIT RISK
Government-Wide
$ 9,957
102,514
$ 112,471
Agency
$ 5,950
1,552
31,044
$ 38,546
At June 30, 2011, the Illinois School District Liquid Asset Fund Plus (ISDLAF+) had a Standard
and Poor's AAAm rating. The pool is audited annually by an outside independent auditor and
copies of the report are distributed to participants. The investment advisor for ISDLAF+ is a
corporation organized under the laws of the State of Illinois and is registered with the Securities
and Exchange Commission. All investments are fully collateralized.
INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its
fair value to changes in market interest rates.
43
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 2 - DEPOSITS AND INVESTMENTS (Concluded)
The Regional Office of Education #24' s policy for reducing its exposure to the risk is to structure
their portfolio so that securities mature to the meet the cash requirements for ongoing operations.
As of June 30, 2011, all the investments have investment maturities of less than one year.
CONCENTRATION OF CREDIT RISK
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's
investment in a single issuer. The Regional Office of Education #24 does not have a policy that
specifically addresses concentration of credit risk. As of June 30, 2011, the Regional Office of
Education #24's investment in certificates of deposit which is 88% of total investment and
totaling $133,558 is subject to concentration of credit risk.
NOTE 3 - DEFINED BENEFIT PENSION PLAN
Plan Description. The Regional Office of Education #24' s defined benefit pension plan for
Regular employees provides retirement and disability benefits, post retirement increases, and
death benefits to plan members and beneficiaries. The Regional Office of Education #24' s plan is
affiliated with the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer plan.
Benefit provisions are established by statute and may only be changed by the General Assembly
of the State of Illinois. IMRF issues a publicly available financial report that includes financial
statements and required supplementary information. That report may be obtained online at
www.imrf.org.
Funding Policy. As set by statute, the Grundy/Kendall Counties Regional Office of Education
#24's Regular plan members are required to contribute 4.50 percent of their annual covered
salary. The statute requires employers to contribute the amount necessary, in addition to member
contributions, to finance the retirement coverage of its own employees. The employer annual
required contribution rate for calendar year 2010 was 9.66 percent of annual covered payroll. The
Grundy/Kendall Counties Regional Office of Education #24 also contributes for disability
benefits, death benefits and supplemental retirement benefits, all of which are pooled at the
IMRF level. Contribution rates for disability and death benefits are set by the IMRF Board of
Trustees, while the supplemental retirement benefits rate is set by statute.
Annual Pension Cost. The required contribution for calendar year 2010 was $571,214.
44
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 3 - DEFINED BENEFIT PENSION PLAN (Concluded)
A. THREE-YEAR TREND INFORMATION FOR THE REGULAR PLAN
Calendar Annual Percentage Net
Year Pension ofAPC Pension
Ending Cost (APC) Contributed Obligation
12/31/10 $571,214 100% $0
12/31/09 671,198 100% 0
12/31/08 615,578 100% 0
The required contribution for 2010 was determined as part of the December 31, 2008, actuarial
valuation using the entry age normal actuarial cost method. The actuarial assumptions at
December 31, 2008, included a) 7.5 percent investment rate of return (net of administrative and
direct investment expenses), b) projected salary increases of 4.00% a year, attributable to
inflation, c) additional projected salary increases ranging from 0.40/0 to 10% per year depending
on age and service, attributable to seniority/merit, and d) post retirement benefit increases of 3%
annually. The actuarial value of your employer Regular plan assets was determined using
techniques that spread the effects of short-term volatility in the market value of investments over
a five-year period with a 20% corridor between the actuarial and market value of assets. The
Grundy/Kendall Counties Regional Office of Education #24's Regular plan's unfunded actuarial
accrued liability at December 31, 2008 is being amortized as a level percentage of projected
payroll on an open 10 year basis.
Funded Status and Funding Progress. As of December 31, 2010, the most recent actuarial
valuation date, the Regular plan was 88.16 percent funded. The actuarial accrued liability for
benefits was $7,003,574 and the actuarial value of assets was $6,174,102, resulting in an
underfunded actuarial accrued liability (UAAL) of $829,472. The covered payroll for calendar
year 2010 (annual payroll of active employees covered by the plan) was $5,913,192 and the ratio
ofthe UAAL to the covered payroll was 14 percent.
The schedule of funding progress, presented as RSI following the notes to the frnancial
statements, presents multiyear trend information about whether the actuarial value of plan assets
is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
NOTE 4 - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS
The Grundy/Kendall Counties Regional Office of Education #24 participates in the Teachers'
Retirement System of the State of Illinois (TRS). TRS is a cost-sharing multiple-employer
defined benefit pension plan that was created by the Illinois legislature for the benefit ofIllinois
public school teachers employed outside the city of Chicago.
45
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 4 - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (Continued)
The Illinois Pension Code outlines the benefit provisions of TRS, and amendments to the plan
can be made only by legislative action with the Governor's approval. The State of Illinois
maintains the primary responsibility for funding the plan, but contributions from participating
employers and members are also required. The TRS Board of Trustees is responsible for the
system's administration.
TRS members include all active non-annuitants who are employed by a TRS-covered employer
to provide services for which teacher certification is required. The active member contribution
rate for the year ended June 30, 2011, was 9.4 percent of creditable earnings. The same
contribution rate applies to members whose first contributing service is on or after January' 1,
2011, the effective date of the benefit changes contained in Public Act 96-0889. These
contributions, which may be paid on behalf of employees by the employer, are submitted to TRS
by the employer. The active member contribution rate was also 9.4% for the years ended June
30, 2010 and 2009.
The State of Illinois makes contributions directly to TRS on behalf of the Grundy/Kendall
Counties Regional Office of Education #24' s TRS-covered employees.
On behalf contributions. The State of Illinois makes employer pension contributions on behalf
of the Grundy/Kendall Counties Regional Office of Education #24. For the year ended June 30,
2011, State of Illinois contributions were based on 23.10 percent of creditable earnings not paid
from federal funds, and the Grundy/Kendall Counties Regional Office of Education #24
recognized revenue and expenditures of $232,372 in pension contributions that the State of
Illinois paid directly to TRS. For the years ended June 30, 2010 and June 30, 2009, the State of
Illinois contribution rates as percentages of creditable earnings not paid from federal funds were
23.38 percent ($275,852) and 17.08 percent ($238,827), respectively.
The Grundy/Kendall Counties Regional Office of Education #24 makes other types of employer
contributions directly to TRS:
.. 2.2 formula contributions. Employers contribute 0.58 percent of total creditable earnings
for the 2.2 formula change. This rate is specified by statute. Contributions for the year ended
June 30, 2011 were $4,772. Contributions for the years ending June 30, 2010 and June 30,
2009, were $5,801 and $8,119, respectively.
.. Federal and special trust fund contributions. When TRS members are paid from federal
and special trust funds administered by the Grundy/Kendall Counties Regional Office of
Education #24, there is a statutory requirement for the Grundy/Kendall Counties Regional
Office of Education #24 to pay an employer pension contribution from those funds. Under a
policy adopted by the TRS Board of Trustees that was first effective in the fiscal year ended
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 4 - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (Continued)
June 30, 2006, employer contributions for employees paid from federal and special trust
funds will be the same as the state contribution rate to TRS.
For the year ended June 30, 2011, the employer pension contribution was 23.10 percent of
salaries paid from federal and special trust funds. For the years ended June 30, 2010 and
2009, the employer pension contribution was 23.38 and 17.08 percent of salaries paid from
federal and special trust funds, respectively. For the year ended June 30, 2011 no salaries
were paid from federal and special trust funds therefore there were no required employer
contributions. For the years ended June 30, 2010 and June 30, 2009, required
Grundy/Kendall Counties Regional Office of Education #24 contributions were $863 and
$8,217, respectively.
Early Retirement Option. The Grundy/Kendall Counties Regional Office of Education #24 is
also required to make one-time employer contributions to TRS for members retiring under the
Early Retirement Option (ERO). The payments vary depending on the age and salary of the
member.
The maximum employer ERO contribution is 117.5 percent and applies when the member is age
55 at retirement.
For the year ended June 30, 2011, the Grundy/Kendall Counties Regional Office of Education
#24 paid no employer contribution to TRS under the ERO program. For the years ended June 30,
2010 and June 30, 2009, the Grundy/Kendall Counties Regional Office of Education #24 paid
$66,064 and $0, respectively, in employer ERO contributions.
• Salary increases over 6 percent and excess sick leave. If the Grundy/Kendall Counties
Regional Office of Education #24 grants salary increases over 6 percent and those salaries are
used to calculate a retiree's final average salary, the Grundy/Kendall Counties Regional
Office of Education #24 makes a contribution to TRS. The contribution will cover the
difference in actuarial cost of the benefit based on actual salary increases and the benefit
based on salary increase of up to 6 percent. For the year ended June 30, 2011, the
Grundy/Kendall Counties Regional Office of Education #24 paid $837 to TRS for employer
contributions due on salary increases in excess of 6 percent. For the years ended June 30,
2010, and 2009 the Grundy/Kendall Counties Regional Office of Education #24 paid no TRS
employer contributions due on salary increases in excess of 6 percent, respectively.
If the Grundy/Kendall Counties Regional Office of Education #24 grants sick leave days in
excess of the normal annual allotment and those days are used as TRS service credit, the
Grundy/Kendall Counties Regional Office ofEducation #24 makes a contribution to TRS.
47
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTEA - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (Concluded)
The contribution is based on the number of excess sick leave days used as service credit, the
highest salary used to calculate final average salary, and the TRS total normal cost rate (18.03
percent of salary during the year ended June 30, 2011, as recertified pursuant to Public Act
96-1511). For the years ended June 30, 2011, 2010, and 2009 the GrundylKendall Counties
Regional Office of Education #24 paid no employer contributions to TRS for sick leave days
granted in the excess of the normal annual allotment.
TRS financial information, an explanation of TRS benefits, and descriptions of member,
employer and State funding requirements can be found in the TRS Comprehensive Annual
Financial Report for year ended June 30, 2010. The report for the year ended June 30, 2011, is
expected to be available in late 2011.
The reports may be obtained by writing to the Teachers' Retirement System of the State of
Illinois, PO Box 19253, 2815 West Washington Street, Springfield, Illinois 62794-9253. The
most current report is also available on the TRS Web site at http://trs.illinois.gov.
NOTE 5 - TEACHERS' HEALTH INSURANCE SECURITY FUND
The GrundylKendall Counties Regional Office of Education #24 participates in the Teacher
Health Insurance Security (THIS) Fund, a cost-sharing, multiple-employer defined benefit
postemployment healthcare plan that was established by the Illinois legislature for the benefit of
Illinois public school teachers employed outside the city of Chicago. The THIS Fund provides
medical, prescription, and behavioral health benefits, but it does not provide vision, dental, or life
insurance benefits to annuitants of the Teachers' Retirement System (TRS). Annuitants may
participate in the State administered participating provider option plan or choose from several
managed care options.
The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions
of THIS Fund and amendments to the plan can be made only by legislative action with the
Governor's approval. The Illinois Department of Healthcare and Family Services (HFS) and the
Illinois Department of Central Management Services (CMS) administer the plan with the
cooperation of TRS. The director of HFS determines the rates and premiums for annuitants and
dependent beneficiaries and establishes the cost-sharing parameters. Section 6.6 of the State
Employees Group Insurance Act of 1971 requires all active contributors to the TRS who are not
employees of the State make a contribution to THIS Fund.
48
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED J(JNE 30,2011
NOTE 5 - TEACHERS' HEALTH INSURANCE SECURITY FUND (Concluded)
The percentage of employer required contributions in the future will be determined by the
director of Healthcare and Family Services and will not exceed 105 percent of the percentage of
salary actually required to be paid in the previous fiscal year.
On behalf contributions. The State of Illinois makes employer retiree health insurance
contributions on behalf of Grundy/Kendall Counties Regional Office of Education #24. State
contributions are intended to match contributions to THIS Fund from active members which 0.88
percent of pay during the year ended June 30, 2011. State of Illinois contributions were $7,240,
and Grundy/Kendall Counties Regional Office of Education #24 recognized revenue and
expenditures ofthis amount during the year.
State contributions intended to match active member contributions during the year ended June
30,2010 was 0.84 percent of pay. State contributions on behalf of the district were $8,403.
Had the Regional Office of Education #24 recognized revenue and expenditures for State
contributions intended to match active member contributions during the year ended June 30,
2009 under the current standards, the contribution match would have been 0.84 percent of pay or
$11,746.
Employer contributions to TillS Fund. The Grundy/Kendall Counties Regional Office of
Education #24 also makes contributions to THIS Fund. The employer THIS Fund contribution
was 0.66 percent during the year ended June 30, 2011, and 0.63 percent during the years ended
June 30, 2010 and June 30, 2009. For the year ended June 30, 2011, the district paid $5,430 to
the THIS Fund. For the years ended June 30, 2010 and June 30, 2009, the district paid $6,302
and $8,809 to the THIS Fund, respectively, which was 100 percent ofthe required contribution.
Further information on THIS Fund. The publicly available financial report of the THIS Fund
may be obtained by writing to the Department of Healthcare and Family Services, 201 S.
Grand Ave., Springfield, IL 62763-3838.
49
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATE:MENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 6 - INTERFUND ACTIVITY
DUE TOIFROM OTHER FUNDS
Interfund due to/from other fund balances at June 30, 2011 consist of the following individual
due to/from other funds in the governmental fund balance sheet. The balances between
governmental funds were eliminated in the government-wide Statement ofNet Assets.
Due From Due To
Other Funds Other Funds
Education Fund $ $ 270,931
General Fund 569,145 298,214
$ 569,145 $ 569,145
TRANSFERS
Interfund transfer in/out to other fund balances at June 30, 2011 consist of the following
individual transfers inlout to other funds in the governmental fund Statement of Revenues,
Expenditures, and Changes in Fund Balances. The transfer balances between governmental
funds were eliminated in the government-wide Statement ofActivities. .
Transfer Out Transfer In
Education Fund $ 2,235 $ 3,677
General Fund 20,630 19,188
Special Revenue Fund 72,389 72,389
$ 95,254 $ 95,254
50
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 7 - CAPITAL ASSET ACTIVITY
In accordance with GASB Statement No. 34, the Grundy/Kendall Counties Regional Office of
Education #24 has reported capital assets in the government-wide Statement of Net Assets.
Purchases are reported as capital outlay in the governmental fund statements. .Purchases of
capital assets for business-type activities are capitalized when purchased. The following table
provides a summary of changes in total assets, accumulated depreciation, and investment in
capital assets for the year ended June 30,2011:
Balance Balance
July 1,2010 Additions Deletions June 30, 2011
Governmental Activities:
Education Fund
Equipment $ 84,195 $ $ $ 84,195
Building Improvements 29,505 29,505
Governmental Activities Total Assets 113,700 113,700
Less Accumulated Depreciation .
Equipment (44,438) (8,874) (53,312)
Building Improvements (11,452) (1,967) (13,419)
Total Accmuulated Depreciation (55,890) (10,841) (66,731)
Governmental Activities
Investment in Capital Assets, Net $ 57,810 $ (10,841) $ $ 46,969
Capital assets are depreciated using the straight-line method over the estimated useful lives ofthe
assets. Depreciation expense for the year ended June 30, 2011 of $10,841 was charged to the
governmental activities on the government-wide Statement of Activities. Investment in capital
assets is the component of net assets that reports capital assets net of accumulated depreciation.
NOTE 8 - RISK MANAGEMENT
The Grundy/Kendall Counties Regional Office of Education #24 is exposed to various risks of
loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries
. to employees; and natural disasters. The Grundy/Kendall Counties Regional Office of Education
#24 has purchased commercial insurance to cover these risks. No losses have been incurred in
excess ofthe amounts covered by insurance over the past three years.
51
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30,2011
NOTE 9 - OPERATING LEASE
Grundy/Kendall Counties Regional Office of Education #24 leases an office space for its Joliet
operations. The lease agreement which commenced in 2010 expires in 2015. The agreement
provides for a renewal option to extend the lease for an additional five years. Also, the
agreement generally requires the Grundy/Kendall Counties Regional Office of Education #24 to
pay executory costs.
Rental expense for the year ended June 30, 2011 was $281,774.
Future minimum rentals for the year ending June 30 are:
Year Ending
June 30, Amount
2012 $ 281,774
2013 281,774
2014 281,774
2015 281,774
2016 46,962
Thereafter
$ 1,174,058
52
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEJ\1ENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 10- ON BEHALF PAYMENTS
The State of Illinois paid the following salaries on behalf of the Grundy/Kendall Counties
Regional Office of Education #24:
Regional Superintendent Salary
Assistant Regional Superintendent Salary
Regional Superintendent Fringe Benefit
(Includes State paid insurance)
Assistant Regional Superintendent Fringe Benefit
(Includes State paid insurance)
Regional Superintendent TRS Contribution
Assistant Regional Superintendent TRS Contribution
THIS contributions
TRS Pension contributions
Total
$ 96,435
86,789
25,344
24,784
22,276
20,048
7,240
190,048
$ 472.964
Salary and benefit data for the Regional Superintendent and Assistant Regional Superintendent
was calculated based on data provided by the Illinois State Board of Education.
These amounts have been recorded in the accompanying fmancial statements as State revenue
and expenditures.
53
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 11 - DUE TOIFROM OTHER GOVERNMENTS
The Grundy/Kendall Counties Regional Office of Education #24's Proprietary Fund and various
grant programs have funds due from various other governmental units which consist of the
following:
Due From Other Governments:
Education Fund
State Resources:
Illinois State Board of Education
Will County ROE #56
Federal Resources:
Department ofHuman Services
Kendall County
Will County ROE#56
Illinois State Board of Education
General Fund'
State Resources:
Will County ROE #56
Illinois State Board of Education
Local Governments
Total
Due To Other Governments:
Education Fund
State Governments
Agency Fund
Local Governments
Total
54
$ 84,866
21,707
8,176
116,203
10,621
30,390
183,994
90,135
930
$ 547,022
$ 1,032
89,740
$ 90,772
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30,2011
NOTE 12 - DEFICIT FUND BALANCES
Because some revenues were not be collected for more than 60 days after the Regional Office's
fiscal year ends, .they are not considered "available" revenues and are deferred in the
governmental funds. The deferral of the revenues caused deficit fund balances as of June 30,
2011 in the following funds:
Funds with Deficit Fund Balance
Will County General State Aid
Regional Safe Schools
ESN NFP WIA Grants
Department of Commerce and Economic Opportunity
NOTE 13 -RECLASSIFICATION
Deficit Balance
$ 27,653
14,709
3,113
3,632
$ 49,107
Certain funds and accounts in fiscal year 2010 have been reclassified to conform to the fiscal
year 2011 presentation. In the. financial statements issued for fiscal year 2010, all general state
aid accounts and the Regional Safe Schools account were reported as education funds. Education
funds are used to account for grant funding that is restricted or committed as to its use. Since
general state aid does not meet this requirement, all general state aid accounts are now classified
as general funds. Under GASB 54, the definition of a special revenue fund has been changed. A
special revenue fund should only be reported when restricted or committed proceeds of specific
revenue sources are a substantial portion of the inflows reported in a fund. A substantial portion
of the inflows for the Regional Safe Schools fund comes from General State Aid. Because of
this, Regional Safe Schools no longer meets the definition of a Special Revenue Fund and
therefore, was moved to the General Fund for the 2011 report. In addition, the Local Revenues
and Illinois Tobacco accounts were reclassified from Special Revenue Funds to the general fund.
A special revenue fund is used to account for funding that is restricted or committed for a
specific purpose. Because the purpose of these funds does not satisfy that attribute of a special
revenue fund, they have been reclassified as general funds.
In fiscal year 2010, on-behalf payments- local were overstated by $108,060 in the General School
Fund. Expense was overstated by the same amount. A prior period adjustment was made to correct
this error. This adjustment had no effect on beginning fund balance or net assets.
55
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 13 - RECLASSIFICATION (Continued)
The reclassifications noted above have the following effect on the beginning fund balance for the
governmental funds:
Fund Balance, July 1, 2010
Reclassification of Grundy!Kendall Counties State Aid
Reclassification of Will County State Aid
Reclassification of Regional Safe Schools
Fund Balance, July 1,2010, Restated
Fund Balance, July 1,2010
Reclassification of Grundy!Kendall Counties State Aid
Reclassification of Will County State Aid
Reclassification of Regional Safe Schools
Reclassification of Interest
Reclassification of Illinois Tobacco
Reclassification of Will/Grundy Counties Local Area Network
Reclassification of Local Revenues
Reclassification of Parent University Fairmont 21st Century
Reclassification of Department of Commerce
and Economic Opportunity
Reclassification ofNo Tolerance Task Force
Reclassification of Grundy County Teen Reach
Reclassification of Will County Prevention Consortium - Local
Reclassification of In Touch Local
Reclassification of Engaging Youth for Positive Change
Fund Balance, July 1,2010, Restated
56
Education Funds
$ 469,447
(549,415)
(8,786)
101,291
$ 12,537
General Funds
$ 142,375
549,415
8,786
(101,291)
666
154
1,259
(127)
482
(2,301)
23
224
(34)
904
169
$ 600,704
GRUNDYIKENDALL COUNTIES REGIONAL OFFICE OF EDUCATION #24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 13 - RECLASSIFICATION (Concluded)
Non-major Special
Revenue Funds
Fund Balance, July 1, 2010
Reclassification of Interest
Reclassification of Illinois Tobacco
Reclassification ofWi11/Grundy Counties Local Area Ne~ork
Reclassification of Local Revenues
Reclassification of Parent University Fainnont 21st Century
Reclassification of Department of Commerce
and Economic Opportunity
Reclassification ofNo Tolerance Task Force
Reclassification of Grundy County Teen Reach
Reclassification of Will County Prevention Consortium - Local
Reclassification of In Touch Local
Reclassification of Engaging Youth for Positive Change
Net Assets, July 1,2010, Restated
NOTE 14 - OTHER POST EMPLOYMENT BENEFITS
$
$
40,014
(666)
(154)
(1,259)
127
(482)
2,301
(23)
(224)
34
(904)
(169)
38,595
a. Plan Description
In addition to providing the pension benefits described, the Grundy & Kendall Counties
ROE #24 provides postemployment health care benefits (OPEB) for retired employees
through a single employer defined benefit plan. The benefits, benefit levels, employee
contributions and employer contributions are governed by the Grundy & Ken