FY11-ROE20-Fin-full

              State of Illinois
EDWARDS, HARDIN, GALLATIN, POPE, SALINE,
WABASH, WAYNE, AND WIDTE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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
EDWARDS, HARDlN,"GALLATlN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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 of Auditor'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 ..
PAGE
1
2-3
4
5-6
7-8
9-10
11
12a-12f
13
14a-14b
15
16a-16h
17
18
19
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
TABLE OF CONTENTS
June 30, 2011
Reconciliation ofthe Governmental Funds Balance Sheet
to the Statement ofNet Assets - Governmental Funds 20
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds 21
Reconciliation ofthe Statement of Revenues, Expenditures, and Changes in
Fund Balances to the Statement of Activities - Governmental Funds........ 22
Statement ofNet Assets - Proprietary Funds 23
Statement of Revenues, Expenses, and Changes in
Fund Net Assets - Proprietary Funds.......................................................... 24
Statement of Cash Flows - Proprietary Funds :................................... 25
Notes to the Financial Statements :.. 26-55
REQUIRED SUPPLEMENTAL INFORMATION
Illinois Municipal Retirement Fund Schedule of Funding Progress (unaudited) 56
Other Post Employment Benefits Schedule of Funding Progress (unaudited) 57
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
General Fund Account
Truants Alternative/Optional Education .
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
ROEIISC Operations ~ .
58-59
60-61
62
63
64-67
68-71
72
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
TABLE OF CONTENTS
June 30, 2011
Federal Special Education - Pre-School Discretionary .
American Recovery and Reinvestment Act (ARRA)
Title I School Improvement & Accountability .
Combining Balance Sheet
Nonmajor Special Revenue Funds .
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances Nonmajor Special Revenue Funds .
FEDERAL COMPLIANCE SECTION
73
74
75
76
Schedule of Expenditures of Federal Awards 77-78
Notes to the Schedule of Expenditures of Federal Awards........................... 79
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
OFFICIALS
Regional Superintendent
(Current and during the Audit Period)
Assistant Regional Superintendent
(During Audit Period, Acting Effective July 1, 2010
through December 31,2010)
Assistant Regional Superintendent
(During Audit Period, Acting Effective January 1, 2011
through June 30, 2011)
Offices are located at:
512 N. Main Street
Harrisburg, IL 62946
930 Market Street
Mount Carmel, IL 62863
Wayne County Courthouse
Fairfield, IL 62837
307 E. Cherry Street
Carmi, IL 62821
500 E. Main Street
Albion, IL 62806
1
Mr. Lawrence Fillingim
Mr. Kent Wheeler
Mr. James Taylor
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
COMPLIANCE REPORT SUMMARY
The compliance audit testing performed 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
3
1
1
Prior Audit
2
'0
2
An additional two matters, which are less than a significant deficiency or material weakness but more 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.
SUMMARY OF FINDINGS AND QUESTIONED COSTS
Item No. Description
FINDINGS (GOVERNMENT AUDITING STANDARDS)
Finding Type
11-1 12a Inadequate Internal Controls Over
Financial Processes
Material Weakness
11-2 12c Controls Over Financial Statement Material Weakness
Preparation
11-3 12e Inadequate Internal Controls Over
Compliance Material Weakness
2
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
COMPLIANCE REPORT SUMMARY (Concluded)
FINDINGS AND QUESTIONED COSTS (FEDERAL COMPLIANCE)
Item No.
11-3 12e
Description
Inadequate Controls Over Compliance
Finding Type
Material Weakness
PRIOR FINDINGS NOT REPEATED (GOVERNMENT AUDITING STANDARDS)
10-2
None
15 Controls Over Compliance With Laws and Regulations
PRIOR FINDINGS NOT REPEATED (FEDERAL COMPLIANCE)
EXIT CONFERENCE
The findings and recommendations appearing in this report were discussed with Agency personnel at an
informal exit conference on October 5, 2011. Attending were Larry Fillingim, Regional Superintendent,
and Michelle D. Smith, Manager, Kemper CPA Group, LLP. Responses to the recommendations were
provided by Larry Fillingim, Regional Superintendent on November 17, 2011.
3
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
FINANCIAL STATEMENT REPORT SUMMARY
The audit of the accompanying basic financial statements of the Edwards, Hardin, Gallatin, Pope, Saline,
Wabash, Wayne, and White Counties Regional Office of Education #20 was perfonned by Kemper CPA
Group LLP.
Based on their audit, the auditors expressed an unqualified opinion on the Edwards, Hardin, Gallatin,
Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20's basic financial
statements.
4
KEMPER
.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 financial
statements of the governmental activities, the business-type activities, each major fund, and the aggregate
remaining fund information of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
Counties Regional Office of Education #20, as of and for the year ended June 30, 2011, which collectively
comprise the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20's basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties Regional Office of Education #20'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 fmancial 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 fmancial 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties Regional Office of Education #20, as of June 30, 2011, and the respective changes in
financial position and cash flows, where applicable, for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of
Education #20 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties Regional Office of Education #20' s governmental funds' assets or liabilities nor was there
any effect to the total amount of any of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties Regional Office of Education #20's governmental fund balance'S as of and for the year
ended June 30, 2011.
5
7200 Eagle Crest Blvd. IIIiI 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 18, 2012, on
our consideration of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20's internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of
that report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
The Management's Discussion and Analysis and Illinois Municipal Retirement Fund Schedule of Funding
Progress and Other Post Employment Benefits Schedule of Funding Progress on pages 16a-16h, and 56-57 are
not a required part of the 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 opinions on the financial statements that collectively
comprise the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20's basic financial statements. The combining and individual nonmajor fund financial
statements and budgetary comparison schedules are presented for purposes of additional analysis and are not a
required part of the basic financial statements. 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 ofStates, Local Governments, and Non-Profit Organizations, and is also not a
required part of the basic financial statements. The combining and individual nonmajor fund financial
statements, budgetary comparison schedules, 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 aU material respects in relation to the basic financial statements taken as a whole.
Certified Public Accountants and Consultants
Evansville, Indiana
January 18,2012
6
KEMPER
.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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20, as of and for the year ended June 30, 2011, which collectively comprise the
Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of
Education #20's basic financial statements and have issued our report thereon dated January 18, 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 of the United States.
Internal Control Over Financial Reporting
Management of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 is responsible for establishing and maintaining effective internal control over
financial reporting. In planning and performing our audit, we considered the Edwards, Hardin, Gallatin, Pope,
Saline, Wabash, Wayne, and White Counties Regional Office of Education #20'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
Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education
#20's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20'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.
7200 Eagle Crest Blvd. II EvaZville, 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, 11-2, and 11-3 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 Edwards, Hardin, Gallatin, Pope, Saline,
Wabash, Wayne, and White Counties Regional Office of Education #20'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 instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards and which are described in the accompanying Schedule of Findings and
Questioned Costs as item 11-3.
We also noted certain matters which we have reported to management of the Edwards, Hardin, Gallatin,
Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 in a separate letter
dated January 18,2012.
Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of
Education #20's responses to the findings identified in our audit are described in the accompanying Schedule
of Findings and Questioned Costs. We did not audit the Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20' s responses and, accordingly, we 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 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 18, 2012
8
KEMPER
-CPA GROUPLLP
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS
THAT COULD HAVB A DIRECT AND MATERIAL EFFECT ON EACH MAJOR
PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A-133
Honorable William G. Holland
Auditor General
State of Illinois
Compliance
We have audited the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20' s compliance with the types of compliance requirements described in the U S. Office
of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and
material effect on each of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20's major federal programs for the year ended June 30, 2011. The Edwards,
Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20' s
major federal programs are 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 each of its major federal programs is the responsibility of the Edwards,
Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20' s
management. Our responsibility is to express an opinion on the Edwards, Hardin, Gallatin, Pope, Saline,
Wabash, Wayne, and White Counties Regional Office of Education #20'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-133 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 Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20's compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not
provide a legal determination or' the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
Counties Regional Office of Education #20's compliance with those requirements.
In our opinion, the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 complied, in all material respects, with the compliance requirements referred to
above that could have a direct and material effect on each of its major federal programs for the year ended
June 30, 2011. However, the results of our auditing procedures disclosed instances of noncompliance with
those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are
described in the accompanying Schedule of Findings and Questioned Costs as item 11-3.
7200 Eagle Crest Blvd. II Eva:tsville, IN 47715-8154
Phone: (812)421-8000 Fax: (812)421-2292 kempercpa.com
Internal Control Over Compliance
The management of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20 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 Edwards, Hardin, Gallatin, Pope, Saline,
Wabash, Wayne, and White Counties Regional Office of Education #20'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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20's internal control over compliance.
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 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 discussed
below, we identified a certain deficiency in internal control over compliance that we consider to be a material
weakness.
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. We consider the deficiency in internal control over
compliance described in the accompanying Schedule of Findings and Questioned Costs as Finding 11-3 to be
a material weakness.
Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office· of Education
#20' s response to the findings identified in our audit are described in the accompanying Schedule of Findings
and Questioned Costs. We did not audit Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
Counties Regional Office of Education #20's responses and accordingly, we express no opinion on the
responses.
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.
I(~ (';1'11 GlI»If LLf
Certified Public Accountants and Consultants
Evansville, Indiana
January 18, 2012
10
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30,2011
SECTION 1-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 that are not considered to
be material weakness(es)?
• Noncompliance material to financial statements noted?
Federal Awards
Internal control over major programs:
• Material weakness(es) identified?
• Significant deficiency(ies) identified that are not considered to
be material weakness(es)?
Type of auditor's report issued on compliance for major programs:
Unqualified
Yes
No
Yes
Yes
No
Unqualified
Any audit findings disclosed that are required to be reported in accordance with
OMB Circular A-133, Section 510(a)? Yes
Identification of major programs:
CFDA Numbers
84.173A
84.389A
Name of Federal Program or Cluster
Federal Special Education- Preschool Discretionary
ARRA Title I School Improvement & Accountability
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as a low-risk auditee?
11
No
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS
Finding No. 11-1- Inadequate Internal Control over Financial Processes (Partial Repeat of Finding
10-1)
Criteria/specific requirement:
The Regional Superintendent of Schools is responsible for establishing and maintaining an
internal control system over receipt and disbursement processes to prevent errors and fraud.
Condition:
We noted the following weaknesses in the Regional Office's internal controls:
II Harrisburg Project receipts are received by a person who is not independent of the general
ledger entry process;
" The bookkeeper has access to the cash receipts and also records cash receipts in the
general ledger;
" One instance in which the purchase order and requisition were issued after the product
invoice date;
" One instance of insufficient documentation to support the disbursement;
" One instance in which the employee's annual salary and benefits had not been approved
by the Regional Superintendent; and
" Three of 10 employees received an increase in gross pay for life and dental/vision
insurance rate increases, which is contrary to the Regional Office's policy, and these
increases of pay were not being properly approved by the Regional Superintendent. No
documentation of the date ofthe approval was noted.
Effect:
The Regional Office does not have adequate controls in place over receipts, general
disbursements, and payroll disbursements. There is no dual review or reconciliation of the cash
receipts that the Harrisburg Project receives, which gives opportunity for theft or error.
Individuals with unrestricted access to cash accounts are receiving payments and posting them
into the general ledger system with no segregation of the cash receipt process duties.
Unauthorized payroll and changes in payroll rates could result in employees receiving incorrect
payment for their services. Funds obligated, with no. evidence of an intent to purchase, have been
approved during the period that the funds are available. Further there was no supporting
documentation for an expenditure which could lead to unauthorized purchases and overpayment
of expenses.
12a
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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 Control over Financial Processes (Partial Repeat of Finding
10-1) (Concluded)
Cause:
The Regional Office of Education #20 does not have proper internal control procedures over the
receipt, general disbursement, and payroll disbursement process.
Recommendation:
Receipts for all areas of the Regional Office should be opened, restrictively endorsed, and listed
by a person with no access to the bank accounts, and independent of the general ledger entry
function.
Purchase orders and/or requisition forms should be completed and authorized before an item is
ordered, invoiced, and payment is disbursed. All invoices and receipts should be maintained with
the purchase order or requisition form to support the expenditure.
The Regional Superintendent should authorize, by signature and date, all changes in salary. This
can be accomplished with a new contract or a pay increase authorization signed by the Regional
Superintendent.
Management's Response:
The Regional Office agrees that recordkeeping staff was the first to handle checks received for
one fund before any other staff independent of recording information in the accounting program.
Effective October 10, all receipts are recorded by a person that does not have access to the
general ledger.
The Regional Office agrees that· our purchase order process needs improvement regarding the
timing of purchase order preparation and approval, and include supporting documentation.
Implementation began on October 10.
The Regional Office agrees that authorization and approval of any adjustments to staff salaries
need to be documented by signature and dated by Regional Superintendent. Implementation
began on October 10.
12b
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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
Criteria/Specific Requirement:
The Regional Office of Education #20 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 #20 does not have sufficient internal controls over the fmancial
reporting process. While the Regional Office maintains controls over the processing of most
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 the following:
• Numerous adjusting entries were required to present the financial statements m
accordance with generally accepted accounting principles.
• A restricted fund was found to be combined with a proprietary fund.
• Material amounts of cash remained unrecorded at year end.
• Receipts are not recorded as received, or periodically throughout the year; instead they
are recorded subsequent to year end in preparation for the annual audit.
• The fixed asset listing incorrectly listed some assets that had already been fully
depreciated as having current year depreciation expense.
• An expense was incorrectly recorded twice to a federal fund in the general ledger.
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:
The Regional Office's bookkeeping staff does not enter receipts, receivables, and payables until
they prepare for the annual audit at year end which does not allow time for analysis and review
before submission to the auditors.
12c
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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 (Concluded)
Recommendation:
As part of its internal control over the preparation of its financial statements, including
disclosures, the Regional Office of Education #20 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 of the Regional Office of Education's activities and
operations.
Management's Response:
The Regional Office acknowledges that timely recording of receipts, receivables, and payables is
a necessary part of accurate accounting, reporting, and detection of problems or errors. Every
attempt is being made to get current with all aspects of data entry.
The Regional Office agrees that an error in judgment was made when the restricted fund was
combined with a proprietary fund. The Regional Office will make certain that all grants and
funding will be recorded with transparency.
12d
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS (Continued)
Finding No. 11-3- Inadequate Internal Controls over Compliance
Federal Program Name: Federal Special Education - Pre-School Discretionary
Project #'s: 10-4605-00 and 11-4605-00
CFDA #: 84.173
Passed through: Illinois State Board of Education
Federal Agency: U.S. Department of Education
Federal Program Name: American Recovery and Reinvestment Act of 2009 (ARRA)
Education Jobs Fund
Project #' s: 11-4880-92 and 11-4880-93
CFDA #: 84.410
Passed through: Illinois State Board of Education
Federal Agency: U.S. Department of Education
Criteria/Specific Requirement:
As a recipient of federal, State, and local funds from various grantor agencies, the Regional
Office must incorporate certain procedures into their operations in order to comply with the grant
agreements with these entities. The Regional Office is required to accurately spend funding in
accordance with budgets submitted to grantors and accurately submit expenditure reports timely.
In addition, funding received under ARRA is required to be separately tracked from other funding
sources.
Condition:
A. Federal Special Education - Pre-School Discretionary - The Regional Office does not have a
process in place to verify that covered transactions are not entered into with contracted parties
that are suspended or debarred, nor does the Regional Office have a procurement policy in
place.
B. Federal program - ARRA Education Jobs Fund - This fund activity was combined with
General State Aid Sec. 18-8 activity and should have been separately tracked in the general
ledger.
Questioned Costs:
A. None
B. None
12e
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2011
SECTION II - FINANCIAL STATEMENT FINDINGS (Conclusion)
Finding No. 11-3- Inadequate Internal Controls over Compliance (Conclusion)
Context:
A. Recipients of federal grant monies are required to have a procurement policy in place.
Further, the recipient is required to ensure the entities they do business with are not included
on the Excluded Party Listing System.
B. Under federal regulations all ARRA funds are to be accounted for separately.
Effect:
A. The Regional Office could have unknowingly contracted with suspended or debarred parties
for goods and services. Additionally, the Regional Office did not allow full and open
competition for the contract of goods and services via the procurement provisions in the A­102
Common Rule and OMB Circular A-llO.
B. The Regional Office did not transparently track the ARRA funding separately from other
funds. .
Cause:
A. The Regional Office does not have internal controls in place that require the Program Director
to follow the procurement, suspension, and debannent requirements ofthis program.
B. The Regional Office was not aware of the reporting requirements ofARRA funding.
Recommendation:
A. The Regional Office should implement a documented procurement process which allows for
full and open competition. Additionally, before entering into a contract, the Regional Office
should verify that the parties are not listed as suspended or debarred on the Excluded Party
List System.
B. The Regional Office should separately track and report any ARRA funding.
Management Response:
The Regional Office has initiated steps to follow the procurement, suspension, and debarment
requirements for federal funds. We also now realize that the term "reimbursement model" does
not remove the need to report grant funding and expenditures in a separate fund.
12f
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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:
Finding No. 11-3 - Inadequate Internal Controls over Compliance
(details on pages 12e-12f)
MATERIAL WEAKNESSES:
Finding No. 11-3 - Inadequate Internal Controls over Compliance
(details on pages 12e-12f)
13
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
CORRECTIVE ACTION PLAN FOR CURRENT-YEAR AUDIT FINDINGS
JUNE 30, 2011
Corrective Action Plan
Finding No. 11-1- Inadequate Internal Control over Financial Processes (partial Repeat of Finding 10-1)
Condition:
We noted the following weaknesses in the Regional Office's internal controls:
• Harrisburg Proj ect receipts are received by a person who is not independent ofthe general ledger
entry process;
• The bookkeeper has access to the cash receipts and also records cash receipts in the general
ledger;
• One instance in which the purchase order and requisition were issued after the product invoice
date;
• One instance of insufficient documentation to support the disbursement;
• One instance in which the employee's annual salary and benefits had not been approved by the
Regional Superintendent; and .
• Three of 10 employees received an increase in gross pay for life and dental/visions insurance rate
increases, which is contrary to the Regional Office's policy, and these increases of pay were not
being properly approved by the Regional Superintendent. No documentation of the date of the
approval was noted.
Plan:
The Regional Office agrees that recordkeeping staff was the first to handle checks received for one fund
before any other staff independent of recording information in the accounting program. Effective
October 10, all receipts are recorded by a person that does not have access to the general ledger.
The Regional Office agrees that our purchase order process needs improvement regarding the timing of
purchase order preparation and approval, and include supporting documentation. Implementation began
on October 10.
The Regional Office agrees that authorization and approval of any adjustments to staff salaries need to
be documented by signature and dated by Regional Superintendent. Implementation began on October
10.
Anticipated Date of Completion: Immediately upon learning of oversight
Name of Contact Person:
Honorable Larry Fillingim, Regional Superintendent of Schools
14a
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
CORRECTIVE ACTION PLAN FOR CURRENT-YEAR AUDIT FINDINGS
JUNE 30, 2011
Corrective Action Plan (Continued)
Finding No. 11-2- Controls Over Financial Statement Preparation
Condition:
The Regional Office of Education #20 does not have sufficient internal controls over the financial
reporting process. While the Regional Office maintains controls over the processing of most accounting
transactions, there are not sufficient controls over the preparation of the GAAP based fmancial
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 the following:
• Numerous adjusting entries were required to present the financial statements in accordance with
generally accepted accounting principles.
• A restricted fund was found to be combined with a proprietary fund.
• Material amounts of cash remained unrecorded at year end.
• Receipts are not recorded as received, or periodically throughout the year; instead they are
recorded subsequent to year end in preparation for the annual audit.
• The fixed asset listing incorrectly listed some assets that had already been fully depreciated as
having current year depreciation expense.
• An expense was incorrectly recorded twice to a federal fund in the general ledger.
Plan:
The Regional Office acknowledges that timely recording of receipts, receivables, and payables is a
necessary part of accurate accounting, reporting, and detection of problems or errors. Every attempt is
being made to get current with all aspects of data entry.
The Regional Office agrees that an error in judgment was made when the restricted fund was combined
with a proprietary fund. The Regional Office will make certain that all grants and funding will be
recorded with transparency.
Anticipated Date of Completion: Immediately upon learning of oversight
Name of Contact Person:
Honorable Larry Fillingim, Regional Superintendent of Schools
14b
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
CORRECTIVE ACTION PLAN FOR CURRENT-YEAR AUDIT FINDINGS
JUNE 30, 2011
Corrective Action Plan (Concluded)
Finding No. 11-3- Inadequate Internal Controls over Compliance
Condition:
A. Federal Special Education - Pre-School Discretionary - The Regional Office does not have a
process in place to verify that covered transactions are not entered into with contracted parties that
are suspended or debarred, nor does the Regional Office have a procurement policy in place.
B. Federal program - ARRA Education Jobs Fund - This fund activity was combined with General
State Aid Sec. 18-8 activity and should have been separately tracked in the general ledger.
Plan:
The Regional Office has initiated steps to follow the procurement, suspension, and debarment
requirements for federal funds. We also now realize that the term "reimbursement model" does not
remove the need to report grant funding and expenditures in a separate fund.
Anticipated Date of Completion: Immediately upon learning of oversight
Name of Contact Person:
Honorable Larry Fillingim, Regional Superintendent of Schools
14c
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
Finding
No.
10-1
10-2
Condition
Internal Control over Payroll
Controls Over Compliance With
Laws and Regulations
15
Current Status
Partially Repeated
as Finding 11-1
Corrected
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20
(ROE #20) provides this Management's Discussion and Analysis of its financial statements. This narrative overview
and analysis of the financial activities is for the fiscal years ended June 30, 2011 and 2010. We encourage readers to
consider this information in conjunction with the ROE #20's fmancial statements, which follow.
During fiscal year 2011 the Regional Office of Education #20 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 15 to
the fmancial statements. Because of these reclassifications the fund analysis is not comparable between fiscal year
2010 and fiscal year 2011. In addition, in fiscal year 2011 the Principal Mentoring program that was previously
reported as part of the proprietary fund was restated to be presented as part·of the Education Fund.
FINANCIAL HIGHLIGHTS
• General Fund revenues were $618,772 in fiscal year 2010 and increased to $1,137,003 in fiscal year 2011,
while General Fund expenditures were $705,776 in fiscal year 2010 and increased to $1,138,025 in fiscal year
2011.
• The increase in General Fund revenues was attributable to an increase in State revenue payments in fiscal year
2011. The increase in General Fund expenditures for fiscal year 2011 was due primarily to an increase in
salaries and benefits, purchased services, and supplies and materials.
(It Special revenue fund revenues were $2,004,384 in fiscal year 2010 and decreased to $1,648,622 in fiscal year
2011, while special revenue fund expenditures were $2,044,308 in fiscal year 2010 and decreased to
$1,597,842 in fiscal year 2011.
(It The decrease in Special revenue fund revenues from fiscal year 2010 to fiscal year 2011 occurred because of
the decrease of State sources in the Education Fund. The decrease in Special revenue fund expenditures from
fiscal year 2010 to fiscal year 2011 was due primarily to a decrease in Education Fund salaries and benefits,
supplies and materials, and payments to other governments.
(It Proprietary fund revenues were $80,067 in fiscal year 2010 and decreased to $40,440 in fiscal year 2011,
while Proprietary fund expenditures were $89,219 in fiscal year 2010 and decreased to $41,195 in fiscal year
2011.
It The decrease in Proprietary fund revenues from fiscal year 2010 to fiscal year 2011 occurred because of the
decrease in Local revenue sources (workshops). The decrease in Proprietary fund expenditures from fiscal
year 2010 to fiscal year 2011 was due primarily to a decrease in salaries and benefits and a decrease in
purchased services due to decreased workshops.
16a
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
USING THIS ANNUAL REPORT
The annual report consists of a series of fmancial statements and other information, as follows:
• Management's Discussion and Analysis introduces the basic fmancial statements and provides an analytical
overview ofthe ROE #20's financial activities.
• 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 ROE #20 as a whole and present an overall view of the
ROE #20' s finances.
• The fund fmancial statements tell how governmental services were financed in the short term as well as what
remains for future spending. Fund fmancial statements report the ROE #20's operations in more detail than
the government-wide statements by providing information about the most significant funds.
• Notes to the fmancial statements provide additional information that is essential to a full understanding of the
data provided in the basic financial statements.
• Required Supplementary infoIDlation further explains and supports the fmancial statements, and
supplementary information provides detailed information about the non-major funds.
REPORTING THE REGIONAL OFFICE OF EDUCATION #20 AS A WHOLE
The Statement of Net Assets and the Statement of Activities
The government-wide statements report information about the ROE #20 as a whole using accounting methods similar
to those used by private-sector companies. The Statement of Net Assets includes all the ROE #20's assets and
liabilities. All ofthe current year revenues and expenses are accounted for in the Statement of Activities regardless of
when cash is received or paid.
The two government-wide statements report the ROE #20's net assets and how they have changed. Net assets - the
difference between the ROE #20's assets and liabilities - are one way to measure the ROE #20's financial health or
position.
• Over time, increases or decreases in the ROE #20's net assets are an indicator of whether financial position is
improving or deteriorating, respectively.
• To assess the ROE #20's overall health, additional non-financial factors, need to be considered.
In the government-wide financial statements, the ROE #20's activities consist of governmental activities and
business-type activities.
16b
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
REPORTING THE REGIONAL OFFICE OF EDUCATION #20 AS A WHOLE (Concluded)
• Governmental activities: Most of the ROE #20's basic services are included here, such as regular and special
education instruction, student and instructional staff support services and administration. State and Federal
grants, local school districts, and State aid fmance most of these activities.
• Business-type activities: The ROE #20 charges fees to help cover the costs of certain services and workshops
it provides and records this activity in the Proprietary fund.
Governmental Fund Financial Statements
The governmental fund financial statements provide detailed information about the ROE #20's funds, focusing on its
most significant or "major" funds - not the ROE #20 as a whole. Funds are accounting devices the ROE #20 uses to
keep track of specific sources of funding and spending on particular programs. Some funds are required by State law
or by bond covenants. The ROE #20 establishes other funds to control and manage money for particular purposes.
Governmental funds account for most of the ROE #20's basic services. These focus on how cash and other financial
assets that can readily be 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 financial resources that can be spent in the near future to finance the ROE #20's
programs. Because this information does not encompass the additional long-term focus of the government-wide
statements, a reconciliation between the government-wide statements and the governmental fund statements follow
each of the related 'govemmentalfund statements. The ROE #20's governmental funds include the General Fund and
the Special Revenue Funds.
The governmental funds required financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances.
Proprietary Fund Financial Statements
Proprietary funds are those in which revenues and expenses related to services provided to organizations inside the
ROE #20 on a cost reimbUrsement basis are reported. The ROE #20 reports the Local Workshop fund as a nonmajor
proprietary fund. The Local Workshop fund accounts for the receipts and expenses pertaining to teacher meetings
and workshops of a professional nature.
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 major proprietary fund and nonmajor funds
aggregated.
16c
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of financial position. The Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties ROE #20's net assets at June 30, 2011 and 2010 totaled
$186,180 and $219,762 respectively. The analysis that follows provides a summary of the ROE #20's net assets at
June 30, 2011 and 2010 for its governmental and business-type activities.
CONDENSED STATEMENT OF NET ASSETS
Governmental Activities
2011 2010
Business-Type Activities
2011 2010
Total Primary Government
2011 2010
Current Assets
Capital Assets
Total Assets
$ 425,673 $ 514,805 $ 52,326 $ 41,022 $ 477,999 $ 555,827
22,247 43~,9_4_3 58_0 22--,·,_24_7 4_4~,5_2_3
447,920 __5_58--:.,_74_8 5_2,::.-3_26 4--:.1,_60_2__'---_5_0--'0,_24_6 6_0--:0,:..-35_0_
Current Liabilities
Noncurrent Liabilities
Total Liabilities
244,388 329,018 30,107 6,374 274,495 335,392
___39-=-,5_7_1 4_5..::....,1_9_6 3_9-'-,5_7_1 4--:5,:..-19_6_
__2_83~,9_5_9 37_4..::....,2_1_4__3--:0,:..-10_7 6.:-,3_74 3_1_4,,--0_66 3_8--,0,:..-5_88_
22,247 43,943 580 22,247 44,523
$
96,458 31,261 96,458 31,261
___45....t..,2_5_6 10_9~,3_3-,-0__2--:2,:...-21_9,--.__3_4,::.-64_8 6_7-'-,4_75 1_4--,3,,--97_8_
163,961 $ 184,534 $ 22,219 $ 35,228 $ 186,180 $ 219,762
Net Assets
Capital Assets net
Restricted for
educational purposes
Unrestricted
Total Net Assets
The ROE's combined net assets decreased by $33,582 in FY11 and decreased by $57,649 in FY10. The decrease
occurred primarily as a result of expenditures exceeding funding in FY11. The decrease in FY10 occurred primarily
as a result of decrease in State funding and an increase in total expenditures during the year ended June 30, 2010.
16d
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued)
CHANGES IN NET ASSETS
Governmental Activities Business-Type Activities Total Primary Government % Change
2011 2010 2011 2010 2011 2010 2011-2010
Revenues:
Program revenues:
Operating Grants/Contributions $ 1,782,936 $ 1,802,337 $ $ $ 1,782,936 $ 1,802,337 -1.08%
Charges for Services 40,440 80,067 40,440 80,067 -49.49%
General Revenues:
Local Sources 323,777 324,300 323,777 324,300 -0.16%
State Sources 307,565 215,102 307,565 215,102 42.99%
Federal Sources 60,310 60,310 -100.00%
On-Behalf payments - State 304,178 312,801 304,178 312,801 -2.76%
Interest 368 780 287 10 655 790 -17.09%
Transfers 9,136 783 (9,136) (783)
Total Revenues 2,727,960 2,716,413 31,591 79,294 2,759,551 2,795,707 -1.29%
Expenses:
Instructional services:
Salaries and benefits 1,706,714 1,706,328 1,706,714 1,706,328 0.02%
Purchased services 580,749 466,813 580,749 466,813 24.41%
Supplies and materials 99,198 106,566 99,198 106,566 -6.91%
Payments to other governments 29,122 132,170 29,122 132,170 -77.97%
Capital outlay 2,678 898 2,678 898 198.22%
Other objects 2,980 5,836 2,980 5,836 -48.94%
Depreciation 23,101 32,725 23,101 32,725 -29.41%
Interest expense 3,218 3,218 100.00%
Administrative expenses:
On-behalf payments 304,178 312,801 304,178 312,801 -2.76%
Business.;.type expenses:
Instructional 41,195 89,219 41,195 89,219 -53.83%
Total Expenses 2,751,938 2,764,137 41,195 89,219 2,793,133 2,853,356 -2.11%
Decrease in Net Assets (23,978) (47,724) (9,604) (9,925) (33,582) (57,649)
Net Assets - Beginning, As restated 187,939 232,258 31,823 45,153 219,762 277,411 -20.78%
Net Assets - Ending $ 163,961 $ 184,534 $ 22,219 $ 35,228 $ 186,180 $ 219,762 -15.28%
16e
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
GOVERNMENT-WIDE FINANCIAL ANALYSIS (Concluded)
Total program revenues
Total general revenues
The following analysis compares total revenues for the years ended June 30:
2011 2010
$ 1,823,376 $ 1,882,404
936,175 913,303
Total revenues $ 2,759,551 $ 2,795,707
Operating grants and contributions from local, State, and federal sources account for a majority of the total revenue.
The ROE's expenses primarily relate to instructional services, which account for 89% of the total governmental
activities expenses.
Governmental Activities Expenses
11.1 11.3
DFY'10
DlFY'11
.1 .2
4.8
.1 .03
$-
$200,000
$400,000
$600,000
$1,200,000
$1,000,000
$800,000
$1,600,000
$1,400,000
$1,800,000
Salaries & Purchased Supp6es Capital outlay Payments to Other objects On-behalf
benefits servtes &depr other gov payments
16f
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
Governmental Activities
The analysis of changes in net assets reflects a decrease of $23,978 in FY11 and a decrease of $47,724 in FY10.
FINANCIAL ANALYSIS OF THE REGIONAL OFFICE OF EDUCATION FUNDS
As previously noted, ROE #20 uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
The ROE #20's governmental funds reported combined fund balances of $156,760 in FYll and $94,093 in FY10.
The primary reason for the increase in combined fund balance in FY11 was due to decrease in payments to other
governments, and increase in State funding.
Governmental Fund Highlights
CD The General Fund balance was $22,990 in FY10 restated to $62,545 (See note 15) and decreased to $61,631 in
FY11. The decrease in FYll was attributable to revenues received were less than expenditures.
CD The Education Fund balance was $20,771 in FY10 restated to $(15,379) (See note 15) and increased to $2,517
in FYll. The increase in FY11 was attributable to an increase in federal funding for education.
GIl The Harrisburg Project Fund balance was $5,748 in FY10 and increased to $56,943 in FYll. This increase in
FY11 was attributable to increased State funding and decreased purchases of supplies and capital outlay.
GIl The Institute Fund balance was $31,261 in FY10 and decreased to $28,431 in FYll. This decrease in FY11
was attributable to revenues received were less than expenditures.
Business-Type Fund Highlights·
GIl The Local Workshop Fund balance was $35,228 in FY10 restated to $31,823 (See note 15) and decreased to
$27,357 in FYll. The decrease was attributable to revenues were less than expenditures and existing cash
being spent.
BUDGETARY HIGHLIGHTS
The ROE #20 annually adopts budgets for certain grants, which are submitted to the State Board of Education. The
State Board reviews the proposed budget and either grants approval or returns it without approval with comments.
Any unapproved budget must be resubmitted to the State Board for [mal approval.
16g
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
BUDGETARY IDGHLIGHTS (CONCLUDED)
The budget may be amended during the year utilizing procedures prescribed by the State Board. Over the course of.
the year, the ROE #20 amended several of its grant budgets to reflect adjustments in revenue and expenditures
associated with changes in funding from the Federal and State sources or for additional services needed and provided
to the local school districts. A schedule showing the original and final grant budget amounts compared to the ROE
#20's actual financial activity is included in the supplementary information section ofthis report.
CAPITAL ASSETS
Capital assets of the ROE #20 include office equipment, computers, audio-visual equipment, and office furniture.
The ROE #20 maintains an inventory of capital assets, which have been accumulated over time. The decrease for
FYI1 was $22,276 and came as a result of less grant money available to purchase equipment. More detailed
information about capital assets is available in the notes to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
At the time these financial statements were prepared and audited, the Regional Office was aware of the following
existing circumstances that could significantly affect its financial health in the future:
• A decrease is expected in the number of students being served by the local school districts.
• Funding for FY12 is expected to be comparable to FYll. Due to the economic condition of the State of
Illinois, funding payments have been delayed on State grants.
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
This financial report is designed to provide the Regional Offices' citizens, taxpayers, and customers with a general
overview of the finances and to demonstrate the accountability for the money it receives. If you have questions about
this report or need additional financial information, contact the Regional Superintendent of the Regional Office of
Education #20, 512 North Main Street, Harrisburg, Illinois 62946.
16h
BASIC 'FINANCIAL STATEMENTS
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
STATEMENT OF NET ASSETS
JUNE 30, 2011
Primary Government
Governmental Business-Type
Activities Activities Total
ASSETS
Current Assets:
Cash and cash equivalents $ 219,865 $ 32,052 $ 251,917
Due (to) from other funds (20,274) 20,274
Due from other governments:
Local 34,069 34,069
State 150,302 150,302
Federal 41,711 41,711
Total Current Assets 425,673 52,326 477,999
Noncurrent Assets:
Capital assets, net of depreciation 22,247 22,247
TOTAL ASSETS 447,920 52,326 500,246
LlABlLITIES
Current Liabilities:
Accounts payable 47,217 3,018 50,235
Salaries and benefits payable 52,154 52,154
Due to other governments:
Local 1,106 27,089 28,195
State 65 65
Loans payable 137,000 137,000
Deferred revenue 6,846 6,846
Total Current Liabilities 244,388 30,107 274,495
Noncurrent Liabilities:
Liability for compensated absences 39,571 39,571
Total Noncurrent Liabilities 39,571 39,571
TOTAL LIABlLITIES 283,959 30,107 314,066
NET ASSETS
Invested in capital assets 22,247 22,247
Restricted for educational purposes 96,458 96,458
Unrestricted 45,256 22,219 67,475
TOTAL NET ASSETS $ 163,961 $ 22,219 $ 186,180
The notes to the financial statements are an integral part ofthis statement.
17
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2011
Program Revenues
Net (Expense) Revenue and
Changes in Net Assets
$ 1,706,714 $ - $
580,749
99,198
2,980
23,101
2,678
29,122
304,178
2,748,720
41,195 40,440
41,195 40,440 -
$ 2,789,915 $ 40,440 $
1,267,833 $ (438,881) $
446,403 (134,346)
48,416 (50,782)
(2,980)
(23,101)
4,083 1,405
16,201 (12,921)
(304,178)
1,782,936 (965,784)
Primary Government
Governmental Business-Type
Activities Activities Total
$ (438,881)
(134,346)
(50,782)
(2,980)
(23,101)
1,405
(12,921)
(304,178)
-- (965,784)
(755) (755)
QEl (755)
1,782,936 (965,784) (755) (966,539)
Operating
Grants and
Contributions
Charges for
FUNCTIONSIPROGRAMS Expenses Services
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-behalfpayments - State
Total Governmental Activities
Business-type Activities:
Other
Total Business-type Activities
TOTAL PRIMARY GOVERNMENT
GENERAL REVENUES:
Local sources 323,777 - 323,777
State sources 307,565 - 307,565
On-behalf payments - State 304,178 - 304,178
Investment earnings 368 287 655
Interest expense (3,218) - (3,218)
Transfers 9,136 (9,136)
Total General Revenues 941,806 (8,849) 932,957
CHANGE IN NET ASSETS (23,978) (9,604) (33,582)
NET ASSETS - BEGINNING, RESTATED (See Note 15) - 187,939 31,823 219,762
NET ASSETS - ENDING $ 163,961 $ 22,219 $ 186,180
The notes to the financial statelnents are an integral part ofthis statement.
18
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2011
Other Total
, General Education Harrisburg Institute Nonmajor Governmental
Fund Fund Project Fund Funds Eliminations Funds
ASSETS
Cash and cash equivalents $ 137,501 $ 41,325 $ 13,419 $ 17,044 $ 10,576 $ - $ 219,865
Due from other funds 225,661 - - 11,975 2 (237,638)
Due from other governments:
Local 34,069 - - - - - 34,069
State 72,094 27,146 51,062 - - - 150,302
Federal - 41,711 - - - - 41,711
TOTAL ASSETS $ 469,325 $ 110,182 $ 64,481 $ 29,019 $ 10,578 $ (237,638) $ 445,947
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 9,705 $ 32,094 $ 2,364 $ 310 $ 2,744 $ - $ 47,217
Salaries and benefits payable 37,025 15,129 - - - - 52,154
Due to other funds 213,514 38,350 5,174 278 596 (237,638) 20,274
Due to other governments:
Local - 1,106 - - - - 1,106
State 65 - - - - - 65
Loans payable 137,000 - - - - - 137,000
Deferred revenue 10,385 20,986 - - - - 31,371
TOTAL LIABILITIES 407,694 107,665 7,538 588 3,340 (237,638) 289,187
Fund Balance (Deficit):
Restricted - 3,263 56,943 28,431 7,821 - 96,458
Assigned 101;826 - - - - - 101,826
Unassigned (40,195) (746) - - (583) - (41,524)
Total Fund Balance (Deficit) 61,631 2,517 56,943 28~4~) ?,~38_ - 156,760
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT) $ 469,325 $ 110,182 $ 64,481 $ 29,019 $ 10,578 $ (237,638) $ 445,947
The notes to the financial statements are an integral part ofthis statement.
19
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE
COUNTIES
REGIONAL OFFICE OF EDUCATION #20
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
JUNE 30, 2011
TOTALFUNDBALANCES-GOVERNMENTALFUNDS
Amounts reported for governmental activities in the Statement ofNet
Assets are different because:
Long-term liabilities, including compensated absences, are not due
and payable in the current period and, therefore, are not reported
in the funds. .
Revenues on the Statement of Activities that do not provide current
financial resources, and are not reported as revenues in the funds.
Capital assets used in governmental activities are not
financial resources and, therefore, are not reported in the funds.
NET ASSETS OF GOVERNMENTAL ACTIVITIES
$
$
156,760
(39,571)
24,525
22,247
163,961
The notes to the financial statements are an integral part ofthis statement.
20
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Other Total
General Education Harrisburg Institute Nonmajor Governmental
Fund Fund ~ect Fllnd Funds Funds
REVENUES
Local sources $ 258,405 $ - $ 12,840 $ 29,578 $ 12,604 $ 313,427
State sources 574,420 118,821 802,200 - 1,183 1,496,624
Federal sources - 671,396 - - - 671,396
On-behalf payments - State 304,178 - - - - 304,178
Total Revenues 1,137,003 790,217 815,040 29,578 13,787 2,785,625
EXPENDITURES
Instructional Services
Salaries and benefits 641,631 397,055 661,136 1,077 11,440 1,712,339
Purchased services 125,432 332,446 89,125 27,406 6,340 580,749
Supplies and materials 51,206 35,567 10,222 282 . 1,921 99,198
Other objects 2,780 - - 25 175 2,980
Payments to other governments 9,590 15,811 - 3,n.l - 29,122
On-behalf payments - State 304,178 - - - - 304,178
Capital outlay - 678 3,405 - - 4,083
Debt service:
Interest 3,208 10 - - - 3,218
Total Expenditures 1,138,025 781,567 763,888 32,511 19,876 2,735,867
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (1,022) 8,650 51,152 (2,933) (6,089) 49,758
OTHER FINANCING SOURCES (USES)
Transfer in - 9,136 - - - 9,136
Interest 108 110 43 103 4 368
Total Other Financing Sources (Uses) 108 9,246 43 103 4 9,504
NET CHANGE IN FUND BALANCES (914) 17,896 51,195 (2,830) (6,085) 59,262
FUND BALANCES (DEFICIT) - BEGINNING, RESTATED (See note 15) 62,545 (15,379) 5,748 31,261 13,323 97,498
FUND BALANCES - ENDING $ 61,631 $ 2,517 $ 56,943 $ 28,431 $ 7,238 $ 156,760
The notes to the financial statements are an integral part of this statement.
21
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WlllTE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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 $ 59,262
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.
Capital outlay $ 1,405
Depreciation expense (23,101) (21,696)
Revenues reported in the Statement of Activities in the prior year that did not
provide current financial resources, and were reported as revenues in the funds.
Deferred revenue
Local sources $ (8,711)
State sources (81,887)
Federal sources (1,096) (91,694)
Revenues in the Statement of Activities that do not provide current
financial resources, and are not reported as revenues in the funds.
Deferred revenue
Local sources $ 10,350
State sources 14,175 24,525
Certain expenses reported in the Statement of Activities do not require the
use of current financial resources and therefore are not reported as
expenditures in governmental funds. 5,625
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ (23,978)
The notes to the financial statements are an integral part ofthis statement.
22
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
JUNE 30,2011
Business-Type
Activities -
Enterprise Funds
Other Nonmajor
Proprietary Fund-
Local Lab School
Workshops Reservations Totals
ASSETS
Current Assets:
Cash and cash equivalents $ 3,101 $ 28,951 $ 32,052
Due from other funds 27,453 31,000 58,453
TOTAL ASSETS 30,554 59,951 90,505
LIABILITIES
Current Liabilities:
Accounts payable 3,018 3,018
Due to other funds 179 38,000 38,179
Due to other government.s
Local 27,089 27,089
TOTAL LIABILITIES 3,197 65,089 68,286
NET ASSETS
Unrestricted 27,357 (5,138) 22,219
TOTAL NET ASSETS $ 27,357 $ (5,138) $ 22,219
The notes to the financial statements are an integral part of this statement.
23
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND wmTE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Business-Type
Activities -
Enterprise Funds
Other Nonmajor
Proprietary Fund-
Local Lab School
Workshops Reservations Totals
OPERATING REVENUES
Local sources $ 40,440 $ $ 40,440
Total Operating Revenues 40,440 40,440
OPERATING EXPENSES
Salaries and benefits 932 932
Purchased services 20,754 103 20,857
Supplies and materials 16,851 16,851
Depreciation 580 580
Payments to other governments 1,975 1,975
Total Operating Expenses 41,092 103 41,195
OPERATING lNCOME (LOSS) (652) (103) (755)
NONOPERATING SOURCES (USES)
Transfer out (3,819) (5,317) (9,136)
Interest 5 282 287
Total Nonoperating Revenue (3,814) (5,035) (8,849)
CHANGE IN NET ASSETS (4,466) (5,138) (9,604)
TOTAL NET ASSETS - BEGINNING, RESTATED (See Note 15) 31,823 31,823
TOTAL NET ASSETS - ENDlNG $ 27,357 $ (5,138) $ 22,219
The notes to the financial statements are an integral part ofthis statement.
24
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH, WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2011
Business-Type
Activities -
Enterprise Funds
Other Nonmajor
Proprietary Fund-
Local Lab School
Workshops Reservations Totals
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 40,503 $ $ 40,503
Payments to suppliers and providers of goods and services (36,862) (103) (36,965)
Payments to employees (932) (932)
Net Cash Provided By (Used for) Operating Activities 2,709 (103) 2,606
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest 5 282 287
Net Cash Provided by (Used for) Investing Activities 5 282 287
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Proceeds from other governments 27,089 27,089
Proceeds from other funds 38,000 38,000
Payments to other funds (8,537) (36,317) (44,854)
Net Cash Provided By (Used for) Noncapital Financing Activities (8,537) 28,772 20,235
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,823) 28,951 23,128
CASH AND CASH EQUIVALENTS - BEGINNING 8,924 8,924
CASH AND CASH EQUIVALENTS - ENDING $ 3,101 $ 28,951 $ 32,052
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY (USED FOR) OPERATING AC!'IVITIES
Operating income (loss) $ (652) $ (103) $ (755)
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:
Depreciation 580 580
Change in assets and liabilities:
(Decrease) in accounts payable 2,718 2,718
Increase in receivable 63 63
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 2,709 $ (103) $ 2,606
The notes to the financial statements are an integral part ofthis statement.
25
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 was fonned under the provisions of the State of Illinois, Illinois State
Board of Education.
In 2011, Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 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 of
Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and
AICPA Pronouncements. The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties Regional Office of Education #20 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 defmitions, 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 has evaluated subsequent events through JfulUarj 18, 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 fonnation of other teacher meetings and assist in their
management; evaluate the schools in the region; examine evidence of indebtedness; file and keep
the returns of elections required to be returned 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 ofthe Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
26
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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)
, Counties Regional Office of Education #20' s districts; providing township treasurers with a list
ofdistrict 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.
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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20, 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 Edv/ards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20. Such activities are reported as a
single special revenue fund (Education Fund).
C. SCOPE OF THE REPORTING ENTITY
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20's reporting entity includes all related organizations for which they
exercise oversight responsibility.
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education .#20 has developed criteria to determine whether outside agencies with
activities which benefit the citizens of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20, including districts or joint
agreements which serve pupils from numerous regions, should be included in its financial
27
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES.
REGIONAL OFFICE OF EDUCATION #20
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)
reporting entity. The criteria include, but are not limited to, whether the Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20
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 districts and joint agreements have been determined not to be a part of the reporting entity
after applying the manifesting of oversight, scope of public service, and special fmancing
relationships criteria and are therefore excluded from the accompanying financial statements
because the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20 does not control the assets, operations, or management of the
districts or joint agreements. In addition, the Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20 is not aware of any entity, which
would exercise such oversight as to result in the Edwards, Hardin, Gallatin, Pope, Saline,
Wabash, Wayne, and White Counties Regional Office of Education #20 being considered a
component unit ofthe entity.
D. GOVERl'-.JMENT-WIDE AND FUND FINANCIAL STATEIvfENTS
The Statement of Net Assets and the Statement of Activities are government-wide financial
statements. They report information on all of the Edwards, Hardin, Gallatin, Pope, Saline,
Wabash, Wayne, and White Counties Regional Office of Education #20'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 Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20
has two business-type activities that rely on fees and charges for support.
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20' s government-wide financial statements include a Statement of Net
Assets and a Statement of Activities. These statements present a summary of governmental and
business-type activities for the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties Regional Office of Education #20 accompanied by a total column.
28
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH
WAYNE, AND wHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTESTOFINANCIALSTATEMffiNTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Concluded)
These statements are presented on an "economic resources" measurement focus as prescribed by
GASB Statement No. 34. All of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne,
'and White Counties Regional Office of Education #20's assets and liabilities, including capital
assets, are included in the accompanying Statement of Net Assets. 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 fmancial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds are reported as separate columns in the fund fmancial 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 between governmental funds and proprietary funds appear as due to/due
from on the Governmental Funds Balance Sheet and Proprietary Funds Statement of Net Assets
and as other resources and other uses on the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances and on the Proprietary Funds Statement of
Revenues, Expenses and Changes in Fund Net Ass,ets. All interfund transactions between
governmental funds and governmental funds and internal service funds are eliminated on the
government-wide fmancial 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. In the
Statement of Activities, internal service fund transactions have been eliminated; however, those
transactions between governmental and business-type activities have not been eliminated.
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
major proprietary fund and nonmajor funds aggregated.
29
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
E. PROPRIETARY FUND FINANCIAL STATEMENTS (Concluded)
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 of Net 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.
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 nonoperating revenues.
Operating expenses are those expenses that are essential to the primary operations of the fund.
All other expenses are reported as nonoperating 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-vvide 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. Revenue
received after the Regional Office's availability period are reported as deferred revenue in the
fund statements and are reported as current revenue in the Statement ofActivities.
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 ofthe timing ofrelated cash flows.
Grants and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the grantor have been met.
30
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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)
The governmental funds financial statements focus on the measurement of spending or "fmancial
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 financing 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.
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 reyenues. In one, monies must be expended on the
specific purpose or project before any amounts will be paid to the Edwards, Hardin, Gallatin,
Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20; 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.
Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office
of Education #20 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 Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20'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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 uses' funds to maintain its financial records during the year. A fund is
defined as a fiscal and accounting entity with a self-balancing set of accounts. The Edwards,
Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of
Education #20 uses governmental and proprietary funds.
31
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
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 fund 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 Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20
has presented all maj or funds that met the above qualifications. The Edwards, Hardin, Gallatin,
Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 reports the
following major governmental funds:
General Fund - The General Fund is the operating fund of the Regional Office of Education #20.
'It is used to account for all financial resources in the Region except those required to be
accounted and reported for in another fund. The General Fund is always considered a major
fund. The following accounts are included in the General Fund:
Clearing - This fund operates as an imprest account. Money is transferred from various
funds and the expenditures appear within the fund in which the cost was incurred.
Local Lunch/Breakfast - To account for Local monies received to provide free lunches
and breakfasts to eligible needy children.
Payroll- This fund is utilized for processing payroll. Money is transferred from various
funds and the salary expenses appear within the fund in which the salary cost was
incurred.
32
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Continued)
General Budget - This fund is used for the general operation of the Regional Office and
to cover expenses that are not paid for by other funds.
Truants Alternative/Optional Education - This fund accounts for the proceeds from State
grants expended under a program to reduce student truancy.
Truants Alternative General State Aid - These funds are used to account for the
administration of monies to be used for the General State Aid Program.
Regional Safe Schools - This fund is used to account for the monies received from the
State. The program concentrates on the education of students who have been
expelled from the school districts served by the Regional Office of Education #20.
Safe Schools State Aid - To account for General State Aid received from the Illinois
State Board 'of Education based on the average daily attendance at the Safe
School.
Major Special Revenue Funds - 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 vanous grants supporting
education enhancement programs as follows:
ROE/ISC General Operations - This fund accounts for grant monies received and
expended for general and administrative expenses.
ROE/ISC Technology - This fund accounts for State monies received and
expended for implementing regional-based computer software and
providing on-going support ofthat software.
33
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Continued)
Workforce Investment Act - This fund accounts for federal grant monies received
and expended to prepare youth for entry into the labor force and to afford
job training to those economically disadvantaged youth facing serious
barriers to employment, who are in special need of such training to obtain
productive emplOYment.
Federal Special Education - Pre-School Discretionary - This fund is used to
account for the monies received from the State (federal dollars) to promote
increasing public awareness of the availability of services and locating,
identifying and evaluating children suspected ofhaving disabilities.
American Recovery and Reinvestment Act (ARRA) Title I School Improvement
& Accountability - This fund is used to work with fIrst and second year
Title I schools in improvement status to help them understand the school
improvement planning process and to support district improvement
planning for Title I districts in improvement status.
Career and Technical Education - This fund is used to account for the monies
received from Southern Illinois University to provide technical assistance
to the Center for Workforce Development (SlUC) in the Springfield offices
located on the Lincoln Land Community College campus and to support
grant-funded projects and activities supported through various
public/private sector sources.
Career and Technical Education Curriculum - This fund is used to account for the
monies received from Southern Illinois University to provide technical
assistance to the Center for Workforce Development (SlUC) in the
Springfield offices located on the Lincoln Land Community College
campus and to support grant-funded projects and activities supported
through various public/private sector sources.
Principal Mentoring - This fund is used to account for the monies received from
the State to ensure that fIrst year principals are mentored by a qualified,
highly-trained mentor.
34
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Continued)
American Recovery and Reinvestment Act (ARRA) Education Jobs Program ­Tills
fund is used to account for the monies that local educational agencies
were passed to retain existing employees, to recall or reillre former
employees, and to hire new employees in order to provide early childhood,
elementary, or secondary educational and related services.
System of Support - Tills fund is used to account for the monies received from the
State (federal dollars) to provide improvement support to schools in
academic early warning and academic watch status as well as to assist other
schools whose performance makes placement on the lists· in the near future
likely.
McKinney-Vento Education For Homeless Cillidren and Youth - This fund is
used to account for the monies received from the State (federal dollars) for
assisting school districts in identifying and providing assistance to at-risk
students.
Federal Lunch - Tills fund is used to account for the monies received from the
State (federal dollars) for reimbursement for meals through the school
lunch program at the regular price as well as reimbursement of free- and
reduced~priced meals for students enrolled in the Regional Safe Schools
Program.
State Lunch - To account for State monies received to provide free lunches and
breakfasts to eligible needy cillidren enrolled in the Regional Safe School
Program.
Federal Forest Reserve - This fund is used to account for the monies received
from the State (federal dollars) for school districts with land in the Shawnee
National Forest.
School Breakfast Incentive - To account for State monies received to provide
breakfast meals to eligible needy children.
35
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
GOVERNMENTAL FUNDS (Concluded)
Federal Breakfast - This fund is used to account for the monies received from the
State (federal dollars) to provide breakfast meals meeting federal
requirements to all children in attendance at the Regional Safe School
Program.
Harrisburg Project - This fund is used to account for the contract that creates and
maintains computer software and provides an electronic exchange of data for the
school districts with other entities.
Institute - This fund accounts for fees from registrations. These funds are used to help
pay certain administrative expenses incurred to conduct workshops and for
general meetings with teachers and other school personnel. All funds generated
remain restricted until expended only on the aforementioned activities.
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 reports the following nonmajor governmental funds:
Nonmajor special revenue funds include the following:
General Educational Development - To account for the Regional Office of Education's
administration of the GED Testing Program. Revenues are received from testing
and diploma fees.
Bus Driver/Transportation - This fund accounts for State and local receipts and expenses
as a result of training school district bus drivers.
Supervisory - This fund accounts for proceeds provided to the Regional Superintendent
by the Illinois State Board of Education to be used for travel and related purposes.
PROPRIETARY FUNDS
Proprietary funds are those in which revenues and expenses related to services provided to
organizations inside the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
Counties Regional Office of Education #20 are reported.
Local Workshops - To account for the fees and local revenues received and related·
disbursements incurred while performing the corresponding program services.
36
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPRlETARY FUNDS (Concluded)
Lab School Reservations - To account for the fees received and related disbursements
incurred for startup ofthe lab schools every August.
1. GOVERNMENTAL FUND BALANCES
Fund balance is the difference between assets and liabilities in a Governmental Fund. The
following types of fund balances are 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.
There are no accounts presenting a nonspendable fund balance.
Restricted Fund Balance - the portion of a Governmental Fund's net assets that are subj ect to
external enforceable legal restrictions. The following fund balances are restricted by grant
agreements or contracts: Principal Mentoring and Harrisburg Project. The following fund
balances are restricted by Illinois statute: Institute, Bus Driver/Transportation, and Supervisory.
Conunitted 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· that 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: Clearing, Payroll, Truants Alternative Gen. State Aid, Safe Schools State Aid and
Local Lunch/Breakfast.
Unassigned Fund Balance - the portion of a Governmental Fund's net assets that are available
expendable resources in a governmental fund that are not designated for a specific purpose. The
following fund balances are unassigned: General Budget, Federal Lunch, State Lunch, Federal
Breakfast, and General Educational Development.
37
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30,2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
J. 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
(l) 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 definition of "restricted"
or "invested in capital assets."
K. CASH AND CASH EQUNALENTS
Cash and cash equivalents consists of cash on deposit. The Edwards, Hardin, Gallatin, Pope,
Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 considers all
liquid investments with a maturity of three months or less when purchased to be cash
equivalents.
L. INVENTORY
Inventory is not recorded. The cost is recorded as an expenditure at the time individual inventory
items are purchased.
M. CAPITAL ASSETS
Capital ~ssets purchased or acquired, with an original cost of $1,000 or more, are reported at
historical cost or estimated historical cost. Contributed assets are reported at fair market value as
ofthe 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.
38
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
M. CAPITAL ASSETS (Concluded)
Depreciation on all assets is provided on the straight-line basis over the following estimated
useful lives:
Office Equipment and Furniture
Computer Equipment
Building Improvements
N. COMPENSATED ABSENCES
5 - 10 years
3 - 5 years
10 - 20 years
Employees of the Regional Office of Education #20 are permitted to accumulate earned but
unused vacation benefits. Accumulated unused vacation benefits are accrued as incurred in the
government-wide financial statements. Governmental funds record accumulated unused vacation
benefits payable only when due for payment, such as when an employee retires or resigns.
Accrued but unused vacation time in the amount of $39,571 is included on the government-wide
financial statements at June 30, 2011.
Sick leave accumulates as far as time available but is not reimbursable to employees upon
termination. Therefore, no accruals or reserves have been established.
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. BUDGET INFORMATION
The Regional Office of Education #20 acts as the administrative agent for certain grant programs
that are accounted for in the General and Education Funds. 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 information.
Budgetary comparison schedules have been provided in supplementary schedules for the
following funds: Truants Alternative/Optional Education, Regional Safe Schools, ROEIISC
Operations, Federal Special Education - Pre-School Discretionary, and ARRA Title I School
Improvement & Accountability.
39
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 2 - DEPOSITS AND INVESTMENTS
The fllinois Compiled Statutes authorize the Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20 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 of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20' s government-wide deposits were
$251,917 and the bank balances were $608,683. Of the total bank balances as of June 30, 2011,
$507,082 was secured by federal depository insurance and $99,383 was collateralized by
securities pledged by the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
Counties Regional Office of Education #20's financial institution in the name of the Regional
Office.
CUSTODIAL CREDIT RISK
Custodial credit risk for deposits with fmancial 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne,
and White Counties Regional Office of Education #20' s investment policy requires that deposits
with financial institutions in excess of FDIC limits be secured by some form of collateral, by a
written agreement, and held at an independent, third-party institution in the name ofthe Edwards,
Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of
Education #20.
B. INVESTMENTS
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and white Counties Regional
Office of Education #20 does not have a formal investment policy, as its only investments are
internally pooled in the Illinois Funds Money Market Fund. At June 30, 2011, the Regional
Office of Education #20 had investments with carrying and fair values of $2,218 invested in the
Illinois Funds Money Market Fund.
40
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 2 - DEPOSITS AND INVESTMENTS (Concluded)
CREDIT RISK
At June 30, 2011, the Illinois Funds Money Market Fund had a Standard and Poor's AAA rating.
The pool is audited annually by an outside independent auditor and copies of the report are
distributed to participants. Although not subject to direct regulatory oversight, the fund is
administered by the Illinois State Treasurer in accordance with provisions of the Illinois Public
Funds Investment Act, 30 ILCS 235. All investments are fully collateralized.
INTEREST RATE RISK
The Illinois Funds Money Market Fund, created by the Illinois General Assembly, enables
custodians of public funds an investment option with a competitive rate of return on fully
collateralized investments and immediate access to the funds. The investment policy of the
Illinois Funds Money Market Fund states that, unless authorized specifically by the Treasurer, a
minimum of 75% of its investments shall have less than one-year maturity and no investment
shall exceed two years maturity.
CONCENTRATION OF CREDIT RISK
Unless specifically authorized by the Treasurer, the Illinois Funds Money Market Fund's
investment policy lin1its investment categories to not exceed 25% of the portfolio, with the
exception of cash equivalents and u.S. Treasury securities. Further, certificates of deposit cannot
. exceed 10% of any single financial institution's total receipts.
NOTE 3 - DEFINED BENEFIT PENSION PLAN
Plan Description. The Edwards, Hardin, Gallatin, Pope, Saline, Wabash" Wayne, and White
Counties Regional Office of Education #20' 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and
White Counties· Regional Office of Education #20' 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne,
and White Counties Regional Office of Education #20's Regular plan members are required to
41
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATE:MENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 3 - DEFINED BENEFIT PENSION PLAN (Continued)
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 contribution rate for calendar year 2010 was 12.53
percent. The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20 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 $115,617.
A. TREND INFORMATION
Actuarial
Valuation
Date
12/31/10
12/31/09
12/31/08
Annual
Pension
Cost (APC)
$ 115,617
88)81
92,929
Percentage of
APC
Contribution
100%
100%
100%
Net
Pension
Obligation
$0
o
o
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) additional projected salary increases of 4.00% a year, attributable
to inflation, c) additional projected salary increases ranging from 0.4% 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 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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and.White Counties Regional
Office of Education #20's Regular plan's UJifunded 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 81.49 percent funded. The actuarial accrued liability for
benefits was $2,292,125 and the actuarial value of assets was $1,867,740, resulting in an
42
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 3- DEFlNED BENEFIT PENSION PLAN (Concluded)
underfunded actuarial accrued liability (VAAL) of $424,385. The covered payroll for calendar
year 2010 (annual payroll of active employees covered by the plan) was $922,721 and the ratio of
the VAAL to the covered payroll was 46 percent.
The schedule of funding progress, presented as RSI following the notes to the financial
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 Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional.
Office of Education #20 participates in the Teacher's Retirement System of the State of Illinois
(TRS) is a cost-sharing multiple-employer defined benefit pension plan that was created by the
Illinois legislature for the benefit of Illinois public school teachers employed outside the city of
Chicago. -
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 primary responsibility for funding of 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 fust contributing service is on or after Jan. 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 percent for the years ended June 30,
2010 and 2009.
The State of Illinois makes contributions directly to TRS on behalf of the Edwards, Hardin,
Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20's
TRS-covered employees.
CD On behalf contributions. The State of Illinois makes employer pension contributions on
behalf of the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20. For the year ended June 30, 2011, State of Illinois
43
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 4 - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (Continued)
• On behalf contributions. (Concluded)
contributions were based on 23.10 percent of creditable earnings not paid from federal funds,
and the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20 recognized revenue and expenditures of $101,115 in
pension contributions that the State ofIllinois 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 were 23.38 percent ($110,903) and 17.08 percent
($58,204), respectively.
The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 makes other types of employer contributions directly to TRS.
• 2.2 formula contributions. Employers contribute 0.58 percent of creditable earnings for the
2.2 formula change. This rate is specified by statute. Contributions for the year ended June
30, 2011 were $1,586. Contributions for the years ending June 30, 2010 and June 30, 2009,
were $1,750 and $2,223, respectively.
• Federal and special trust fund contributions. When TRSmembers are paid from federal
and special trust funds administered by the Edwards, Hardin, Gallatin, Pope, Saline, Wabash,
Wayne, and White Counties Regional Office of Education #20, there is a statutory
requirement for the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White
Counties Regional Office of Education #20 to pay an employer pension contribution from
those funds. Under a policy adopted by the TRS Board of Trustees that was fust effective in
the fiscal year ended 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 salaries
totaling $11,719 were paid from federal and special trust funds that required employer
contributions of $2,707. ;For the years ended June 30, 2010 and June 30, 2009, required
. Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties Regional
Office of Education #20 contributions were $701 and $7,257, respectively.
• Early Retirement Option. The Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne,
and White Counties Regional Office of Education #20 is also required to make one-time
44
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 4 - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (Continued)
• Early Retirement Option. (Concluded)
employer ERO contribution 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 contribution is 117.5 percent and applies when the member is age 55 at retirement.
For the years ended June 30, 2011, 2010, and 2009, the Edwards, Hardin, Gallatin, Pope,
Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 paid no
employer contributions to TRS under the ERO program.
• Salary increases over 6 percent and excess sick leave. If the Edwards, Hardin, Gallatin,
Pope, Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 grants
salary increases over 6 percent and those salaries are used to calculate a retiree's [mal average
salary, the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20 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 years ended June 30, 2011, 2010, and 2009, the Edwards, Hardin, Gallatin, Pope,
Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 paid $2,603,
$0, and $0, respectively, in employer contributions to TRS for employer contributions due on
salary increases in excess of 6 percent.
If the Edwards, Hardin, Gallatin, Pope, Saline, Wabash, Wayne, and White Counties
Regional Office of Education #20 grants sick leave days in excess of the normal annual
allotment and those days are used as TRS service credit, the Edwards, Hardin, Gallatin, Pope,
Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 makes a
contribution to TRS. 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 Edwards, Hardin, Gallatin, Pope,
Saline, Wabash, Wayne, and White Counties Regional Office of Education #20 paid no
employer contributions to TRS for sick leave days granted in the excess of the normal annual
allotment.
45
EDWARDS, HARDIN, GALLATIN, POPE, SALINE, WABASH,
WAYNE, AND WHITE COUNTIES
REGIONAL OFFICE OF EDUCATION #20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2011
NOTE 4 - TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS (Concluded)
Further information on TRS. TRS financial information, an explanation of TRS benefits, and
descriptions of member, employer