Financial Audit Presentation Year Ended June 30, 2013 The School District of Newberry County Greene, Finney & Horton, CPAs

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ OPINION  District’s responsibility:  Effective internal controls  Financial statements  GF&H responsibility:  Opinion – reasonable assurance that financial statements are materially correct  Issued unmodified opinion  BEST OPINION THE DISTRICT CAN RECEIVE Greene, Finney & Horton, CPAs

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund  Total fund balance increased $1.05 million to $11.9 million Unassigned fund balance is $11.2 million, which is 26% of 2013 actual expenditures and 25% of 2014 budgeted expenditures GFOA recommends a minimum of 16.7% (two months) Greene, Finney & Horton, CPAs

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Major Reasons To Maintain An Adequate Fund Balance: Cash flow through second half of calendar year; property taxes are cyclical Significant emergencies and unanticipated expenditures Flexibility for discretionary funding needs Potential for better interest rates on debt issues (can save the District money) To cover potential shortfalls from the state (a) due to budget cuts or (b) as a result of the change in legislation Extremely important given the continuing uncertainties in our economy Greene, Finney & Horton, CPAs

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Revenues: General Fund revenues of $42.8 million increased $2.2 million (5%) compared to the prior year. Major causes were: Increase in state revenues of $ 1.9 million Increase in local taxes of $0.4 million Decrease in all other revenues of $ 0.1 million $1.4 (3%) million higher than budget Local taxes were $0.7 million higher State revenues were $0.7 million higher GENERAL FUND REVENUES

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund expenditures increased approximately $2.2 million (5%) to $43.3 million Increase in Expenditures were due to: $1.1 million increase in instruction $1.0 million increase in support $0.1 million increase in all other expenditures Increases in salaries and benefits was the primary driver $0.3 million (1%) less than budget due primarily to lower than anticipated expenditures for purchased services, energy and supplies and materials GENERAL FUND EXPENDITURES General Fund Expenditures:

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Funds Special Revenue Funds: Federal and state grants and programs – total of $11.0 million expended in FY2013 for approximately 70 programs The District is constrained by federal and state requirements for most of these programs to use the funds only as allowed by the applicable grants No fund balance for most of these programs as any unspent funds must be returned to the State or carried over to the next year. Food Service Fund: Increase in fund balance of $174k to $2.1 million

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Funds Capital Project Funds: Decrease in fund balance by $3.4 million leaving $8.9 million in fund balance $4.2 million expended on capital projects and $1.8 million transferred from NICE Capital Projects to the NICE Debt Service Fund for the NICE principal payment Major projects in2013: upgrades and improvements at Newberry High School and construction on the new District Office Debt Service Funds: Decrease in fund balance by $0.5 million leaving $8.0 million in fund balance Total debt service payments of $13.4 million, including payments of $6.2 million on short-term bonds

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Other Items of Note: Total outstanding debt was $78.5 million at June 30, 2013 Decrease of $3.2 million from June 30, 2012 $3.7 million (principal) and $3.9 (interest) is due in FY2014 The District issued is Series 2013B General Obligation Bonds in the amount of $6.0 million in October 2013 Bonds will be used to partially fund the required NICE debt service for FY2014 and to provide additional proceeds for capital outlay Bonds mature in March 2014, plus interest at 0.6% Greene, Finney & Horton, CPAs

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Net Position - $69.6 million  $49.6 million Net Investment in Capital Assets  $7.4 million Restricted  $12.6 million Unrestricted Revenues - $65.7 million  62% is state/federal - restricted Expenses - $64.4 million - $3.5 million is non-cash depreciation District-Wide (GASB 34) Assets - $156.4 million  $115.9 million is capital assets  $35.7 million is cash and investments Liabilities - $86.9 million  $78.5 million is outstanding principal - debt

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs ACCOUNTING UPDATE: Future Significant Changes in Accounting Principles: GASB #67/68: Accounting and Financial Reporting for Pension Plans and Pensions. Effective in FY2015 for cost-sharing multiple- employer plans (SCRS and PORS). The District will be required to record its pro-rata portion of the net pension liability associated with these plans in its Statement of Net Position This will significantly decrease the District’s unrestricted net assets/position.

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Compliance No findings, significant deficiencies, or material weaknesses were noted Single Audit was required for 2013: Major programs audited were Title I, IDEA and School Improvement - ARRA Management Letter Required communications to management and those charged with governance: Pupil Activities Greene, Finney & Horton, CPAs

NCSD 2013 FINANCIAL AUDIT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Summary Unmodified opinion on the Financial Statements from GF&H Good financial condition as of June 30, 2013 Greene, Finney & Horton, CPAs