FY11-ROE03-Fin-Full

              STATE OF ILLINOIS
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
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 Auditor General, State of Illinois
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
TABLE OF CONTENTS
Page(s)
OFFICIALS ..................................................................................................................................... 1
COMPLIANCE REPORT SUMMARY ........................................................................................ 2-3
FINANCIAL STATEMENT REPORT SUMMARY .................................................................... 4
INDEPENDENT AUDITORS' REPORT ...................................................................................... 5-6
INDEPENDENT AUDITORS' 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 ................................... 7- 8
INDEPENDENT AUDITORS' 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 ................................................................. 9 - 10
SCHEDULE OF FINDINGS AND QUESTIONED COSTS ....................................................... 11- 16
CORRECTIVE ACTION PLAN FOR CURRENT YEAR AUDIT FINDINGS ....................... 17- 18
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS ........................................................ 19
MANAGEMENT'S DISCUSSION AND ANALYSIS .................................................. 20A- 20L
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements:
Statement ofNet Assets ........................................................................................................ 21
Statement of Activities ......................................................................................................... 22
Fund Financial Statements:
Balance Sheet- Governmental Funds ................................................................................... 23
Reconciliation of the Governmental Funds Balance Sheet to the
Statement ofNet Assets .................................................................................................. 24
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds ....................................................................................................... 25
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
TABLE OF CONTENTS
(Continued)
BASIC FINANCIAL STATEMENTS: (Continued)
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Page(s)
Fund Balances to the Statement of Activities - Governmental Funds ............................. 26
Statement ofNet Assets- Proprietary Funds ......................................................................... 27
Statement of Revenues, Expenses and Changes in Fund
Net Assets- Proprietary Funds ........................................................................................ 28
Statement of Cash Flows - Proprietary Funds ........................................................................ 29
Notes to Financial Statements ................................................................................................ 30-49
REQUIRED SUPPLEMENTARY INFORMATION:
I1linois Municipal Retirement Fund - Schedule of Funding Progress .......................................... 50
SUPPLEMENTAL INFORMATION:
Genera] Fund:
Combining Schedules:
Combining Schedule of Accounts- General Fund .......................................................... 51 -53
Combining Schedule ofRevenues, Expenditures and Changes in Fund Balance-
General Fund Accounts ............................................................................................ 54- 56
Education Fund:
Combining Schedules:
Combining Schedule of Accounts - Education Fund ...................................................... 57 - 63
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances -
Education Fund Accounts ......................................................................................... 64 - 70
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
TABLE OF CONTENTS
(Continued)
SUPPLEMENTAL INFORMATION: (Continued)
Education Fund: (Continued)
Individual Schedules:
Budgetary Comparison Schedule- Education Fund Accounts
Early Childhood
Page(s)
Project #10-3705-00 ................................................................................................... 71
Budgetary Comparison Schedule - Education Fund Accounts
Early Childhood
Project #11-3705-00 ................................................................................................... 72
Budgetary Comparison Schedule- Education Fund Accounts
Early Childhood
Project# 10-3 705-01.. ........................... ............... ........................ ............................... 73
Budgetary Comparison Schedule - Education Fund Accounts
Early Childhood
Project#11-3705-01 ................................................................................................... 74
Budgetary Comparison Schedule- Education Fund Accounts
ROEIISC Operations
Project #10-3730-00 ................................................................................................... 75
Budgetary Comparison Schedule -Education Fund Accounts
ROEIISC Operations
Project #11-3730-00 ................................................................................................... 76
Budgetary Comparison Schedule - Education Fund Accounts
Truants Alternative/Optional Education
Project #1 0-3695-00 ................................................................................................... 77
Budgetary Comparison Schedule- Education Fund Accounts
Truants Alternative/Optional Education
Project# 11-3695-00................................................................................................... 78
Budgetary Comparison Schedule- Education Fund Accounts
Adult Education & Family Literacy
Project #501AA (FY 2010) ........................................................................................ 79
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
TABLE OF CONTENTS
(Continued)
SUPPLEMENTAL INFORMATION: (Continued)
Education Fund: (Continued)
Individual Schedules: (Continued)
Budgetary Comparison Schedule - Education Fund Accounts
Adult Education & Family Literacy
Page(s)
Project #501AA (FY 2011) ...................................................................................... 80
Budgetary Comparison Schedule - Education Fund Accounts
Regional Safe Schools
Project# 10-3696-00 ................................................................................................. 81
Budgetary Comparison Schedule - Education Fund Accounts
Regional Safe Schools
Project #11-3696-00 ................................................................................................. 82
Budgetary Comparison Schedule - Education Fund Accounts
McKinney Education for Homeless Children
Project # 1 0-4920-00 ................................................................................................. 83
Budgetary Comparison Schedule - Education Fund Accounts
McKinney Education for Homeless Children
Project # 11-4920-00 ................................................................................................. 84
Budgetary Comparison Schedule - Education Fund Accounts
Beginning Teacher Induction Pilot Program
Project #1 0-3982-00 ................................................................................................. 85
Budgetary Comparison Schedule - Education Fund Accounts
Beginning Teacher Induction Pilot Program
Project #11-3982-00 ................................................................................................. 86
Budgetary Comparison Schedule - Education Fund Accounts
ARRA- McKinney Education for Homeless Children
Project #1 0-4862-00 ................................................................................................. 87
Budgetary Comparison Schedule - Education Fund Accounts
Gifted Education Seminar
Project #09-3350-00 ................................................................................................. 88
Budgetary Comparison Schedule - Education Fund Accounts
Title I Reading First Part B SEA
Project #1 0-4337-00 ................................................................................................. 89
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
TABLE OF CONTENTS
(Continued)
SUPPLEMENTAL INFORMATION: (Continued)
Education Fund: (Continued)
Individual Schedules: (Continued)
Budgetary Comparison Schedule - Education Fund Accounts
ARRA- Title I- School Improvement & Accountability
Page(s)
Project# 11-4854-00 ................................................................................................. 90
Nonmajor Funds:
Combining Statements:
Combining Balance Sheet- Nonmajor Special Revenue Funds ...................................... 91 - 92
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Nonmajor Special Revenue Funds ............................................................................ 93- 94
FEDERAL FINANCIAL COMPLIANCE SECTION:
Schedule of Expenditures of Federal Awards .............................................................................. 95
Notes to the Schedule of Expenditures of Federal Awards .......................................................... 96- 97
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
OFFICIALS
Regional Superintendent (during the audit period) ................................................................ Mr. Mark Drone
Regional Superintendent (current) .................................................................................. Ms. Julie Wollerman
Assistant Regional Superintendent (during the audit period) ......................................... Ms. Julie Wollerman
Assistant Regional Superintendent (current) ....................................................................................... Vacant
Offices are located at:
300 S. th Street
Vandalia, IL 62471
200 W. College
Greenville, IL 62246
101 N. 41
h Street, Room 204
Effingham, IL 62401
1805 W. Fletcher- Suite B
Vandalia, IL 624 71
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
COMPLIANCE REPORT SUMMARY
The compliance audit testing perfonned during this audit was conducted in accordance with Government
Auditing Standards and in accordance with the Illinois State Auditing Act.
AUDITORS' REPORTS
The auditors' reports on compliance and on internal controls do not contain scope limitations, disclaimers, or
other significant non-standard language.
SUMMARY OF AUDIT FINDINGS
Number of
Audit findings
Repeated audit findings
Prior recommendations implemented
or not repeated
This Audit
2
1
0
Details of audit findings are presented in a separate report section.
Prior Audit
1
1
0
Additional matters which were less than significant deficiencies or material weaknesses 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 auditors' reports.
Item No.
11-1
11-2
SUMMARY OF FINDINGS AND QUESTIONED COSTS
Description Finding Type
FINDINGS (GOVERNMENT AUDITING STANDARDS)
13-14 Controls Over Financial Statement Preparation Material Weakness
FINDINGS AND QUESTIONED COSTS (FEDERAL COMPLIANCE)
15-16 Unallowable Costs Charged to Federal Program Compliance
Material Weakness
PRIOR FINDINGS NOT REPEATED (GOVERNMENT AUDITING STANDARDS)
There were no prior findings not repeated.
PRIOR FINDINGS NOT REPEATED (FEDERAL COMPLIANCE)
There were no prior findings.
2
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
COMPLIANCE REPORT SUMMARY (Continued)
EXIT CONFERENCE
An informal exit conference was held on October 21, 2011. Attending were Julie Wollerman, Regional
Superintendent, Jil] Wright, Bookkeeper of the Regional Office of Education #3, and Nathan Earnest of
West & Company, LLC. Responses to the recommendations were provided by Julie Wollerman via e-mail on
November 28, 2011.
3
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
FINANCIAL STATEMENT REPORT
SUMMARY
The audit of the accompanying basic financial statements of the Bond, Fayette, and Effingham Counties
Regional Office ofEducation #3 was performed by West & Company, LLC.
Based on their audit, the auditors expressed an unqualified opinion on the Regional Office of Education #3 's
basic financial statements.
4
,.---- - --- --- WEST & COMPANY, LLc----~------.
MEMBERS
E. LYNN FREESE
RICHARD C. WEST
BRIAN E. DANIELl
JANICE K. ROMACK
DIANA R. SMITH
D. RAIF PERRY
JOHN H. VOGT
JOSHUA D. LOWE
Honorable William G. Holland
Auditor General
State of Illinois
CERTIFIED PUBLIC ACCOUNTANTS
&
CONSULTANTS
613 BROADWAY AVENUE
P.O. BOX 945
MAnOON, ILLINOIS 61938
(217) 235·4747
www. westcpa.corn
INDEPENDENT AUDTTORS' REPORT
OFFICES
EDWARDSVILl E
EFFINGHAM
GREENVILLE
MATTOON
SULLIVAN
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 Bond, Fayette, and Effingham Counties Regional Office of Educa1ion #3, as of and for the
year ended June 30, 20 II , which collectively comprise the Bond, Fayette, and Effingham Counties Regional
Office ofEducation #3's basic financial statements as listed in the table of contents. These fmancial statements
are the responsibility of the Bond, Fayette, and Effmgham Counties Regional Office of Education #3's
management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial aud its contained in Government Auditing Standards, issued
by the Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and the 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 Bond, Fayette, and Effingham Counties Regional Office of
Education #3, as of June 30, 2011 , and the respective changes in financial position and cash flows, where
applicable, thereof for the year then ended jn conformity with accounting principles generally accepted in the
United States of America.
As discussed in Note l to the Financial Statements, the Bond, Fayette, and Effingham Counties Regional
Office of Education #3 adopted GASB Statement No. 54, Fund Balance Reporting and GovernmentaL Fund
Type Definitions during the year ended June JO, 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 Bond, Fayette, and Effingham Counties Regional Office of Education
#3 's funds' assets or liabilitjes, nor was there any effect to the total amount of any of the Bond, Fayette, and
Effingham Counties Regional Office of Education #3 's governmental fund balances as of and for the year
ended JuneJO, 2011.
Member of Prfvate Companies Practice Sectlon
5
In accordance with Government Auditing Standards, we have also issued a report dated January 24, 2012 on
our consideration of the Bond, Fayette, and Effingham Counties Regional Office ofEducation #3's internal
control over financial reporting and on our tests of its compliance with certain provisions oflaws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over 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 ofFunding
Progress on pages 20A-20L and 50 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 ofthe 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 Bond, Fayette, and Effingham Counties Regional Office of Education #3 '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 A wards is presented for purposes of
additional analysis as required by U.S. Office ofManagement 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 ofExpenditures ofF ederal A wards have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects
in relation to the basic financial statements taken as a whole.
January 24, 2012
6
.--- --- ------ WEST & COMPANY, LLc - ---- ---- ------,
MEMBERS
E. LYNN FREESE
RICHARD C. WE;ST
BRIAN E. DAN)Ell
JANICE K. ROMACK
DIANA A. SMITH
D. RAIF PERRY
JOHN H. VOGT
JOSHUA D, LOWE
CERTIFIED PUBLIC ACCOUNTANTS
&
CONSULTANTS
613 BROADWAY AVENUE
P.O. BOX 945
MAITOON, ILLINOIS 61938
(217) 235-4747
www. westcpa.com
OFFICES
EDWARDSVILLE
EFFINGHAM
GREENVILLE
MATIOON
SULLIVAN
INDEPENDENT AUDITORS' 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 AUDITTNG STANDARDS
Honorable William G. Holland
Auditor General
State oflllinois
As Specjaf 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 Bond, Fayette, and Effingham Counties Regional Office of Education #3, as of and for the year
ended June 30, 2011, which collectively comprise the Bond, Fayette, and Effmgham Counties Regional Office
of Education #3's basic financial statements and have issued out report thereon dated January24, 2012.
We conducted our audit in accordance with aud iting standards generally accepted in tbe United Stares 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 Bond, Fayette, and Effingham Counties Regional Office ofEducation #3 is responsible for
establishing and maintaining effective internal control over financial reporting. In planning and performing
our audit, we considered the Bond, Fayette, and Effingham Counties Regional Office of Education #3 ~ s
internal control over financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinions on the fi nancial statements but not for the purpose of express ing an opinion on the
effectiveness of the Bond, Fayette, and Effingham Counties Regional Office of Education #3 's internal control
over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe Bond, Fayette,
and Effingham Counties Regional Off1ce of Education #3 's internal control over fi nancial 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 acc-ompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency
in internal control over financial reporting that we consider to be a material weakness.
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 tjmely 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 fmancial
statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency
described in finding 11-1 in the accompanying Schedule of Findings and Questioned Costs to be a material
weakness. Member ol Private Companies Practice Section
7
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Bond, Fayette, and Effmgham Counties Regional
Office of Education #3 's financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with
which could have a direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
We noted certain matters which we have reported to management of the Bond, Fayette, and Effingham
Counties Regional Office of Education #3 in a separate letter dated January 24, 2012.
Bond, Fayette, and Effingham Counties Regional Office ofEducation #3 's response to the fmding identified in
our audit is described in the accompany Schedule of Findings and Questioned Costs. We did not audit Bond,
Fayette, and Effingham Counties Regional Office ofEducation #3's response and, accordingly, we express no
opinion on it.
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 ofEducation, 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.
January 24, 2012
8
~----------WEST & COMPANY, LLC----------__,
MEMBERS
E. LYNN FREESE
RICHARD C. WEST
BRIAN E. DANIELL
JANICEK. ROMACK
DIANA R. SMITH
D. RAIF PERRY
JOHN H. VOGT
JOSHUA D. LOWE
CERTIFIED PUBLIC ACCOUNTANTS
&
CONSULTANTS
613 BROADWAY AVENUE
P.O. BOX 945
MATTOON. ILLINOIS 61938
(217) 235-4747
www.westcpa.com
OFFICES
EDWARDSVILLE
EFFINGHAM
GREENVILLE
MATTOON
SULLIVAN
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
REQUIREMENTS TfiA T COULD HAVE 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 oflllinois
Compliance
We have audited the Bond, Fayette, and Effingham Counties Regional Office of Edllcation #3 's compliance
with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that
could have a direct and material effect on each of its major federal programs for the year ended June 30,2011 .
The Bond, Fayette, and Effingham Counties Regional Office of Education #3 '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 oft he Bond, Fayette, and Effmgham Counties Regional
Office of Education #3's management. Our responsibility is to express an opinion on the Bond, Fayette, and
Effingham Counties Regional Office of Education #3'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 ofStates,
Local Governments. and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we
plan and perfonn the audit to obtain reasonable assurance about whether noncompliance wi1h 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 Bond, Fayette, and
Effingham Coun1ies Regional Office of Education #3'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. Out audit does not provide a legal determination on the Bond, Fayette, and
Effingham Counties Regional Office ofEducation #3's compliance with those requirements.
As described in item 1 1-2 in the accompanying Schedule of Findings and Questioned Costs, the Bond, Fayette,
and Effingham Counties Regjonal Office of Education #3 did not comply wi.th requirements regarding
documentation of allowable costs tbat are applicable to its Title J- Reading First Part B SEA program.
Compliance with such requirements is necessary, in our opinion, for the Bond, Fayette, and Effi ngham
Regional Office of Education #3 to comply with the requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, the Bond, Fayette, and
Effingham Counties Regional Office ofEducation #3 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, 201 I.
Member ol Private Compar~ies Practice Section
9
Internal Control Over Compliance
Management of the Bond, Fayette, and Effingham Counties Regional Office ofEducation #3 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 Bond, Fayette, and Effingham Counties Regional Office ofEducation #3's internal control over
compliance with the requirements that could have a direct and material effect on a major federal program in
order to determine our 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 Bond, Fayette, and Effingham Counties Regional Office of
Education #3 's internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the preceding
paragraph 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 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 item 11-2 to be a material
weakness.
Bond, Fayette, and Effingham Counties Regional Office ofEducation #3 's response to the fmding identified in
our audit is described in the accompanying Schedule of Findings and Questioned Costs. We did not audit the
Bond, Fayette, and Effingham Counties Regional Office of Education #3 's response and, accordingly, we
express no opinion on the response.
This report is intended solely for the information and use of the Auditor General, the General Assembly, the
Legislative Audit Commission, the Governor, agency management, others within the organization, Illinois
State Board of Education, federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
W..w-- r- ~MJ, 1-/.-.V
January 24, 2012
10
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30,2011
Section I ~~ Summary of Auditors' Results
Financial statements
Type of auditors' report issued:
Internal control over financial reporting:
Material weakness(es) identified?
Significant deficiency(ies) identified that
are not considered to be material
weakness( es )?
Non compliance material to financial
statements noted?
Federal A wards
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(ies) identified that
are not considered to be material
weakness(es)?
Type of auditors' report issued on compliance for major programs:
Any audit findings disclosed that are required to be reported
in accordance with Circular A-133, Section .510(a)?
11
UNQUALIFIED
__X _ yes no
___ yes __X _ none reported
___ yes X no
_X_ yes no
__X _none reported
Unqualified for all major programs except
for Title I - Reading First Part B SEA,
which was qualified
no
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2011
Section I-- Summary of Auditors' Results (concluded)
Identification of major programs:
CFDA Number(s) Name of federal program or cluster
Education for Homeless Children and Youth Cluster:
84.196A
84.387A
84.357A
84.41 OA
McKinney Education for Homeless Children
ARRA-McKinney Education for Homeless
Children
Title I Reading First Part B SEA
ARRA Education Jobs Program
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as a low-risk auditee? ___ yes X no
12
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2011
Section II: Financial Statement Findings
FINDING NO. 11-1- Controls Over Financial Statement Preparation (repeat of 10-1, 09-1, 08-1 and
07-1)
Criteria/Specific Requirement:
The Regional Office of Education #3 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 #3 does not have sufficient internal controls over the financial reporting
process. The Regional Office maintains their accounting records on the cash basis of accounting. While
the Regional Office maintains controls over the processing of most accounting transactions, there are not
sufficient controls over the preparation/review of the GAAP based fmancial statements for management or
employees in the nonnal course of perfonning their assigned functions to prevent or detect financial
statement misstatements and disclosure omissions in a timely manner. For example, auditors, in their
review ofthe Regional Office's accounting records, noted the following:
• The Regional Office does not have adequate controls over the maintenance of complete records of
cash, accounts receivable, capital assets, accrued expenses, or deferred revenue.
• Numerous adjustments are required to present financial statements in accordance with generally
accepted accounting principles.
Effect:
Management or employees in the nonnal course of perfonning their assigned functions may not prevent or
detect financial statement misstatements and disclosure omissions in a timely manner.
Cause:
According to Regional Office officials, they did not have adequate funding to hire and/or train their
accounting personnel in order to comply with these requirements. Additionally, adequate training from the
accounting software company is not available.
13
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30,2011
Section II - Financial Statement Findings (Continued)
FINDING NO. 11-1- Controls Over Financial Statement Preparation (repeat of 10-1, 09-1, 08-1 and
07-1} (Continued)
Auditors' Recommendation:
As part of its intema1 control over the preparation of its financial statements, including disc1osures, the
Regiona] Office of Education #3 should implement a comprehensive preparation and/or review procedure
to ensure that the financia1 statements, including disclosures, are complete and accurate. Such review
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 Superintendent understands this finding and will pursue training for the local bookkeeping
personnel in order to comply with GAAP.
14
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2011
Section III - Federal Award Findings
FINDING NO. 11-2- Unallowable Costs Charged to Federal Program
Federal Program Name: Title I- Reading First Part B SEA
Project#: 10-4337
CFDA #: 84.357 A
Passed Through: Illinois State Board of Education
Federal Agency: U.S. Department of Education
Criteria/Specific Requirement:
Regulations set forth by OMB Circular A -87 (Revised 511 0/04) require costs allowable under federal
awards to meet the following general criteria:
1. The costs must be necessary and reasonable for proper and efficient performance of federal awards.
2. The costs must be adequately documented.
Condition:
During our compliance testing of the Title I - Reading First Part B SEA program, we found 2
disbursements out of 13 tested that did not have adequate documentation. These disbursements were to
purchase $50 and $150 gift cards from two vendors. The Regional Office officials stated the cards were
given to workshop participants to purchase educational materials at a later date. However, there was no
follow up documentation maintained to support what was purchased with the gift cards, whether those
purchases were for allowable costs or when the ultimate purchase was made. Furthermore, one of the gift
card purchases was made on the last day of the grant period.
Questioned Costs: $1,550
Context:
We tested the Title I-Reading First Part B SEA grant as a major program during the fiscal year 2011. As
part ofthe compliance test, we selected all 13 non-payroll disbursements and reviewed the invoices for
compliance with the program. Regional Office of Education #3 had total expenditures of$8,007 during
fiscal year 2011 for this grant.
15
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2011
Section III- Federal Award Findings (Continued)
FINDING NO. 11-2- Unallowable Costs Charged to Federal Program (Continued)
Effect:
The Regional Office of Education #3 is not in compliance with the requirements of this federal program.
Cause:
The Regional Office personnel believed that having documentation for the purchase of the gift cards was
sufficient. Therefore, they did not follow the transaction documentation through to the products actually
purchased with grant funds.
Auditors' Recommendation:
The Regional Office of Education #3 should obtain documentation for all grant expenditures, including
items purchased with gift cards. The gift card purchases should follow OMB Circular A-87 criteria for
allowable costs and should follow grant guidelines for period of availability. If the Regional Office
determines it too cumbersome to obtain documentation for the gift card purchases, they should consider
purchasing educational materials to distribute to the teachers at the workshops in lieu of distributing gift
cards.
Management's Response:
The Regional Superintendent agrees with this finding and will immediately remedy this situation by
terminating the purchase of gift cards for teachers' use in purchasing their own materials.
16
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
CORRECTIVE ACTION PLAN FOR CURRENT YEAR
AUDIT FINDINGS
For the year ended June 30,2011
Corrective Action Plan
FINDING NO. 11-1 -Controls Over Financial Statement Preparation (repeat of 10-1, 09-1, 08-1
and 07-1}
Condition:
The Regional Office of Education #3 does not have sufficient internal controls over the fmancial reporting
process. The Regional Office maintains their accounting records on the cash basis of accounting. While
the Regional Office maintains controls over the processing of most accounting transactions, there are not
sufficient controls over the preparation/review 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:
• The Regional Office does not have adequate controls over the maintenance of complete records of
cash, accounts receivable, capital assets, accrued expenses, or deferred revenue.
• Numerous adjustments are required to present financial statements in accordance with generally
accepted accounting principles.
Plan:
The Regional Superintendent understands this finding and wi11 pursue training for the local bookkeeping
personnel in order to comply with GAAP.
Anticipated Date of Completion:
Ongoing
Name of Contact Person:
Julie Wollerman, Regional Superintendent
17
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
CORRECTIVE ACTION PLAN FOR CURRENT YEAR
AUDIT FINDINGS
For the year ended June 30, 2011
Corrective Action Plan
FINDING NO. 11-2- Unallowable Costs Charged to Federal Program
Federal Program Name: Title I- Reading First Part B SEA
Project#: 10-4337
CFDA #: 84.357A
Passed Through: Illinois State Board of Education
Federal Agency: U.S. Department of Education
Condition:
During our compliance testing of the Title I - Reading First Part B SEA program, we found 2
disbursements out of 13 tested that did not have adequate documentation. These disbursements were to
purchase $50 and $15 0 gift cards from two vendors. The Regional Office officials stated the cards were
given to workshop participants to purchase educational materials at a later date. However, there was no
follow up documentation maintained to support what was purchased with the gift cards, whether those
purchases were for allowable costs or when the ultimate purchase was made. Furthermore, one of the gift
card purchases was made on the last day of the grant period.
Plan:
The Regional Superintendent will immediately remedy this situation by terminating the purchase of
gift cards for teachers' use in purchasing their own materials.
Anticipated Date of Completion:
November 28,2011
Name of Contact Person:
Julie Wollerman, Regiona1 Superintendent
18
Finding
Number
10-01
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the year ended June 30, 2011
Condition
Controls Over Financial Statement Preparation
19
Current
Status
Repeated
MANAGEMENT'S DISCUSSION AND ANALYSIS
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
The following is a discussion and analysis of the financial performance of the Regional Office ofEducation for
Bond, Fayette, and Effingham Counties for the fiscal year ended June 30, 2011. This section is a summary of
the financial activities of the Regional Office of Education #3 based on currently known facts, decisions, or
conditions. It is also based on both the government-wide and governmental fund financial statements. The
results of the current year are discussed in comparison with the prior year, with an emphasis placed on the
current year. This section is only an introduction and should be read in conjunction with the financial
statements for the Regional Office of Education for Bond, Fayette, and Effingham Counties, which
immediately follow this section.
Overview of the Financial Statements
This annual report consists of five parts: Management's Discussion and Analysis (MD&A), the Basic
Financial Statements, Notes to the Financial Statements, required supplementary information, and
supplementary information. The Basic Financial Statements include two kinds of statements that present
different views of the Regional Office of Education #3:
• The first two statements are general financial statements that provide both short-term and long-term
information about the Regional Office of Education #3 's overall financial status.
• The remaining statements are fund financial statements that focus on individual parts of the Regional
Office of Education #3, reporting the Regional Office ofEducation #3 's operations in more detail than
the general statements. The fund financial statements concentrate on the Regional Office ofEducation
#3 's most significant funds with all other non-major funds listed in total in one column.
• Governmental funds statements tell how basic services such as grant-funded programs were financed
in the short term as well as what remains for future spending.
• Proprietary funds statements provide information related to services provided to organizations
comprising the Bond, Fayette, and Effingham Counties Education Service Region.
The financial statements also include notes that explain some of the information in the statements and provide
more detailed data. Required supplementary information includes the Management's Discussion and Analysis
and the Illinois Municipal Retirement Fund Schedule of Funding Progress that further explains and supports
the financial statements. Supplementary information provides a comparison of the Regional Office of
Education #3 's budgets for the year and also includes combining and individual nonmajor fund financial
statements.
Figure A-1 summarizes the major features of the Regional Office of Education #3 's financial statements,
including the portion of the Regional Office of Education #3 's activities they cover and the types of
information they contain. The remainder of this overview section of MD&A highlights the structure and
contents of each of the statements.
20A
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30, 2011
Overview ofthe Financial Statements (Continued)
Fi ure A-1
Major Features of the Regional Office of Education #3's Government-wide and Fund Financial
Statements
Scope
Required
financial
statements
Government-wide
Statements
Entire Regional
Office 9f Educati<:m
.'
• Statement ofNet
Assets
• Statement of
Activities
Accounting ,Aecmal.accoqnting
basis and · 1
• • · • ·• • and ec.onomi-c · ·, '
measurement ·. ;reso-urces focus
focus
Type of
asset/liability
information
Type or
inflow/out now
information
All assets and
liabilities, both
financial and capital,
short-term and long­term
All·reYenues and
expenses during
year, regardless of
when cash cis
received or paid
Fund Statements
Governmental Funds
The. aetfvities: ef the. Regional
Office :Or:Eauca'tion~that are not :
prop.rie.lalj,, si:J'ch ~· special
revenue and g~neritl funds. , , .
• Balance Sheet
• Statement of Revenues,
Expenditures, and Changes in
Fund Balances
Mo4ified accnial accounting and
~urrent financial're~ources focus.
Generally, assets expected to be
used up and liabilities that come
due during the year or soon
thereafter; no capital assets or
long-term liabilities included
Revertue,s for which cash is
received during or soon after the
end of the year; expenditures.
when goods or s~r,vices have been
received ~d'Jfie related liability is
Clue and pay~J)Ie_ ·
20B
Proprietary Funds
A.qjvifies the Regional
Office of Educ.ation operates
m·which expenses related to
·setvices are done on ~co~-:
r~imbur.sement. basis .
• Statement ofNet Assets
• Statement of Revenues,
Expenses and Changes in
Net Assets
• Statement of Cash Flows
A:~rual aGCoun:tirig and
e.conomrc resources focus
All assets and liabilities, both
fmancial and capital, and
short-term and long-term
A-Jl reyenues and expenses
.during the year, regardless of
· wf)en cash ~re~ived or paid
.•.
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30, 2011
Overview of the Financial Statements (Continued)
Government-Wide Statements
The government-wide statements report information about the Regional Office of Education #3 as a whole
using accounting methods similar to those used by private-sector companies. The Statement ofNet Assets
includes all of the Regional Office of Education #3 's assets and liabilities. All of the current year's 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 Regional Office of Education #3's net assets and how they
have changed. Net assets, the difference between the Regional Office ofEducation #3's assets and liabilities,
is one way to measure the Regional Office ofEducation #3's financial health or position.
• Increases or decreases in the Regional Office of Education #3 's net assets are an indicator of
whether its financial position is improving or deteriorating, respectively.
• To assess the overall health of the Regional Office of Education #3, one needs to consider
additional non-financial factors, such as changes in the State Board of Education's policies, as
well as changes in federal programs and policies that impact educational services in individual
States.
In the government-wide financial statements, the Regional Office of Education #3 's activities are divided into
two categories:
• Governmental Activities: Most of the Regional Office of Education #3 's basic services are
included here, such as grant-funded programs, support services, and administration.
• Business-type activities: The Regional Office ofEducation #3 charges fees to help cover the costs
of certain services and workshops it provides.
Fund Financial Statements
The fund financial statements provide more detailed information about the Regional Office of Education #3 's
funds, focusing on its most significant or "major" funds- not the Regional Office of Education #3 as a whole.
Funds are accounting devices the Regional Office of Education #3 uses to keep track of specific sources of
funding and spending on particular programs. Some funds are required by State law. The Regional Office of
Education #3 establishes other funds to control and to manage money for particular purposes or to show that it
is properly using certain revenues, such as federal grants.
20C
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
Overview of the Financial Statements (Continued)
Fund Financial Statements (Concluded)
The Regional Office of Education #3 has two kinds of funds:
• Governmental Funds: Most of the Regional Office of Education #3 's basic services are included in
governmental funds, which generally focus on (1) how cash and other financial assets that can readily
be converted to cash t1ow in and out and (2) the balances left at year end that are avaiJable for
spending. Consequently, the governmental funds statements provide a detailed short-term view that
helps you determine whether there are more or fewer financial resources that can be spent in the near
future to finance the Regional Office of Education #3 's programs. Because this information does not
encompass the additional long-term focus of the government-wide fmancial statements a reconciliation
between the governmental fund financial statements and the government-wide financial statements
follow the related governmental fund financial statements.
• Proprietary Funds: The Regional Office of Education #3 charges fees for some services. Proprietary
funds are reported in the same way as government-wide staten1ents. The Regional Office of Education
#3 's Enterprise funds, one type of proprietary fund, is the same as its business-type activities, but
provides more detail and additional information, such as cash flows. The Regional Office of
Education #3 currently has one Enterprise Fund, the Local Workshops Fund.
Government-wide Financial Analysis
Statement of Net Assets
The Statement ofNet Assets reports all financial and capital resources. The statement presents the assets and
liabilities in order of relative liquidity. The liabilities with average maturities greater than one year are reported
in two components-the amount due within one year and the amount due in more than one year. The difference
between the Regional Office ofEducation #3's assets and liabilities is its net assets.
This section will explain the differences between the current and prior year's assets, liabilities, and changes in
net assets. The Regional Office of Education for Bond, Fayette, and Effingham Counties' financial activities
include both Governmental and Business-type activities. These are reported below.
20D
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
Government-wide Financial Analysis (Continued)
Statement of Net Assets (Continued)
CONDENSED STATEMENT OF NET ASSETS
GOVERNMENTAL ACTIVITIES
2011 2010
Current Assets $ 819,611 $ 821,567
Capital assets, being depreciated, net 33,207 51,207
Total Assets 852,818 872,774
Current Liabilities 197,370 256,109
Net Assets:
Invested in capital assets 33,207 51,207
Restricted 160,548 13,477
Unrestricted 461,693 551,981
Total Net Assets $ 655,448 $ 616,665
Increase I
(Decrease)
(1 ,956)
(18,000)
(19,956)
(58,739)
(18,000)
147,071
(90,288)
38,783
The Regional Office of Education #3's governmental assets exceeded governmental liabilities (net assets) by
$655,448 at the close of the fiscal year. Cash and cash equivalents made up the majority of assets. The
Regional Office of Education #3 uses its governmental net assets to perform general operations, provide
professional services to school districts in the Bond, Fayette, and Effingham Counties Educational Service
Region and surrounding areas, and to operate Alternative Education Programs within the region.
20E
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30, 2011
Government-wide Financial Analysis (Continued)
Statement of Net Assets (Concluded)
BUSINESS-TYPE ACTIVITIES
2011 2010
Current Assets $ 268,459 $ 262,532
Capital assets, being depreciated, net 3,187 5,060
Total Assets 271,646 267,592
Current Liabilities 46
Net Assets:
Invested in capital assets 3,187 5,060
Unrestricted 268,459 262,486
Total Net Assets $ 271,646 $ 267,546
Increase I
(Decrease)
5,927
(1 ,873)
4,054
(46)
(1 ,873)
5,973
4,100
The Regional Office of Education #3 uses its business-type net assets to provide workshop and training
services to school districts in the Bond, Fayette, and Effingham Counties Educational Service Region and
surrounding areas.
General Ovenriew and Analysis of Significant Individual Governmental Funds
During fiscal year 2011 the Regional Office of Education #3 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 1 to the financial statements. Because of these reclassifications the fund
analysis is not comparable between fiscal year 201 0 and fiscal year 2011.
NON-MAJOR SPECIAL REVENUE FUNDS
• The Institute Fund is administered by the Regional Office of Education #3 and had a fund balance of
$22,278, which represents a $8,801 increase over the previous year.
• The General Education Development Fund is administered by the Regional Office of Education #3
and had a fund balance of$22,507, which represents a $3,834 increase over the previous year.
20F
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
Government-wide Financial Analysis (Continued)
General Oven-iew and Analysis of Significant Individual Governmental Funds (Continued)
NON-MAJOR SPECIAL REVENUE FUNDS (Continued)
• The ROE School Bus Driver Training Fund is administered by the Regional Office of Education #3
and had a fund balance of $9,883, which represents a $4,384 increase over the previous year.
• The Supervisory Fund is administered by the Regional Office of Education #3 and had a fund balance
of $4,83 8, which represents a $251 decrease below the previous year. The expenses related to this
fund increase or decrease depending on the needs on the Regional Office. The line item to support the
Supervisory Fund was cut from the Illinois State Budget in FY 10.
EDUCATION FUND
• The Illinois Family Violence Coordinating Council is administered by the Educational Services
Division ofthe Regional Office ofEducation #3 and had a fund balance of$7,308, which represents a
$6,676 decrease below the previous year.
• The Truants Alternative/Optional Education Fund is administered by the Alternative Education
Programs of the Regional Office of Education #3 and had a fund balance of $(6,320), which
represents a $25,526 increase above the previous year.
• The Regional Safe Schools Fund is administered by the Alternative Education Programs of the
Regional Office of Education #3 and had a fund balance of $(5,346), which represents a $23,462
increase above the previous year.
• The Adult Education & Family Literacy grants are administered by the Alternative Education
Programs of the Regional Office of Education #3 and had a fund balance of $(28,620) which
represents a $17,106 decrease below the previous year. The reason for this large deficit would be
caused by late payments from the State of Illinois.
• The Early Childhood Fund is administered by the Educational Services Division of the Regional
Office of Education #3 and had a fund balance of $0, which represents a $17,453 increase over the
previous year.
• The ROEIISC Operations Fund is administered by the Education Services Division of the Regional
Office ofEducation #3 and had a fund balance of$(3,981), which represents a $12,231 increase over
the previous year.
20G
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
Government-wide Financial Analysis (Continued)
General Ovenriew and Analysis of Significant Individual Governmental Funds (continued)
EDUCATION FUND (Continued)
• At the end ofFY 11, the State of Illinois was experiencing some cash flow issues, which is reflected in
the negative fund balances for the following funds: ROEIISC Operations, Adult Education and Family
Literacy, Truants Alternative Optional Education, and Regional Safe Schools. Even though monies
were vouchered by the State Board of Education, the Illinois Comptroller did not issue payments for
these programs. The Regional Office of Education was able to support these programs by tapping into
local resources.
• The Office ofViolence Against Women (OVW) Program is administered by the Educational Services
Division of the Regional Office of Education. The Regional Office of Education #3 began providing
services through the OVW Rural grant in January 2009 and ended June 2011.
• The Beginning Teacher Induction Pilot Program is administered by the Education Services Division of
the Regional Office of Education and had a fund balance of$0, which represents a $8,957 increase
over the previous year.
• The Alternative Education Program- Other is administered by the Alternative Education Program of
the Regional Office of Education and had a fund balance of $52,318, which represents a $3,990
decrease below the previous year.
20H
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended J one 30, 2011
Government-wide Financial Analysis (Continued)
Statement of Activities
The Statement of Activities accounts for all of the current year revenues and expenses regardless of when cash
is received or paid.
STATEMENT OF ACTIVITIES
GOVERNMENTAL ACTIVITIES
Revenues:
Federal
Local sources
State sources
On-behalf payments
Interest
Total revenues
Expenses:
Instructional Services:
Salaries and benefits
Purchased services
Supplies and materials
Payments to other governments
Other objects
Depreciation
On-behalf payments
Total expenses
Excess of revenues over expenditures
Net assets- beginning
Net assets - ending
$
$
2011 2010
693,735 $ 805,426
479,596 511,571
960,516 1,123,463
387,220 391,078
1,504 2,658
2,522,571 2,834,196
1,208,115 1 '178,439
532,772 630,507
102,896 115,583
227,405 336,714
135 1,265
25,245 22,660
387,220 391,078
2,483,788 2,676,246
38,783 157,950
616,665 5
655,448
Increase I
(Decrease)
(111,691)
(31 ,975)
(162,947)
(3,858)
(1,154)
(311,625)
29,676
(97,735)
(12,687)
(109,309)
(1 '130)
2,585
(3,858)
(192,458)
(119, 167)
157,950
38,783
Revenues from governmental activities were $2,522,571 and expenses were $2,483,788.
201
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
Government-wide Financial Analysis (Continued)
Statement of Activities (Continued)
STATEMENT OF ACTIVITIES
BUSINESS-TYPE ACTIVITIES
2011 2010
Revenues:
Program Revenues:
Charges for services $ 28,623 $ 36,347
Expenses:
Salaries and benefits 7,583 2,808
Purchased services 10,592 15,173
Supplies and materials 1,885 2,650
Other objects 2,590 99
Depreciation 1,873 2,246
Total expenses 24,523 22,976
Operating revenue 4,100 13,371
Net assets - beginning 267,546 254,175
Net assets - ending $ 271,646 $ 267,546
Increase I
(Decrease)
(7,724)
4,775
(4,581)
(765)
2,491
(373)
1,547
(9,271)
13,371
4,100
Revenues from business-type activities were $28,623 and expenses were $24,523. The Regional Office of
Education #3 's business-type activities include workshops that invo]ve charges for service. Expenses include
sa]aries and purchases of goods and supplies to support these activities.
20J
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30, 2011
Financial Analysis of the Regional Office of Education #3 's Funds
The Regional Office of Education #3 uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements. The Regional Office of Education #3 's governmental funds reported
combined net assets of$38,783 above last year's ending net asset balance of$616,665. The Regional Office
of Education #3 's proprietary funds reported combined net assets of $4,1 00 above last year's ending fund
balance of $267,546.
Governmental Fund Highlights
• The Regional Office of Education #3 's General Fund and Education Fund showed revenue slightly higher
than expenses. The increased revenue on the fund financial statements is a result of a partial catch-up of
prior year late payments by the State.
Proprietary Fund Highlights
• As part of its mission, the Regional Office of Education #3 continues to provide workshop and training
services to school districts even during economically challenging times. Many workshops were offered
free-of-charge and below cost-recovery in order to meet organizational objectives.
Budgetary Highlights
The Regional Office of Education #3 annually adopts a budget on a basis consistent with U.S. generally
accepted accounting principles; however, the annual budget is not required to be legally adopted. The Illinois
State Board of Education reviews the proposed budget and either grants approval or returns it without approval
with comments. Any unapproved budget must be resubmitted to the Illinois State Board of Education for fmal
approval. The budget may be amended during the year utilizing procedures prescribed by the Illinois State
Board of Education. A schedule showing the original and final budget amounts compared to the Regional
Office of Education #3's actual financial activity is included in the supplementary information section ofthis
report.
Factors Bearing on the Regional Office of Education #3's Future
At the time these financial statements were prepared and audited, the Regional Office of Education #3 was
aware of several existing circumstances that could significantly impact its financial health in the future:
• The Regional Office of Education #3 is obligated to provide programs and services in compliance with
statutory, regulatory and mandated requirements from the Legislature and the Illinois State Board of
Education. These programs and services are provided even though payments from the State have not
been timely. The Regional Office of Education #3 must maintain a proficient professional and clerical
staff in order to provide a consistent level of service to the constituents of the educational service
region served by the regional superintendent of schools. Reliance on delayed state and federal funding
brings an element of uncertainty to the budgeting process each year, yet the mandated programs and
services have no contingencies built in.
20K
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended June 30,2011
Factors Bearine; on the Regional Office of Education #3's Future (Continued)
• The Regional Office of Education #3 has a long-standing policy of re-deploying aging computer and
audio-visual inventory within the organization. The equipment being replaced is refurbished for use
by the alternative education programs, which are also accepting donated computer equipment from
other agencies and using open source licensed software programs rather than commercial licensed
software programs in an effort to reduce costs. This practice has resulted in an increased number of
computers available for student use at little or no expense to any program. The regional superintendent
provides new equipment, software and training to personnel as warranted.
• A limited number of federal and state grant programs help support the Regional Office of Education
#3 's Educational Services Division and the Alternative Education Programs. Funding from these grant
programs is not assured from year to year. Because of limited availability of funds to other agencies
and organizations, there is increased competition for funded grant programs due in part to a reduction
in the amount of grant funding available and the similar financial circumstances all entities are
experiencing. The future of the Alternative Education Programs and the Educational Services
Division (and the programs and services they provide) is directly dependent on their abilities to
compete for grant funding. The Alternative Education Programs have been expanding due to
increased needs by the districts for placement of students requiring alternative educational
services. The number of employees in the Educational Services Division has been reduced because of
a reduction in grant funds.
• The Regional Office of Education #3 operates under conservative fiscal management and will
continue to remain productive through the current State budgetary conundrum through frugal fiscal
management, staying within fiscal limits and by utilizing human resources and physical resources
effectively. A continuous review of current and past practices, as weJl as current operations policies
has led to practical modifications resulting in reduction of expenditures and reasonably stable fund
balances.
Contacting the Regional Office of Education #3's Financial Management
This financial report is designed to provide those citizens and taxpayers who reside within the Bond, Fayette,
and Effingham Counties Regional Office of Education #3 boundaries with a general overview of the Regional
Office of Education #3 's finances and to demonstrate the Regional Office of Education #3 's accountability for
the money it receives. If you have questions about this report or need additional financial information, contact
the Regional Office of Education #3, 300 South Seventh Street, Vandalia, IL 62471.
20L
BASIC FINANCIAL STATEMENTS
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
STATEMENT OF NET ASSETS
June 30, 2011
Primary Government
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and cash equivalents $ 717,636 $ 75,592 $ 793,228
Due from other governments 293,687 1 '155 294,842
Internal balances (191,712) 191,712
Total current assets 819,611 268,459 1,088,070
Noncurrent assets:
Capital assets, net 33,207 3,187 36,394
Total assets 852,818 271,646 1,124,464
LIABILITIES
Current liabilities:
Accounts payable 58,239 58,239
Salaries and benefits payable 45,228 45,228
Deferred revenue 93,903 93,903
Total current liabilities 197,370 197,370
NET ASSETS
Invested in capital assets 33,207 3,187 36,394
Restricted for education purposes 160,548 160,548
Unrestricted 461,693 268,459 730,152
Total net assets $ 655,448 $ 271,646 $ 927,094
The notes to the financial statements are an integral part of this statement.
21
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
STATEMENT OF ACTIVITIES
For the year ended June 30, 2011
Net (Expense) Revenue and
Pro~am Revenues Chanses in Net Assets
Operating Prim~ Government
Charges for Grants and Governmental Business-Type
FUNCTIONS/PROGRAMS ExEenses Services Contributions Activities Activities Total
Governmental activities:
Instructional services:
Salaries and benefits $ 1,208,115 $ $ 992,037 $ (216,078) $ $ (216,078)
Purchased services 532,772 306,482 (226,290) (226,290)
Supplies and materials 102,896 97,132 (5, 764) (5,764)
Capital outlay 5,570 5,570 5,570
Payments to other governments 227,405 252,896 25,491 25,491
Other objects 135 134 (1) (I)
Depreciation 25,245 (25,245) (25,245)
Administrative:
On-behalf payments - local 17,923 (17,923) (17,923)
On-behalf payments - state 369,297 p69,297} {369,297}
Total governmental activities 2,483,788 1,654,251 ~829,537} ~829,537}
Business-type activities
Instructional services 24,523 28,623 4,100 4,100
Total primary government $ 28,623 $ 1,654,251 (829,537) 4,100 (825,437)
General revenues:
Local sources 479,596 479,596
On-behalf payments - local 17,923 17,923
On-behalf payments - state 369,297 369,297
Interest 1,504 1,504
Total general revenues 868,320 868,320
Change in net assets 38,783 4,100 42,883
Net assets - beginning 616,665 267,546 884,211
Net assets - ending $ 655,448 $ 271,646 $ 927,094
The notes to the financial statements are an integral part of this statement.
22
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2011
Other Total
General Education Nonmajor Governmental
Fund Fund Funds Funds
ASSETS
Cash and cash equivalents $ 530,289 $ 128,901 $ 58,446 $ 717,636
Due from other governments 833 288,189 4,665 293,687
Total assets $ 531,122 $ 417,090 $ 63' 111 $ 1,011,323
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable $ 41,624 $ 13,010 $ 3,605 $ 58,239
Salaries and benefits payable 27,805 17,423 45,228
Due to other funds 191,712 191,712
Deferred revenue 179,586 179,586
Total liabilities 69,429 401,731 3,605 474,765
FUND BALANCES
Restricted 59,626 59,506 119,132
Assigned 361,304 361,304
Unassigned 100,389 (44,267) 56,122
Total fund balances 461,693 15,359 59,506 536,558
Total liabilities and fund balances $ 531,122 $ 417,090 $ 63,111 $ 1,011,323
The notes to the financial statements are an integral part of this statement.
23
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
June 30, 2011
Total fund balances-governmental funds
Amounts reported for governmental activities in the Statement ofNet
Assets are different because:
Some revenues will not be collected for several months after the
Regional Office fiscal year ends; they are not considered "available"
revenues and are deferred in the governmental funds.
Capital assets used in governmental activities are not
financial resources and, therefore, are not reported in the funds.
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
24
$536,558
85,683
33,207
$655,448
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the year ended June 30,2011
Other Total
General Education Nonmajor Governmental
Fund Fund Funds Funds
Revenues:
Local sources $ 370,959 $ 64,436 $ 44,201 $ 479,596
State sources 512,499 540,098 16,669 1,069,266
Federal sources 693,735 693,735
On-behalf payments 387,220 387,220
Interest 1,504 1,504
Total revenues 1,272,182 1,298,269 60,870 2,631,321
Expenditures:
Instructional services:
Salaries and benefits 516,537 679,027 12,551 1 ,208,115
Purchased services 249,454 255,937 27,381 532,772
Supplies and materials 28,388 70,338 4,170 102,896
Payments to other governments 227,405 227,405
Other objects 135 135
On-behalf payments 387,220 387,220
Capital outlay 1,675 5,570 7,245
Total expenditures 1,183,274 1,238,412 44,102 2,465,788
Excess of revenues
over expenditures 88,908 59,857 16,768 165,533
Fund balances, beginning of year, restated 372,785 (44,498) 42,738 371,025
Fund balances, end of year $ 461,693 $ 15,359 $ 59,506 $ 536,558
The notes to the financial statements are an integral part of this statement.
25
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES­GOVERNMENTAL
FUNDS
For the year ended June 30,2011
Net change in fund balances
Amounts reported for governmental activities in the Statement of Activities
are different because:
Some revenues will not be collected for several months after the
Regional Office fiscal year ends; they are not considered "available"
revenues and are deferred in the governmental funds.
Current year revenue that wil1 not be collected within
60 days of the Regional Office's fiscal year end is
considered "deferred" revenue in the fund statements.
Prior year "deferred" revenue that is recorded as revenue in the
fund statements in the current year.
Governmental funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense.
Capital outlay
Depreciation expense
Change in net assets of governmental activities
$
$
85,683
(194,433)
7,245
(25,245)
The notes to the financial statements are an integral part of this statement.
26
$ 165,533
(1 08,750)
(18,000)
$ 38,783
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
ASSETS
Current assets:
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
June 30, 2011
Cash and cash equivalents
Due from other governments
Due from other funds
Total current assets
Noncurrent assets:
Capital assets, net
Total assets
NET ASSETS
Invested in capital assets
Unrestricted
Total net assets
$
$
Business-Type
Activities
Enterprise Fund
Workshops
75,592
1,155
191,712
268,459
3,187
271,646
3,187
268,459
271,646
The notes to the financial statements are an integral part of this statement.
27
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
Operating revenues:
Charges for services
Operating expenses:
Salaries and benefits
Purchased services
For the year ended June 30, 2011
Supplies and materials
Payments to other governments
Depreciation
Total operating expenses
Operating income
Total net assets - beginning
Total net assets- ending
$
$
Business-Type
Activities
Enterprise Fund
Workshops
28,623
7,583
10,592
1,885
2,590
1,873
24,523
4,100
267,546
271,646
The notes to the financial statements are an integral part of this statement.
28
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the year ended June 30, 2011
Cash :flows from operating activities:
Collection of fees
Payments to suppliers and providers of
goods and services
Payments to employees
Net cash provided by operating activities
Cash flows for noncapital financing activities:
Loan to other funds, net
Net decrease in cash and cash equivalents
Cash and cash equivalents- beginning
Cash and cash equivalents- ending
Reconciliation of operating income to net cash
provided by operating activities:
Operating income
Adjustments to reconcile operating income
to net cash provided by operating activities:
Decrease in accounts payable
Depreciation
Increase in due from other governments
Net cash provided by operating activities
$
$
$
$
Business-Type
Activities
Enterprise Fund
Workshops
27,468
(15,113)
(7,583)
4,772
(165,914)
(161,142)
236,734
75,592
4,100
(46)
1,873
(1,155)
4,772
The notes to the financial statements are an integral part of this statement.
29
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Regional Office ofEducation #3's accounting policies conform to generally accepted accounting principles
which are appropriate to local governmental units of this type.
A. Reporting Entity
The Regional Office of Education #3 was created by Illinois Public Act 76-735, as amended, effective
August 8, 1995. The region encompasses Bond, Fayette, and Effingham counties.
The Regional Superintendent of Schools is the chief administrative officer of the region and is elected to
the position for a four-year term. The Regional Superintendent is responsible for the supervision and
control of the school districts.
The Regional Superintendent's responsibilities for administering the school educational service region
programs include, but are not limited to, providing directions to teachers and school officials on science,
art and teaching methods; implementing the State Board of Education's Policy Programs; encouraging
camaraderie among teachers through the teachers' institute; making public notice of unfilled teaching
positions within the region; and ensuring of the safety, health and welfare of the students in the region by
periodically inspecting the school buildings and ensuring that the bus drivers have valid driving licenses
and are properly trained to operate the school buses. The Regional Superintendent is also responsible for
apportionment and payment of funds received from the State for the districts in the region, or seeing that
no payments are made unless the treasurer has filed or renewed appropriate bond and that the district has
certified publication ofthe annual financial report.
The Regional Office of Education #3 derives its oversight power and authority over the school districts
from the School Code and is responsible for its own fiscal and budgetary matters. The Regional Office of
Education #3 exercises no oversight responsibility on financial interdependency, selection of governing
authority, designation ofmanagement or the ability to significantly influence the operations of any other
outside agencies. Control or dependency is determined on the basis of budget adoption, taxing authority,
funding and appointment of the respective governing order. Therefore, no other agency has been included
as a component unit in the Regional Office of Education #3's financial statements. In addition, the
Regional Office of Education #3 is not aware of any entity that would exercise oversight as to result in the
Regional Office of Education #3 being considered a component unit ofthe entity.
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of
Activities) report information on all ofthe nonfiduciary activities ofthe primary government. For the most
part, the effect of interfund activity has been removed from these statements. Governmental activities,
which normally are supported by intergovernmental revenues, are reported separately from the business­type
activities, which rely to a significant extent on fees and charges for support.
30
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Government-wide and Fund Financial Statements (Continued)
The Statement ofNet Assets includes all ofthe Regional Office of Education #3's assets and liabilities,
including capital assets. The Statement of Activities demonstrates the degree to which the direct expenses
of a given function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function or
segment and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Other items not properly included among program
revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual
governmental funds are reported as separate columns in the fund financial statements. Nonmajor funds are
aggregated and presented in a single column.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the
government considers revenues to be available if they are collected within 60 days of the end of the current
fiscal period. Revenues received more than 60 days after the end of the current period are deferred in the
governmental fund financial statements but are recognized as current revenues in the government-wide
financial statements. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, as well as expenditures related to compensated absences
and claims and judgments, are recorded only when payment is due.
It is the Regional Office of Education #3 's policy to first apply restricted resources when an expenditure or
expense is incurred for which both restricted and unrestricted resources are available. For unrestricted
fund balances, committed fund balances are used first, then assigned fund balances, then unassigned, if
any.
The Regional Office of Education #3 reports the following major governmental funds:
General Fund- The General Fund is the general operating fund of the Regional Office of Education #3
and is used to account for all financial resources except those required to be accounted for and reported in
another fund. This fund is available to pay general and administrative expenditures of the Regional Office
of Education #3. Included in this fund are:
31
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
General Fund (Continued)
General - This fund provides funding for expenditures incurred in order to operate the Regional
Office of Education #3.
County -This fund accounts for the shared expenses incurred in the operation of the Regional
Superintendent's office.
EIU - This fund provides the opportunity for teachers and administrators to earn graduate credit
through participation in weekend classes in programs leading to advanced degrees. Programs
currently offered include a Masters Degree in Guidance and Counseling and a Masters or Specialist
Degree in School Administration from EIU.
Attendance Officer- This program provides funding for a truant officer which is utilized to pay for
related truancy expenses.
Curriculum COOP- This program accounts for local receipts from participating districts that are
used to pay for joint events.
Truant Alternative/Optional Education General State Aid - This fund accounts for General
State Aid received to support the Truants Alternative/Optional Education Program.
Regional Safe Schools Program General State Aid - This fund accounts for General State Aid
received to support the Regional Safe Schools programs.
Tuition -This fund accounts for tuition payments from local districts sending students to alternative
education programs provided by the Regional Office of Education #3.
Education Fund - This Special Revenue Fund is used to account for and report the proceeds of specific
revenue sources that are restricted by grant agreements or contracts to expenditures for specified purposes
supporting education enhancement programs as follows:
Early Childhood - This program provides support that allows qualified early childhood educators
to provide in home and group assistance to families with at risk children of birth to five years of age
to prepare for learning when they become school age.
ROE/ISC Operations -This fund accounts for comprehensive services to improve education in the
Region in the areas of gifted, staff development, administrator academies, school improvement, and
technology.
Illinois Family Violence Coordinating Council- This program provides support for coordination
of committees whose members focus on identifying and reducing incidences of domestic violence.
32
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Education Fund (Continued)
RESPRO- These are Area V grants through Regional Office ofEducation #50 which are provided
to support school improvement services and trainings for the school(s) in the region on academic
warning list which did not meet A YP for two years in a row. These grants also support Regional
Office of Education staff members' involvement in the Area V services and in necessary training of
trainer's sessions.
Truants Alternative/Optional Education- This program provides funding for services designed to
prevent students from dropping out of school.
Adult Education & Family Literacy- This program provides funding to assist students in the
completion of a secondary education.
Regional Safe Schools - This program provides funding for an alternative school program for
disruptive youth in grades 6-9 who have been removed from the regular school setting due to
continuous disruptions in the classroom.
McKinney Education For Homeless Children - This program provides training and technical
assistance to school districts in the 16 counties to assist school officials in understanding and
complying with the McKinney-Vento Act.
ASPIRE-South - These funds are used to support the ASPIRE-South project by providing staff
time for coordination ofR TI trainings offered through the project as well as consultation regarding
the development and delivery of the project objectives. In addition, funds are used for support of
standards-alignment and Reading First training and materials.
Office on Violence Against Women Rural Grant- This fund is used to provide development of
protocols and a training program to address domestic violence, dating violence, sexual assault and
stalking crimes in the fourth judicial circuit. The training program will be used to educate law
enforcement officers and court personnel, including judges and prosecutors.
Beginning Teacher Induction Pilot Program- This program provides staff development sessions,
mentor support, and materials to teachers in their first and second years in the profession. The
project is designed to provide continuous professional support as new teachers move through the
certification process, from initial to standard.
33
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Education Fund (Continued)
Alternative Education Programs- Other- This fund regulates local, state, and federal revenue
and expenses involving breakfast and lunch for the alternative schools.
ARRA-McKinney Education For Homeless Children- American Recovery and Reinvestment
Act funding was provided to the Regional Office of Education #3 and 34 school districts in Area V
to fund programs and services to support homeless education. This included creating, retaining and
funding positions for trainers, liaisons, tutors, teachers, counselors, etc. The Regional Office of
Education #3 served as the fiscal agent for Area V.
The Center - The Regional Office of Education #3 received funding from the Adult Learning
Resource Center (The Center) to serve as one of the partners to the Opening Doors Project. The
funding was used to support training and technical assistance for homeless education. Staff
members travel to different conferences throughout the state to present trainings and also field
questions regarding homeless education issues and provide technical assistance via telephone and
email contacts.
Gifted Education Seminar- The Regional Office of Education #3 received this grant to launch the
new gifted education seminar training formats and to provide trainings to teachers, as well as build
capacity for gifted education within the region.
Title I Reading First Part B SEA- The Regional Office of Education #3 received this small grant
to provide training to primary teachers utilizing the Reading First modules.
American Recovery and Reinvestment Act- Education Jobs Fund (T AOEP)- The Regional
Office of Education #3 received federal funding to create new jobs or retain jobs that were at risk of
being lost due to a lack of funding. This fund served the Truants Alternative/Optional Education
program.
An1erican Recovery and Reinvestment Act- Education Jobs Fund (RSSP)- This program
distributed federal funds to the Regional Safe Schools Program in order to create new jobs or retain
jobs that were at risk of being lost due to a lack of funding.
American Recovery and Reinvestment Act- Title I School Improvement & Accountability­This
grant provides school improvement services and training for the school(s) in the region on an
academic warning list which did not meet A YP for two years in a row.
34
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Additionally, the Regional Office ofEducation #3 reports the following nonmajor governmental funds:
Special Revenue Funds- Special Revenue Funds are used to account for the proceeds of specific revenue
sources that are restricted to expenditures for specific purposes. Included among these funds are:
General Education Development (GED) - This fund accounts for the receipts and expenses
pertaining to the GED/High School Equivalency program for high school dropouts.
ROE School Bus Driver Training- This fund accounts for State and local receipts and expenses
designed for initial and refresher courses of instruction for school 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.
Institute - This fund accounts for teacher certificate registration, issuance and evaluation fees for
processing certificates, and expenses to promote the professional growth of teachers and school
personnel. All funds generated remain restricted until expended only on the aforementioned activities.
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.
The Regional Office of Education #3 reports the following major proprietary fund:
Enterprise Funds- Enterprise funds are used to account for operations (a) that are financed and operated
in a manner similar to private business enterprise where the intent of the governing body is that the costs
(expenses, including depreciation) of providing goods or services to the general public on a continuing
basis should be financed or recovered primarily through user charges; or (b) where the governing body has
decided that periodic determination of revenues earned, expenses incurred, and/or net income is
appropriate for capital maintenance, public po1icy, management control accountability, or other purposes.
Included in this fund is:
Workshops- To account for the fees and local revenues received and related expenses incurred while
performing the corresponding program services.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues ofthe
Regional Office of Education #3 's enterprise funds are charges to customers for sales and services.
Operating expenses for enterprise funds include the cost of sales and services and administrative expenses.
35
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity
1. Cash and Investments
The Regional Office of Education #3 considers cash on hand, checking accounts, savings accounts,
and investments held with an original maturity date of less than 90 days to be cash and cash
equivalents. State regulations require that the Regional Office of Education #3 deposit funds under
its control into accounts insured by the federal governments, accounts secured by substantial
collateral or pooled investment trusts. All funds not needed for immediate disbursement are
maintained in interest bearing accounts.
Statutes authorize the Regional Office of Education #3 to make deposits or invest in obligations of
states and their political subdivisions, savings accounts, credit union shares, repurchase agreements,
commercial paper rated within the three highest classifications by at least two standard rating
services, and the Illinois Funds Money Market Fund.
2. Interfund Transactions
Activity between funds that are representative oflendinglborrowing arrangements outstanding at the
end of the fiscal year are referred to as "due to/from other funds."
3. Capital Assets
Capital assets are reported in the applicable columns in the government-wide financial statements.
Capital assets are defined by the government as assets with an initial, individual cost of more than
$500 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated fair value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets' lives are not capitalized.
Capital assets are depreciated using straight line method over the following estimated useful lives:
Assets
Office equipment and furniture
Computer equipment
Other equipment and leasehold improvements
Years
5-10
3-5
5-20
In the fund financial statements, capital assets used in governmental operations are accounted for as
capital outlay expenditures ofthe governmental fund upon acquisition.
36
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
4. Compensated Absences
Non-certified and certified employees who work 12 calendar months earn up to 20 vacation days for
a full year of service. The accumulated total vacation days may never exceed 30 days. In the event
that a program terminates, no vacation days will be honored past the ending date of the program.
Certified employees who work less than 12 calendar months per year do not earn vacation days, and
therefore, no liability is accrued.
Employees receive up to 12 sick days annually and the unused portion is accumulated up to 180
days and carried forward. Employee sick leave is recorded when paid. Upon termination,
employees do not receive any accumulated sick leave pay, and therefore, no liability is accrued.
5. Equity Classifications
Government-wide Statements
Equity is classified as net assets and displayed in three components:
Invested in capital assets - Consists of capital assets, net of accumulated depreciation.
Restricted net assets- Consists of net assets with constraints placed on the use either by (1)
external groups such as creditors, grantors, contributors, or laws or regulations of other
governments; or (2) law through constitutional provisions or enabling legislation.
Unrestricted net assets- All other net assets that do not meet the definition of"restricted" or
"invested in capital assets."
Fund Statements
Governmental fund equity is classified as fund balance. Fund balance is the difference between
assets and liabilities in a Governmental Fund. The following types of fund balances may be
presented in the Governmental Funds Balance Sheet and Governmental Funds Combining Schedule
of Accounts:
Nonspendable Fund Balance- the portion of a Governmental Fund's net assets that are not
available to be spent, either short term or long term, in either form or through legal restrictions.
There are no funds presenting a nonspendable fund balance.
Restricted Fund Balance- the portion of a Governmental Fund's net assets that are subject to
external enforceable legal restrictions. The following accounts fund balances are restricted by
grant agreements or contracts: Illinois Family Violence Coordinating Council, Alternative
Education Programs - Other. The following funds are restricted by Illinois Statute: General
Education Development, ROE School Bus Driver Training, Supervisory, and Institute.
37
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
5. Equity Classifications (Continued)
Committed Fund Balance- the portion of a Governmental Fund's net assets with self-imposed
constraints or limitations that have been placed at the highest level of decision making. There are no
accounts presenting a committed fund balance.
Assigned Fund Balance -the portion of a Governmental Fund's net assets to denote an intended
use of resources. The accounts presented with assigned fund balances are specified for a particular
purpose by the Regional Superintendent. The following accounts comprise assigned fund balance:
EIU, Attendance Officer, Curriculum COOP, Truant Alternative/Optional Education GSA, Regional
Safe Schools Program GSA, and Tuition.
Unassigned Fund Balance- available expendable financial resources in a governmental fund that
are not designated for a specific purpose. The unassigned fund balance is made up of the General,
County, ROE/ISC Operations, Truants Alternative/Optional Education, Adult Education & Family
Literacy, and Regional Safe Schools.
E. New Accounting Pronouncement
In 2011, the Bond, Fayette, and Effingham Counties Regional Office of Education #3 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 andAICPA Pronouncements. The Bond, Fayette, and Effmgham Counties
Regional Office of Education #3 implemented these standards during the current year; however, GASB
Statements No. 59 and 62 had no impact on the financial statements. The imp]ementation of GASB
Statement No. 54 changed fund balance reporting for governmental funds by adding some additional fund
balance classifications, clarifying governmental fund type definitions, and providing additional disclosures
on how fund balance constraints are imposed and may be modified or eliminated.
38
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
2. BUDGETS AND BUDGETARY ACCOUNTING
The Regional Office of Education #3 was not legaJly required to adopt annual budgets for all funds under its
control, and some annual budgets prepared were not based upon the same operating period. Therefore, budgetary
reports comparing budgeted to actual expenditures are not presented.
Budgets relating to programs funded by grants from the Illinois State Board of Education are prepared and
submitted to the State Board as part of the grant awards process. The State Board must also approve
amendments to these budgets. Grant project budgets are based on the award period. Budgets relating to
programs funded by grants from the Illinois Community College Board must also be prepared and submitted for
approval. Budgetary Comparison Schedules have been presented for the following grants received from the
Illinois State Board of Education or the Illinois Community College Board: Early Childhood 3 705-00, Early
Childhood 3 705-01, ROEIISC Operations, Truants Alternative/Optional Education, Adult Education & Family
Literacy, Regional Safe Schools, McKinney Education for Homeless Children, Beginning Teacher Induction
Pilot Program, ARRA-McKinney Education for Homeless Children, Gifted Education Seminar, Title I Reading
First Part B SEA, and ARRA- Title I- School Improvement & Accountability.
3. USE OF ESTIMATES
The preparation of financial statements in confonnity 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.
4. DEPOSITS
At June 30, 2011, the carrying amount of the Regional Office of Education #3's deposits for the governmental
activities and business-type activities were $717,636 and $75,592, respectively. The bank balance for the
governmental and business-type activities totaled $808,439 all of which was secured by federal depository
insurance or collateralized with securities held by the pledging financial institution's trust department in
the Regional Office of Education #3 's name, and were, therefore, not exposed to custodial credit risk. The
Illinois Funds Money Market Fund accounts had a total balance of$720 at June 30,2011. This amount is fully
collateralized and not subject to credit risk.
39
BOND, FA VETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
5. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2011 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental activities:
Capital assets being depreciated:
Office equipment and furniture $ 71,230 $ $ $ 71,230
Computer equipment 81,005 1,675 82,680
Other equipment and leasehold improvements 71,019 5,570 76,589
Total capital assets being depreciated 223,254 7,245 230,499
Less accumulated depreciation for:
Office equipment and furniture (49,450) (9,798) (59,248)
Computer equipment (60,446) (14,097) (74,543)
Other equipment and leasehold improvements (62, 151) (I ,350) (63,501)
Total accumulated depreciation (172,047) (25,245) (197,292)
Governmental activities capital assets, net $ 51,207 $ (18,000) $ $ 33,207
Business-type activities:
Capital assets being depreciated:
Office equipment and furniture $ 37,500 $ $ $ 37,500
Computer equipment 21,855 21,855
Other equipment and leasehold improvements 21,700 21,700
Total capital assets being depreciated 81,055 81,055
Less accumulated depreciation for:
Office equipment and furniture (33,811) (1,229) (35,040)
Computer equipment (20,484) (644) (21, 128)
Other equipment and leasehold improvements (21,700) (21,700)
Total accumulated depreciation (75,995) (1,873) (77,868)
Business-type activities capital assets, net $ 5,060 $ (1,873) $ $ 3,187
Depreciation expense was charged to functions/programs ofthe Regional Office of Education #3 as follows:
Governmental activities:
Instructional services $ 25,245
Business-type activities:
Instructional services $ 1,873
40
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
6. RETIREMENT FUND COMMITMENTS
A. Teachers' Retirement System of the State of Illinois
The Regional Office of Education #3 participates in the Teachers' Retirement System of the State of
Illinois (TRS). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created by
the Illinois legislature for the benefit 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 the 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 nonannuitants who are employed by a TRS-covered employer to provide
services for which teacher certification is required. The active member contribution rate for the year ended
June 30, 2011 was 9.4 percent of creditable earnings. The same contribution rate applies to members
whose first contributing service is on or after January 1, 2011, the effective date of the benefit changes
contained in Public Act 96-0889. These contributions, which may be paid on behalf of employees by the
employer, are submitted to TRS by the employer. The active member contribution rate was also 9.4
percent for the years ended June 30, 2010 and 2009.
The State of Illinois makes contributions directly to TRS on behalf of the Regional Office of Education
#3's TRS-covered employees.
On-Behalf Contributions to TRS- The State oflJlinois makes employer pension contributions on
behalf of the Regional Office of Education #3. For the year ended June 30, 2011, State of Illinois
contributions were based on 23.10 percent of creditable earnings not paid from federal funds, and
the Regional Office of Education #3 recognized revenue and expenditures of$132,990 in pension
contributions that the State of Illinois paid directly to TRS. For the years ended June 30, 2010, and
June 30, 2009, the State of Illinois contribution rates as percentages of creditable earnings not paid
from federal awards were 23.38 percent ($142,745) and 17.08 percent ($77,864), respectively.
The Regional Office of Education #3 makes other types of employer contributions directly to TRS.
2.2 Formula Contributions- Employers contribute 0.58 percent of total creditable earnings for the
2.2 formula change. This rate is specified by statute. Contributions for the year ended
June 30, 2011 were $2,403. Contributions for the years ended June 30, 2010, and June 30, 2009
were $2,598 and $2,790, respectively.
Federal and Special Trust Fund Contributions- When TRS members are paid from federal and
special trust funds administered by the Regional Office of Education #3, there is a statutory
requirement for the Regional Office of Education #3 to pay an employer pension contribution from
those funds. Under a policy adopted by the TRS Board of Trustees that was first effective for 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.
41
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
6. RETIREMENT FUND COMMITMENTS (Continued)
A. Teachers' Retirement System of the State of Illinois (Continued)
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 contribution was 23.3 8 and 17.08 percent of salaries paid from federal and special trust
funds, respectively. For the year ended June 30, 2011, salaries totaling $21,766 were paid from
federal and special trust funds that required employer contributions of$5,028. For the years ended
June 30, 2010, and June 30, 2009, required Regional Office of Education #3 contributions were
$4,645 and $3,770, respectively.
Early Retirement Option- The Regional Office of Education #3 is also required to make one-time
employer contributions to TRS for members retiring under the Early Retirement Option (ERO). The
payments vary depending on the age and salary of the member.
The maximum employer ERO contribution was 117.5 percent and applies when the member is age
55 at retirement.
For the three years ended June 30, 2011, the Regional Office of Education #3 made no payments to
TRS for employer contributions under the Early Retirement Option.
Salary Increases Over 6 Percent and Excess Sick Leave- If an employer grants salary increases
over 6 percent and those salaries are used to calculate a retiree's final average salary, the employer
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 increases of up to 6 percent.
For the three years ended June 3 0, 2011, the Regional Office of Education #3 made no payments for
employer contributions to TRS due on salary increases in excess of 6 percent.
If an employer grants sick leave days in excess of the normal annual allotment and those days are
used as TRS service credit, the employer 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 fmal
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 three years ended June 30, 2011, the Regional Office of Education #3 made no payments for
employer contributions to TRS for sick leave days granted in excess of the normal annual allotment.
42
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
6. RETIREMENT FUND COMMITMENTS (Continued)
A. Teachers' Retirement System of the State of Illinois (Continued)
TRS financial information, an explanation of TRS benefits, and descriptions of member, employer and
state funding requirements can be found in the TRS Comprehensive Annual Financial Report for the year
ended June 30, 2010. The report for the year ended June 30, 2011, is expected to be available in late
2011.
The reports may be obtained by writing to the Teachers' Retirement System of the State of Illinois, P.O.
Box 19253, 2815 West Washington Street, Springfield, IL 62794-9253. The most current report is also
available on the TRS Web site at trs.illinois.gov.
B. Illinois Municipal Retirement Fund
Plan Description - The Regional Office of Education #3 's defined benefit pension plan for Regular
employees provides retirement and disability benefits, post retirement increases, and death benefits to plan
members and beneficiaries. The Regional Office of Education #3 '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 IJlinois. IMRF issues a
publicly available financial report that includes financial statements and required supplementary
information. That report may be obtained on-line at www.imrf.org.
Funding Policy- As set by statute, the Regional Office of Education #3 's Regular plan members are
required to contribute 4.50 percent of their annual covered salary. The statute requires employers to
contribute the amount necessary, in addition to member contributions, to finance the retirement coverage
of its own employees. The employer annual required contribution rate for calendar year 201 0 was 11.10
percent. The Regional Office of Education #3 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 $68,808.
Three-Year Trend Information for the Regular Plan
Annual Percentage
Fiscal Year Pension ofAPC Net Pension
Ending Cost (APC) Contributed Obli~ation
12/31/2010 $ 68,608 100% $
12/31/2009 46,252 100%
12/3112008 49,736 100%
43
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
6. RETIREMENT FUND COMMITMENTS (Continued)
B. Illinois Municipal Retirement Fund (Continued)
The required contribution for 2010 was determined as part of the December 31, 2008, actuarial valuation
using the entry age normal actuarial cost method. The actuarial assumptions at December 31, 2008,
included (a) 7.5 percent investment rate of return (net of administrative and direct investment expenses),
(b) projected salary increases of 4.0 percent a year, attributable to inflation, (c) additional projected salary
increases ranging from 0.4 percent to 10.0 percent per year depending on age and service, attributable to
seniority/merit, and (d) post retirement benefit increases of3.0 percent annually. The actuarial value ofthe
Regional Office of Education #3's 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 20.0
percent corridor between the actuarial and market value of assets. The Regional Office of Education #3 's
Regular pIan's unfunded actuarial accrued liability at December 31, 2008 is being amortized as a level
percentage of projected payroll on an open 1 0 year basis.
Funded Status and Funding Progress- As ofDecember 31, 2010, the most recent actuarial valuation date,
the Regular plan was 81.92 percent funded. The actuarial accrued liability for benefits was $1 ,4 7 4,5 87
and the actuarial value of assets was $1 ,207 ,940, resulting in an underfunded actuarial accrued liability
(UAAL) of$266,647. The covered payroll for calendar year 2010 (annual payroll of active employees
covered by the plan) was $618,094 and the ratio of the UAAL to the covered payroll was 43 percent.
The schedule of funding progress, presented as required supplementary information (RSI) following the
notes to the financial statements, presents multi-year trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
C. Social Security
Employees not qualifying for coverage under the Illinois Teachers' Retirement System or the Illinois
Municipal Retirement Fund are considered "nonparticipating employees". These employees and those
qualifying for coverage under the Illinois Municipal Retirement Fund are covered under Social Security.
44
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
7. OTHER POST EMPLOYMENT BENEFITS
Teacher Health Insurance Security
The Regional Office of Education #3 participates in the Teacher Health Insurance Security (THIS) Fund, a cost­sharing,
multiple-employer defined benefit postemployment health care plan that was established by the Illinois
legislature for the benefit oflllinois public school teachers employed outside the city of Chicago. The THIS Fund
provides medical, prescription, and behavioral health benefits, but does not provide vision, dental, or life
insurance benefits to annuitants of the Teachers' Retirement System (TRS). Annuitants may participate in the
state administered participating provider option plan or choose from several managed care options.
The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions of THIS Fund
and amendments to the plan can be made only by legislative action with the Governor's approval. The Illinois
Department of Healthcare and Family Services (HFS) and the Illinois Department of Central Management
Services (CMS) administer the plan with the cooperation ofTRS. The director ofHFS determines the rates and
premiums for annuitants and dependent beneficiaries and establishes the cost-sharing parameters. Section 6.6 of
the State Employees Group Insurance Act of 1971 requires all active contributors to the TRS who are not
employees of the state make a contribution to THIS fund.
The percentage of employer required contributions in the future will be determined by the director of Health care
and Family Services and will not exceed 105 percent of the percentage of salary actually required to be paid in
the previous fiscal year.
On behalf contributions to THIS Fund - The State of Illinois makes employer retiree health insurance
contributions on behalf of the Regional Office ofEducation #3. State contributions are intended to match
contributions to THIS Fund from active members which were 0.88 percent of pay during the year ended
June 30, 2011. State of Illinois contributions were $3,645, and the Regional Office of Education #3
recognized revenue and expenditures of this amount during the year.
State contributions intended to match active member contributions during the years ended June 30, 2010
and June 30,2009 were 0.84 percent of pay. State contributions on behalfofRegional Office employees
were $3,756 and $4,015, respectively. Had the Regional Office of Education #3 recognized revenue and
expenditures for State contributions intended to match active contributions during the year ended
June 30, 2009, under the current standards, the contribution match would have been $4,015.
Employer contributions to THIS Fund- The Regional Office of Education #3 also makes contributions
to THIS Fund. The employer THIS Fund contribution was 0.66 percent during the years ended
June 30, 2011, and 0.63 percent during the years ended June 30, 2010, and June 30, 2009. For the year
ended June 30, 2011, the Regional Office of Education #3 paid $2,734 to the THIS Fund. For the years
ended June 30,2010 and June 30,2009, the Regional Office ofEducation #3 paid $2,817 and $3,011 to
the THIS Fund, respectively, which was 100 percent of the required contribution.
The publicly available financial report of the THIS Fund may be obtained by writing to the Department of
Healthcare and Family Services, 201 S. Grand Ave., Springfield, IL 62763-3838.
45
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
8. INTERFUND RECEIVABLES AND PAY ABLES
At June 30, 2011, interfund receivables and payables were as follows:
Due To (Receivable)
Proprietary Fund:
Workshops
Due From (Payable)
Education Fund:
Early Childhood
ROE/ISC Operations
Truants Alternative/Optional Education Program
Adult Education & Family Literacy
Regional Safe Schools
Beginning Teacher Induction Pilot Program
The Center
ARRA Education Jobs (TAOEP)
ARRA Education Jobs (RSSP)
ARRA - Title I - School Improvement & Accountability
Balance at
June 30, 2011
$ 20,701
23,891
44,694
27,913
36,297
2,071
4,000
3,037
1,205
27,903
At June 30, 2011, all of the interfund balances consisted of loans between individual funds within the same
pooled cash account. The loans were used to cover cash shortages in these individual funds.
9. BOND
The Illinois School Code (105 ILCS 5/3-2) directs the Regional Office ofEducation #3 to execute a bond of not
less than $1 00,000 on the Regional Superintendent. The Regional Office of Education #3 has secured and
maintained such a bond with coverage of $100,000 on the Regional Superintendent.
46
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
10. ON-BEHALF PAYMENTS
The Regional Office of Education #3 received on-behalf payments for employee salaries and benefits from the
following entities for the following items:
Bond County:
Office staff benefits
Fayette County:
Office staff benefits
Effingham County:
Office staff benefits
State oflllinois:
Regional Superintendent-salary
Regional Superintendent-benefits
(includes State paid insurance)
Assistant Regional Superintendent-salary
Assistant Regional Superintendent-benefits
(includes State paid insurance)
THIS contributions
TRS pension contributions
$ 8,110
4,899
4,914
96,435
25,346
86,792
24,089
3,645
132,990
$ 387,220
Salary and benefit data for the Regional Superintendent and Assistant Regional Superintendent was calculated
based on data provided by the Illinois State Board of Education.
The on-behalf payments are reflected as revenues and expenditures of the General Fund.
11. RISK MANAGEMENT- CLAIMS AND JUDGEMENTS
The Regional Office of Education #3 is exposed to various risks of loss related to torts; theft of, damage to and
destruction of assets; errors and omissions; workers' compensation; and natural disasters. The Regional Office of
Education #3 is covered by commercial insurance to cover these risks of loss. No settlements have exceeded
insurance coverage in the current or three previous years.
12. OPERATING LEASE
The Bond, Fayette, and Effingham Counties Regional Office ofEducation #3 has entered into annual operating
leases through June 30, 2011 for its Alternative Education Programs to provide classroom space for the Focus
and New Approach Schools and office space for grant programs. Rent expense for 2011 totaled $64,320.
47
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
13. DUE TO/FROM OTHER GOVERNMENTS
The Regional Office of Education #3 's General, Education and Nonmajor Special Revenue Funds have amounts
due from and due to various other governmental units which consist of the following at June 30, 2011:
Due From Other Governments:
General Fund:
Local school districts
Education Fund:
Illinois State Board of Education
Illinois Community College Board
Nonmajor Governmental Funds:
Illinois Department of Corrections
Local school districts
Enterprise Funds:
Local school districts
Total
14. CONTINGENCIES
$ 833
257,019
31' 170
288,189
4,455
210
4,665
1' 155
$ 294,842
The Regional Office of Education #3 has received funding from federal and State grants in the current and prior
years which are subject to audits by granting agencies. The Regional Office of Education #3 believes any
adjustments that may arise will be insignificant to the Regional Office of Education #3's operations.
15. DEFICIT FUND BALANCES
The following individual funds carried the following deficit balances as of June 30, 2011:
ROE/ISC Operations
Truants Alternative/Optional Education Program
Adult Education & Family Literacy
Regional Safe Schools
$ 3,981
$ 6,320
$ 28,620
$ 5,346
The Regional Office of Education #3 intends to reduce these deficits by collecting revenues not considered
"available" at June 30, 2011.
48
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
NOTES TO FINANCIAL STATEMENTS
16. RECLASSIFICATIONS
Effective July 1, 201 0, the Bond, Fayette, and Effingham Counties Regional Office of Education #3 reclassified
Attendance Officer, Cooperative Curriculum, General State Aid, and Tuition as part of the General Fund. The
ROEIISC Operations Fund was reclassified as an Education Fund. The reclassification was due to the
implementation ofGASB Statement No. 54.
General Education
Fund Fund
Fund balance at June 30, 2010 $ 117,265 $ 211,022
Reclassification Adjustment 255,520 (255,520)
Fund balance restated at June 3 0, 201 0 $ 372,785 $ (44,498)
49
REQUIRED SUPPLEMENTARY INFORMATION
(OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS)
Actuarial
Valuation
Date
1213112010
1213112009
1213112008
$
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
Actuarial
Value of
Assets
(a)
1,207,940
1,098,927
1,012,870
ILLINOIS MUNICIPAL RETIREMENT FUND
SCHEDULE OF FUNDING PROGRESS
UNAUDITED
Actuarial
Accrued Unfunded
Liability (AAL) AAL Funded Covered
Entry Age (UAAL) Ratio Payroll
(b) (b- a) (a I b) (c)
$ 1,474,587 $ 266,647 81.92% $ 618,094
1,276,996 178,069 86.06 o/o 576,703
1,130,002 117,132 89.63% 555,089
UAAL as a
Percentage of
Covered Payroll
[(b- a) I c]
43.14 o/o
30.88 o/o
21.10 o/o
On a market value basis, the actuarial value of assets as ofDecember 31,2010 was $1,271,397.
On a market basis, the funded ratio would be 86.22 percent.
50
SUPPLEMENTAL INFORMATION
BOND, FAYETTE, AND EFFINGHAM COUNTIES
REGIONAL OFFICE OF EDUCATION #3
COMBINING SCHEDULE OF ACCOUNTS
GENERAL FUND
June 30, 2011
General County
ASSETS
Cash and cash equivalents $