FY11-ROE17-Fin-Full

              State of Illinois
DEWITT, LIVINGSTON, AND
MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
FINANCIAL AUDIT
(In Accordance with the Single Audit Act
and OMB Circular A-133)
For the Year Ended June 30, 2011
Performed as Special Assistant Auditors
for the Office of the Auditor General
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
TABLE OF CONTENTS
PAGE
OFFICIALS ..... ............ .. .... ........ ................ ........ ....... .. ... ....... ....... .... ... ... ...... .. ..... ........ .... ...... ....... 1
COMPLIANCE REPORT SUMMARY .. ... .. ..... ................ .. ...... ..... ..... ........... ..... ............. .............. 2
FINANCIAL STATEMENT REPORT SUMMARY ..... ........ ..... ................... ....... ..... .. .. ....... .... ..... .. 4
FINANCIAL SECTION
Independent Auditors' Report ... .... ......... .... ........... ... .............. .......... ..... ............... ....... .... .... ..... ... 5
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
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
Schedule of Findings and Questioned Costs ........... ... ..... .......... ... .. ... .. ...... ....... .... .... .. ... ......... .. 11
Corrective Action Plan for Current Year Audit Findings .... ... ................................ ....... ........ .... .. 15
Summary Schedule of Prior Audit Findings ....... ...... ..... ... .......................................................... 17
Management's Discussion and Analysis ........ ...... ...... .... .. .... .. .... ... ... .. ....... ....... ................ ..... .... 18
BASIC FINANCIAL STATEMENTS ...... ......... ... ................ .............. .... ... ................................. .. 33
EXHIBIT
Government-wide Financial Statements:
Statement of Net Assets .... .... ... ......... ............... ... ... ....... ..... ........ ............ A .. ... ........ .. ... 34
Statement of.Activities ....... .... ....................... .... ....... ... ....... ..... ................. B .... ... ... .. ...... 35
Governmental Fund Financial Statements:
Balance Sheet - Governmental Funds ............. ............ ........ .... ... ............. C .. ......... ....... 36
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets ...... ... ....... ... .... ................................... D .................. 37
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds ... ........ ..... ... ........ ..... ..... ......... E ......... .... ..... 38
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances to the Statement of Activities
Governmental Funds ................... .... .... ........... .. ..... ............................. F .......... ........ 39
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
TABLE OF CONTENTS (Continued)
BASIC FINANCIAL STATEMENTS (Continued)
Proprietary Fund Financial Statements:
PAGE
EXHIBIT
Statement of Net Assets - Proprietary Funds ..................... ....... ... ........ ... G ..... .. ...... .... .40
Statement of Revenues, Expenses, and Changes in Fund
Net Assets - Proprietary Funds .................... ...................................... H ..... ....... ...... 41
Statement of Cash Flows - Proprietary Funds ........... ... ..... ... ... ... ............... I ............... ... 42
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets - Fiduciary Funds ........ .... ........ ........... J ........... .. ..... 43
Notes to Financial Statements .................................... ........ .. ... ........ ... ..... ... ..... .. ... .. .... .... .... 44
REQUIRED SUPPLEMENTAL INFORMATION ........ .......... ............... ... ..... ......... .. ..... .... ...... .... 72
Schedule of Funding Progress -
Illinois Municipal Retirement Fund (Unaudited) .................... .... ........ ..... .... ... .... ...... ..... .. 73
Schedule of Funding Progress -
Other Postemployment Benefits (Unaudited) ....... ........ ............... ......... ...................... ... 74
SUPPLEMENTAL INFORMATION ............................... .... ........ .. .......... ........ .. ..... .. ............ ....... 75
SCHEDULE
General Fund Accounts:
Combining Schedule of Accounts ........... ..... ....... ......... ......... ............. ... .... 1 .................. 76
Combining Schedule of Revenues, Expenditures, and
Changes in Fund Balances ............ ........... ..... ....... .. ... ... .......... .. ... ...... 2 .... ..... ......... 80
Budgetary Comparison Schedule .. ...................................... ....... ...... ........ 3 .................. 84
Education Fund Accounts:
Combining Schedule of Accounts .......... ... .................. ... ................ ... .... .... 4 .. ............. ... 85
Combining Schedule of Revenues, Expenditures, and
Changes in Fund Balances ........ .. .... ...... .... ... ... ............................... ... 5 .................. 91
Education Fund Accounts - Budgetary Comparison Schedule ........... .. .... 6 ....... .... .... ... 97
Combining Balance Sheet- Nonmajor Special Revenue Funds ............... ...... 7 ........ ........ 102
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances - Non major Special Revenue Funds ............. 8 .... ..... ... .... 103
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
TABLE OF CONTENTS (Continued)
SUPPLEMENTAL INFORMATION (Continued)
Fiduciary Funds:
Combining Statement of Fiduciary Net Assets -
PAGE
SCHEDULE
Agency Funds .. ... ..... ..... .... ..................... ...... ... .............. ..................... 9 .. ... ... ... ..... 104
Combining Statement of Changes in Assets and Liabilities -
Agency Funds ..... .......... ......... ..... .... .. ............. ... ... ....... ......... ............ 10 .... ............ 105
Schedule of Disbursements to School District Treasurers
and Other Entities ......... ... ......... .. ... ... .. ..... .......... ..... .. ... ............. .... ... .......... .. 11 ... .......... ... 106
FEDERAL COMPLIANCE SECTION
Schedule of Expenditures of Federal Awards .................................................... 12 ................ 107
Notes to the Schedule of Expenditures of Federal Awards .. .. ............................... .... .............. 108
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
Regional Superintendent
(During the Audit Period and Current)
Assistant Regional Superintendent
(During the Audit Period and Current)
Office is located at:
905 N. Main St. - Suite #1
Normal, Illinois 61761
OFFICIALS
1
Mr. Mark Jontry
Ms. Diane Stempinski
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
COMPLIANCE REPORT SUMMARY
The compliance audit testing performed in this audit was conducted in accordance with
Government Auditing Standards and in accordance with the Illinois State Auditing Act.
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
2
1
Prior Audit
3
1
0
Details of audit findings are included in a separate report section.
An additional matter which is less than a significant deficiency or material weakness but more
than inconsequential, has been reported in a Management Letter of Comments to the Regional
Superintendent. In prior years, this issue may have been included as an immaterial finding in the
auditors' report.
SUMMARY OF FINDINGS AND QUESTIONED COSTS
Item No. Page Description Finding Type
11-1
11-2
10-3
12
14
FINDINGS (GOVERNMENT AUDITING STANDARDS)
Controls Over Financial Statement Preparation
Inadequate Internal Controls Over Cash
Material Weakness
Material Weakness
FINDINGS AND QUESTIONED COSTS (FEDERAL COMPLIANCE)
None
PRIOR FINDINGS NOT REPEATED (GOVERNMENT AUDITING STANDARDS)
17
None
PRIOR FINDINGS NOT REPEATED (FEDERAL COMPLIANCE)
Inadequate Recording of American Recovery and
Reinvestment Act Awards
2
Compliance
Significant Deficiency
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
COMPLIANCE REPORT SUMMARY
EXIT CONFERENCE
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 opted not to have
a formal exit conference during the financial audit for the year ended June 30, 2011. Throughout
the audit, numerous meetings were held between auditors and ROE officials to discuss the
matters contained in this audit report. Responses to the recommendations were provided by
Honorable Mr. Mark Jontry, Regional Superintendent, on March 5, 2012.
3
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
FINANCIAL STATEMENT REPORT SUMMARY
The audit of the accompanying basic financial statements of the DeWitt, Livingston, and Mclean
Counties Regional Office of Education #17 was performed by Winkel, Parker & Foster, CPA PC.
Based on their audit, the auditors expressed an unqualified opinion on the DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17's basic financial statements.
4
1ft p A Winkel, Parker W t.ir & Foster, CPA PC
Ccrliric.l Puhlic Accounlilnls f; Consullilnls
Honorable William G. Holland
Auditor General
State of Illinois
INDEPENDENT AUDITORS' REPORT
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 DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17, as of and for the year ended June 30, 2012, which collectively
comprise the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's basic
financial statements as listed in the table of contents. These financial statements are the
responsibility of the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's
management. Our responsibility is to express opinions on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and 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 DeWitt, Livingston, and Mclean
Counties Regional Office of Education #17, as of June 30, 2012, and the respective changes in
financial position and cash flows, where applicable, thereof for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 adopted GASB
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions during the
year ended June 30, 2012. 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 DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's
governmental funds' assets or liabilities nor was there any effect to the total amount of any of the
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's governmental fund
balances as of and for the year ended June 30, 2012.
5
In accordance with Government Auditing Standards, we have also issued our report dated
April 17, 2012 on our consideration of DeWitt, Livingston, and Mclean Counties Regional Office
of Education #17's internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over
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, Illinois Municipal Retirement Fund Schedule of
Funding Progress, and Other Postemployment Benefits Schedule of Funding Progress on pages
19 through 32, 73 and 7 4 are not a required part of the basic financial statements but are
supplemental information required by accounting principles generally accepted in the United
States of America. We have applied certain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the required
supplemental information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the DeWitt, Livingston, and Mclean Counties Regional Office of Education
#17's basic financial statements. The accompanying supplemental information, such as the
combining and individual nonmajor fund financial statements, budgetary comparison schedules
and the Schedule of Disbursements to School District Treasurers and Other Entities are
presented for purposes of additional analysis and are not a required part of the basic financial
statements. The accompanying Schedule of Expenditures of Federal Awards is presented for
purposes of additional analysis as required by U.S. Office of Management and Budget Circular
A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a
required part of the basic financial statements of the DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17. The combining and individual nonmajor fund financial
statements, budgetary comparison schedules, Schedule of Disbursements to School District
Treasurers and Other Entities and the Schedule of Expenditures of Federal Awards have been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
in our opinion, are fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
Clinton, Iowa
April17, 2012
6
6IJ p & Winkel, Paa·ker W t.iF & Foster, CPA PC
Certified Publ i.c Accounta nts & Cou s ulta u ls
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
Honorable William G. Holland
Auditor General
State of Illinois
As Special Assistant Auditors for the Auditor General, we have audited the financial statements
of the governmental activities, the business-type activities, each major fund, and the aggregate
remaining fund information of the DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17, as of and for the year ended June 30, 2012, which collectively comprise the
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's basic financial
statements and have issued our report thereon dated April 17, 2012. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
is responsible for establishing and maintaining effective internal control over financial reporting.
In planning and performing our audit, we considered the DeWitt, Livingston, and Mclean
Counties Regional Office of Education #17's internal control over financial reporting as a basis
for designing our auditing procedures for the purpose of expressing our opinions on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's internal
control over financial reporting. Accordingly, we do not express an opinion on the effectiveness
of the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's internal
control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and was not designed to identify all deficiencies in the
internal control over financial reporting that might be significant deficiencies or material
weaknesses and therefore, there can be no assurance that all deficiencies, significant
deficiencies, or material weaknesses have been identified. However, as described in the
accompanying Schedule of Findings and Questioned Costs we identified certain deficiencies in
internal control over financial reporting that we consider to be material weaknesses.
7
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented, or
detected and corrected on a timely basis. We consider the deficiencies described in findings 11-1
and 11-2 in the accompanying Schedule of Findings and Questioned Costs to be material
weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the DeWitt, Livingston, and Mclean
Counties Regional Office of Education #17'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 also noted a certain matter which we have reported to management of the DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17 in a separate letter dated April17, 2012.
Regional Office of Education # 17's response to the findings identified in our audit are described in
the accompanying Schedule of Findings and Questioned Costs. We did not audit Regional Office
of Education # 17'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 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.
Clinton, Iowa
April 17, 2012
8
A p A Winkel, Parker W t.iF & Foster, CPA PC
C"rLifi ed Publ ic i\c.;co tm t~nts [.f Consultants
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
Honorable William G. Holland
Auditor General
State of Illinois
Compliance
We have audited DeWitt, Livingston, and Mclean Counties Regional Office of Education #17'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 DeWitt,
Livingston, and Mclean Counties Regional Office of Education #17's major federal programs
for the year ended June 30, 2012. The DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's major federal programs are identified in the summary of auditor's
results section of the accompanying Schedule of Findings and Questioned Costs. Compliance
with the requirements of laws, regulations, contracts, and grants applicable to each of its major
federal programs is the responsibility of the DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's management. Our responsibility is to express an opinion on the
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's compliance based
on our audit.
We conducted our audit of comp_liance in accordance with auditing standards generally
accepted in the United States of America; the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States; and
OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17's compliance with those requirements
and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a
legal determination of the DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17's compliance with those requirements.
In our opinion, the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
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, 2012.
9
Internal Control Over Compliance
Management of the DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
is responsible for establishing and maintaining effective internal control over compliance with
requirements of laws, regulations, contracts, and grants applicable to federal programs. In
planning and performing our audit, we considered the DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17's internal control over compliance with requirements that
could have a direct and material effect on a major federal program to determine the auditing
procedures for the purpose of expressing our opinion on compliance and to test and report on
internal control over compliance in accordance with OMB Circular A-133, but not for the purpose
of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we
do not express an opinion on the effectiveness of the DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in
internal control over compliance is a deficiency, or combination of deficiencies, in internal
control over compliance, such that there is a reasonable possibility that material noncompliance
with a type of compliance requirement of a federal program will not be prevented, or detected
and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be deficiencies, significant deficiencies, or material
weaknesses. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of the Auditor General, the General
Assembly, the Legislative Audit Commission, the Governor, agency management, others within
the entity, Illinois State Board of Education, federal awarding agencies and pass-through entities
and is not intended to be and should not be used by anyone other than these specified parties.
Clinton, Iowa
April 17, 2012
10
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2011
Section 1: Summary of Auditor's Results:
Financial Statements
Type of auditor's report issued:
Internal control over financial reporting:
Material weakness( es) identified?
Significant deficiencies identified?
Noncompliance material to
financial statements noted?
Federal Awards
Internal control over major programs:
Material weakness( es) identified?
Significant deficiencies identified?
Unqualified
_x_ yes no
yes _ x_ none reported
__ yes _x_ no
_ _ yes
__ yes
_ x_ no
_x_ none reported
Type of auditor's report issued on compliance for major programs:
Unqualified
Any audit findings disclosed that are required to be reported in accordance with Circular A-133,
Section .510(a)? __ yes _x_ no
Identification of major programs:
CFDA Number(s)
84.410A
84.010A
84.389A
84.002A
Name of Federal Program or Cluster
Education Jobs Fund, Recovery Act
Title I Part A Cluster
Adult Education - Basic Grants to States
Dollar threshold used to distinguish between type A and type B programs: $ 300.000
Auditee qualified as low-risk auditee? __ yes _x_ no
11
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2011
Section II: Financial Statement Findings:
FINDING NO. 11-1 -Controls Over Financial Statement Preparation (Repeat from 2010-
No. 10-1, 2009- No. 09-1, 2008- No. 08-1, and 2007- No. 07-1)
Criteria/Specific Requirement:
The Regional Office of Education #17 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 #17 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 of the GAAP
based financial statements for management or employees in the normal course of performing
their assigned functions to prevent or detect and correct financial statement misstatements and
disclosure omissions in a timely manner. Auditors, in their review of the Regional Office's
accounting records, noted numerous adjustments were required to present financial statements
in accordance with generally accepted accounting principles.
Effect:
Management or employees in the normal course of performing their assigned functions may not
prevent or detect and correct financial statement misstatements and disclosure omissions in a
timely manner.
Cause:
The Regional Office of Education does not have proper controls in place over the preparation of
financial statements to ensure that they are presented in accordance with generally accepted
accounting principles.
12
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2011
Section II: Financial Statement Findings:
FINDING NO. 11-1- Controls Over Financial Statement Preparation (Repeat from 2010-
No. 10-1, 2009- No. 09-1, 2008- No. 08-1, and 2007- No. 07-1) (Continued)
Recommendation:
As part of its internal control over the preparation of its financial statements, including
disclosures, the Regional Office of Education #17 should implement a comprehensive
preparation and/or review procedure to ensure that the financial statements, including
disclosures, are complete and accurate. Such procedures should be performed by a properly
trained individual(s) possessing a thorough understanding of applicable generally accepted
accounting principles, GASB pronouncements, and knowledge of the Regional Office of
Education's activities and operations.
Management's Response:
The Regional Office of Education #17 understands the nature of this finding and realizes that
this circumstance is not unusual in an organization this size. The Regional Office of Education
will continue to seek qualified professional accounting expertise in developing procedures that
will satisfy the pronouncements in financial statement preparation.
This office will continue to provide training for staff in utilizing the full range of financial
technology that currently exists. This office will continue to utilize expert consultants to provide
training in the preparation of financial statements.
13
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2011
Section II: Financial Statement Findings:
FINDING NO. 11-2- Inadequate Internal Controls Over Cash (Repeat from 2010-
No. 10-2)
Criteria/Specific Requirement:
Adequate internal controls over cash require all cash in the custody of the Regional Office of
Education #17 be recorded in the general ledger and each month's bank statement be
reconciled to the related general ledger account balance.
Condition:
The Regional Office of Education #17's ending adjusted general ledger balance for their
operating cash account was not properly reconciled to the bank account.
Effect:
There is a risk of errors in the expenditures reported in the general ledger, and of misuse, or
theft of funding.
Cause:
The Regional Office of Education #17 has inadequate internal controls in place to ensure that
bank statements are reconciled to the related general ledger cash accounts.
Recommendation:
The Regional Office of Education #17's management should review each original bank
reconciliation to its related general ledger account balances monthly to ensure the
reconciliations are completed in a timely manner and that all reconciling items are reviewed with
the appropriate follow-up. The bookkeeper should reconcile all activity that takes place in the
account and track reconciling items to ensure proper treatment.
Management's Response:
This office has implemented protocols to ensure that the cash is recorded in the general ledger
on a daily basis and that monthly reconciliation will be completed in a timely manner. New
personnel have been employed and trained in implementing procedures to reconcile on a
monthly basis.
14
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
CORRECTIVE ACTION PLAN FOR CURRENT YEAR AUDIT FINDINGS
Year Ended June 30, 2011
FINDING NO. 11-1 -Controls Over Financial Statement Preparation {Repeat from 2010-
No. 10-1, 2009- No. 09-1, 2008- No. 08-1, and 2007- No. 07-1)
Condition:
The Regional Office of Education #17 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 of the GAAP
based financial statements for management or employees in the normal course of performing
their assigned functions to prevent or detect and correct financial statement misstatements and
disclosure omissions in a timely manner. Auditors, in their review of the Regional Office's
accounting records, noted numerous adjustments were required to present financial statements
in accordance with generally accepted accounting principles.
Plan:
The Regional Office of Education #17 understands the nature of this finding and realizes that
this circumstance is not unusual in an organization this size. The Regional Office of Education
will continue to seek qualified professional accounting expertise in developing procedures that
will satisfy the pronouncements in financial statement preparation.
This office will continue to provide training for staff in utilizing the full range of financial
technology that currently exists. This office will continue to utilize expert consultants to provide
training in the preparation of financial statements.
Anticipated Completion Date:
Immediately
Contact Person Responsible for Corrective Action:
Honorable Mark Jontry, Regional Superintendent
15
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
CORRECTIVE ACTION PLAN FOR CURRENT YEAR AUDIT FINDINGS
Year Ended June 30, 2011
FINDING NO. 11-2 - Inadequate Internal Controls Over Cash (Repeat from 2010 -
No. 10-2)
Condition:
The Regional Office of Education #17's ending adjusted general ledger balance for their
operating cash account was not properly reconciled to the bank account.
Plan:
This office has implemented protocols to ensure that the cash is recorded in the general ledger
on a daily basis and that monthly reconciliation will be completed in a timely manner. New
personnel have been employed and trained in implementing procedures to reconcile on a
monthly basis.
Anticipated Completion Date:
Immediately
Contact Person Responsible for Corrective Action:
Honorable Mark Jontry, Regional Superintendent
16
Finding
Number
10-1
10-2
10-3
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
June 30, 2011
Condition
Controls Over Financial Statement Preparation
Inadequate Internal Controls Over Cash
Inadequate Recording of American Recovery and
Reinvestment Act Awards
17
Current Status
Repeated
Repeated
Resolved
MANAGEMENT'S DISCUSSION AND ANALYSIS
18
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 provides this
Management's Discussion and Analysis of its financial statements. This narrative overview and
analysis of the financial activities is for the fiscal year ended June 30, 2011. We encourage
readers to consider this information in conjunction with DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17's financial statements, which follow.
During fiscal . year 2011 the DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17 implemented Governmental Accounting Standards Board (GASB) Statement No.
54, Fund Balance Reporting and Governmental Fund Type Definitions, which required certain
programs and funds to be reclassified and the restatement of beginning fund balances as
detailed in Note 15 to the financial statements. Because of these reclassifications, the fund
analysis is not comparable between fiscal year 2010 and fiscal year 2011.
2011 FINANCIAL HIGHLIGHTS
• General Fund revenues increased from $925,908 in 2010 to $3,696,682 in 2011 . The
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 showed an
increase in General Fund balance from $159,166 in fiscal year 2010 to $2,041,481 in
fiscal year 2011 mostly due to fund reclassifications and a net change in fund balance of
$337,728.
• The Institute Fund's fund balance decreased from $109,991 in 2010 to $100,289 in 2011.
The main reason for the decrease is due to a decrease in certificate registrations and
salaries and benefits charged to the fund in fiscal year 2011.
• The Education Fund's fund balance decreased from $1,720,203 in 2010 to $62,046 in
2011 mostly due to fund reclassifications and a net change in fund balance of $64,394.
The Education Fund is made up of grants that the Regional Office receives and these can
vary greatly from year to year as some programs have decreased funding or are
discontinued while others see a funding increase.
USING THIS ANNUAL REPORT
The annual report consists of a series of financial statements and other information as follows:
Management's Discussion and Analysis introduces the basic financial statements and provides
an analytical overview of DeWitt, Livingston, and Mclean Counties Regional Office of Education
#17's financial activities.
The Government-wide Financial Statements consist of a Statement of Net Assets and a
Statement of Activities. These provide information about the activities of DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17 as a whole and present an overall view of
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's finances.
19
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
The fund financial statements tell how governmental services were financed in the short term as
well as what remains for future spending. Fund financial statements report DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17's operations in more detail than the
government-wide statements by providing information about the most significant funds.
Notes to financial statements provide additional information essential to a full understanding of
the data provided in the basic financial statements.
Required Supplemental Information further explains and supports the financial statements with
information about the Illinois Municipal Retirement Fund Schedule of Funding Progress.
Other Supplemental Information provides detailed information about the major and nonmajor
funds.
Figure A-1 summarizes the major features of DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's financial statements, including the portion of DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17's activities they cover and the types of
information they contain.
20
FigureA-1
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
Major Features of the Government-wide and Fund Financial Statements
Government- Fund Statements
wide Governmental Proprietary Fiduciary Funds
Statements Funds Funds
Scope Entire Regional The activities of Activities Instances in which
Office of Regional Office Regional Office Regional Office of
Education #17 of Education #17 of Education #17 Education #17
(except fiduciary that are not operates similar administers resources on
funds) proprietary or to private behalf of someone else,
fiduciary, such as businesses: such as the distributive
grants and workshops fund, Regional Board of
statutory funds School Trustees Fund,
and the Cooperative
PurchasinQ Fund
Required • Statement of • Balance Sheet • Statement of • Statement of
financial Net Assets • Statement of Net Assets Fiduciary Net Assets
statements • Statement of Revenues, • Statement of
Activities Expenditures, Revenues,
and Changes in Expenses, and
Fund Balances Changes in Fund
Net Assets
• Statement of
Cash Flows
Accounting Accrual Modified accrual Accrual Accrual accounting and
basis and accounting and accounting and accounting and economic resources
measurement economic current financial economic focus
focus resources focus resources focus resources focus
Type of asset/ All assets and Generally, assets All assets and All assets and liabilities,
liability liabilities, both expected to be liabilities, both both short-term and long-information
financial and used up and financial and term
capital, short- liabilities that capital, short-term
and long- come due during term and long-term
the year or soon term
thereafter; no
capital assets or
long-term
liabilities
included
Type of inflow/ All revenues and Revenues for All revenues and All additions and
outflow expenses during which cash is expenses during deductions during the
information year, regardless received during the year, year, regardless of when
of when cash is or soon after the regardless of cash is received or paid
received or paid end of the year; when cash is
expenditures received or paid
when goods or
services have
been received
and the related
liability is due
during the year or
soon thereafter
21
DEWITI, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
REPORTING DEWITT, LIVINGSTON, AND MCLEAN COUNTIES REGIONAL OFFICE OF
EDUCATION #17'S FINANCIAL ACTIVITIES
Government-wide Financial Statements
The government-wide financial statements report information about DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17 as a whole using accounting methods similar
to those used by private-sector companies. The Statement of Net Assets includes all of DeWitt,
Livingston, and Mclean Counties Regional Office of Education #17'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 financial statements report DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17's net assets and how they have changed. Net assets - the
difference between DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's
assets and liabilities - are one way to measure DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17's financial health or financial position. Over time, increases or
decreases in DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's net
assets are an indicator of whether financial position is improving or deteriorating. To assess
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's overall health,
additional non-financial factors, such as changes in DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17's grant funding and the condition of facilities need to be
considered.
In the government-wide financial statements, DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's activities are divided into two categories:
• Governmental activities: Most of DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's basic services are included here, such as grants and statutory
funds. Federal and state grant proceeds finance most of these activities.
• Business-type activities: DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17 charges fees to help cover the costs of certain services it provides.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #1 7's lnservice
fund is included here.
Fund Financial Statements
The fund financial statements provide more detailed information about DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17's funds, focusing on its most significant or
"major" funds - not DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 as
a whole. Funds are accounting devices DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17 uses to keep track of specific sources of funding and spending on
particular programs.
22
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
Some funds are required by state law. DeWitt, Livingston, and Mclean Counties Regional Office
of Education #17 establishes other funds to control and manage money for particular purposes,
such as accounting for special revenue funds, or to show that it is properly using certain
revenues, such as federal grants.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 has three kinds of
fund s:
1) Governmental funds: Most of DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17'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 flow in and out and
(2) the balances left at year-end that are available for spending. Consequently, the
governmental fund statements provide a detailed short-term view that helps determine whether
there are more or fewer financial resources that can be spent in the near future to finance
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's programs.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's governmental funds
include the General Fund and Special Revenue Funds.
The required financial statements for governmental funds include a Balance Sheet and a
Statement of Revenues, Expenditures, and Changes in Fund Balances.
2) Proprietary funds: Services for which DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17 charges a fee are generally reported in proprietary funds. Proprietary
funds are reported in the same way as the government-wide financial statements. DeWitt,
Livingston, and Mclean Counties Regional Office of Education #17's Enterprise Funds, one type
of proprietary fund, are the same as its business-type activities, but provide more detail and
additional information, such as cash flows. DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17 currently has one Enterprise Fund, the lnservice Fund.
The required financial statements for proprietary funds include a Statement of Net Assets; a
Statement of Revenues, Expenses, and Changes in Fund Net Assets; and a Statement of Cash
Flows.
3) Fiduciary funds: DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
is the trustee for assets that belong to others. These funds include the Agency Funds.
• Agency Funds - These are funds through which DeWitt, Livingston, and Mclean
Counties Regional Office of Education #17 administers and accounts for certain
federal and/or state grants on behalf of others.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 is responsible for
ensuring the assets reported in the fiduciary funds are used only for their intended purposes
and by those to whom the assets belong. DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17 excludes these activities from the government-wide financial statements
because it cannot use these assets to finance its operations.
23
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
The required financial statements for fiduciary funds include a Statement of Fiduciary Net
Assets.
Reconciliations between the government-wide financial statements and the fund financial
statements follow the fund financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net assets may serve, over time, as a useful indicator of a government's financial position. In
the case of DeWitt, Livingston, and Mclean Counties Regional Office of Education #17, assets
exceeded liabilities by $3,091 ,382 as of June 30, 2011.
A portion of DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's net
assets (14%) reflects its investment in capital assets (e.g., furniture and equipment), less any
related debt used to acquire those assets that are still outstanding. Although DeWitt,
Livingston, and Mclean Counties Regional Office of Education #17's investment in its capital
assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's financial position is
the product of several financial transactions including the net results of activities, the acquisition
and disposal of capital assets, and the depreciation of capital assets.
The following table presents a summary of DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's net assets for the fiscal years ended June 30, 2011 and 2010.
Current assets
Capital assets, net of accumulated
depreciation
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Net assets
Invested in capital assets, net of
related debt
Unrestricted
Restricted for educational purposes
Total net assets
Governmental
Activities
$ 2,894,073
441 443
3,335,516
363,965
2 403
366,368
441,443
2,039,078
488,627
$ 2.969.148
24
Business-
Type
Activities
$ 124,860
124.860
2,626
2,626
122,234
$ 122.234
Total
$ 3,018,933
441 443
3.460,376
366,591
2 403
368,994
441,443
2,161,312
488,627
$ 3.091.382
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
Current assets
Capital assets, net of accumulated
depreciation
Total assets
Current liabilities
Net assets
Invested in capital assets, net of
related debt
Unrestricted
Restricted for educational purposes
Total net assets
Governmental
Activities
$ 2,484,534
508,323
2,992,857
170,835
508,323
2,203,708
109,991
$ 2,822,022
Business-
Type
Activities
$ 149,468
149,468
1 157
148,311
$ :148,31:1
Total
$ 2,634,002
508,323
3,142,325
171,992
508,323
2,352,019
109,991
$ 2,9ZQ,333
The largest portion of DeWitt, Livingston, and Mclean Counties Regional Office of Education
#17's net assets is unrestricted. Unrestricted net assets are the part of net assets that can be
used to finance day-to-day operations without constraints established by debt covenants,
enabling legislation or other legal requirements. Unrestricted net assets were $2,161,312 for
the year ended June 30, 2011. In addition, net assets related to the Institute Fund, Education
Fund, and Non-Major Funds are considered restricted for educational purposes.
25
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
Changes in net assets. DeWitt, Livingston, and Mclean Counties Regional Office of Education
#17's total revenue for the fiscal year ended June 30, 2011 was $6,753,464. The total cost of
all programs and services was $6,454,451 . The following table presents a summary of the
changes in net assets for the fiscal years ended June 30, 2011 and 2010.
2011 Business-
Governmental Type
Activities Activities Total
Revenues:
Program revenues
Charges for services $ $ 39,992 $ 39,992
Operating grants and contributions 3,603,200 3,603,200
General revenues
Local sources 2,451,121 2,451,121
State sources 154,661 154,661
On-behalf payments 504,490 504,490
Total revenues 6.713,472 39.992 6,753,464
Expenses:
Instructional services
Salaries and benefits 3,234,839 6,483 3,241,322
Purchased services 1,681,488 27,477 1,708,965
Supplies and materials 220,856 26,370 247,226
Payments to other governments 660,397 8,016 668,413
Other objects 238 238
Depreciation and disposition losses 67,600 67,600
Capital outlay 15,477 720 16,197
Administrative
On-behalf payments 504,490 504,490
Total expenses 6,385,385 69,066 6,454,451
Excess (deficiency) before transfers 328,087 (29,074) 299,013
Other financing sources (uses)
Transfer in 40 3,037 3,077
Transfer out (3,037) (40) (3,077)
Total other financing sources (uses) (2,997) 2 997
Change in net assets 325,090 (26,077) 299,013
Net assets, beginning of year as restated 2,644,058 148 311 2,792,369
Net assets, end of year $ 2,969.148 $ 122,234 $ 3,Q91 ,382
Operating grants and contributions account for 53% of the total revenue. DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17's expenses primarily relate to
instructional services, which account for 92% of the total expenses.
26
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
Revenues:
Program revenues
Charges for services
Operating grants and contributions
General revenues
Local sources
State sources
On-behalf payments
Total revenues
Expenses:
Instructional services
Salaries and benefits
Purchased services
Supplies and materials
Payments to other governments
Other objects
Depreciation and disposition losses
Capital outlay
Administrative
On-behalf payments
Total expenses
Excess before transfers
Other financing sources (uses)
Transfer in
Transfer out
Total other financing sources (uses)
Change in net assets
Net assets, beginning of year
Net assets, end of year
Governmental
Activities
$
3,770,741
2,451,597
319,832
527.943
7.070,113
2,941,955
2,519,797
242,420
117,470
34,959
96,379
393
527.943
6.481.316
588.797
26,430
(66.191)
(39.761)
549,036
2.272,986
$ 2.822,022
Business­Type
Activities
$ 110,611
110611
19,207
30,426
16,328
1,677
67,638
42 973
46,626
(6,865)
39 761
82,734
65,577
$ 148,311
$ 110,611
3,770,741
2,451,597
319,832
527.943
7.180.724
2,961 '162
2,550,223
258,748
117,470
34,959
96,379
2,070
527.943
6.548.954
631.770
73,056
(73.056)
631,770
2,338.563
$ 2,970.333
Operating grants and contributions account for 53% of the total revenue. DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17's expenses primarily relate to
instructional services, which account for 92% of the total expenses.
27
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
Governmental Activities
Revenues for governmental activities were $6,713,472 and $7,070,113 and expenses were
$6,385,385 and $6,481,316 for 2011 and 2010, respectively.
The following tables present the cost of DeWitt, Livingston, and Mclean Counties Regional Office
of Education #17's functional governmental activities. The tables also show each function's net
cost (total cost less charges for services generated by the activities and intergovernmental aid
provided for specific programs). The net cost shows the financial burden that was placed on the
State and DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's residents
by each of these functions.
2011 Total Net (Expenses)
Expenses Revenues
Instructional services:
Salaries and benefits $ 3,234,839 $ (1,230,729)
Purchased services 1,681,488 (638,965)
Supplies and materials 220,856 (83,925)
Payments to other governments 660,397 (250,951)
Other objects 238 (90)
Depreciation 67,600 (67,600)
Capital outlay 15,477 (5,435)
Administrative:
On-behalf payments 504.490 (504.490)
Total expenses $ 6.385.385 $ (2.782.185)
2010 Total Net (Expenses)
Expenses Revenues
Instructional services:
Salaries and benefits $ 2,941,955 $ (1,059,104)
Purchased services 2,519,797 (907,127)
Supplies and materials 242,420 (87,271)
Payments to other governments 117,470 (42,289)
Other objects 34,959 (12,585)
Depreciation 96,379 (96,379)
Capital outlay 393 22,123
Administrative:
On-behalf payments 527.943 (527,943)
Total expenses $ 6.48L3:16 $ (2,Z:l Q,5Z5)
28
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
The cost of all governmental activities was $6,385,385 and $6,481,316 for 2011 and
2010, respectively.
Federal and state governments subsidized certain governmental activities with grants
and contributions of $3,603,200 and $3,770,7 41 for 2011 and 2010, respectively.
Net cost of governmental activities ($2,782, 185), was financed by general revenues, which are
made up of primarily local and state sources ($2,605,782) and on-behalf payments ($504,490)
for 2011.
Net cost of governmental activities ($2, 71 0,575), was financed by general revenues, which are
made up of primarily local and state sources ($2,771 ,429) and on-behalf payments ($527,943)
for 2010.
Business-Type Activities
Revenues for business-type activities were $39,992 and $110,611 and expenses were $69,066
and $67,638 for 2011 and 2010, respectively. DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's business-type activities include the lnservice Fund. Revenues of these
activities were comprised of charges for service.
INDIVIDUAL FUND ANALYSIS
As previously noted, DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
The financial performance of DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17 as a whole is reflected in its governmental funds, as well. As DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17 completed the year, its governmental
funds reported a combined fund balance of $2,260,772, above last year's ending fund balance of
$2,039,416.
Governmental Fund Highlights
The General Fund's fund balance increased from $159,166 in 2010 to $2,041,481 in 2011 mostly
due to fund reclassifications and a net change in fund balance of $337,728.
The Institute Fund's fund balance decreased from $109,991 in 2010 to $100,289 in 2011. The
main reason for the decrease is due to a decrease in certificate registrations and salaries and
benefits charged to the fund in fiscal year 2011.
29
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
The Education Fund's fund balance decreased from $1,720,203 in 2010 to $62,046 in 2011
mostly due to fund reclassifications. The Education Fund is made up of grants that the Regional
Office receives and these can vary greatly from year to year as some programs are discontinued
while others see a funding increase. Over the various programs that make up the fund, total
revenues exceeded expenditures by $64,394.
Proprietary Fund Highlights
lnservice Fund net assets decreased from $148,311 at June 30, 2010 to $122,234 at June 30,
2011. The decrease is attributable to decreased revenues in the current year.
The In service Fund revenues have decreased from fiscal year 2010 to fiscal year 2011 due to
fluctuations in workshops offered and the number of attendees. The lnservice Fund expenses
were consistent from fiscal year 2010 to fiscal year 2011.
BUDGETARY HIGHLIGHTS
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 is not required to
create a budget for overall operations. They are required to prepare budgets for most of the
grants they receive. Over the course of the year, DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17 amended several of the grant budgets within the Education
Fund. Budgets for grant programs are adjusted because of an increase or decrease in funding
due to changes at the State level or to better allocate funds received to meet the needs of the
program.
CAPITAL ASSETS
As of June 30, 2011, DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
had invested $441,443 in capital assets, including furniture and equipment. This amount was
$66,880 lower when compared to 2010. Total depreciation expense for the year was $67,600.
The following schedule presents capital asset balances net of depreciation for the fiscal year
ended June 30, 2011.
Governmental Business-Type
Activities Activities Total
Furniture and equipment $ 78,486 $ $ 78,486
Leasehold improvements 362,957 362,957
$ 44:1,443 $ $ 44:1 443
30
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
The following schedule presents capital asset balances net of depreciation for the fiscal year
ended June 30, 2010.
Governmental Business-Type
Activities Activities Total
Furniture and equipment $ 136,662 $ $ 136,662
Leasehold improvements 371,661 371 661
$ 508,323 ~ $ 508,323
Additional information on DeWitt, Livingston, and Mclean Counties Regional Office of Education
#17's capital assets can be found in Note 8 on pages 65 and 66 of this report.
ECONOMIC FACTORS BEARING ON DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17'S FUTURE
At the time these financial statements were prepared and audited, DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17 was aware of several existing circumstances
that could significantly affect its financial health in the future:
Multiple economic factors continue to provide a negative impact on the financial health of the
DeWitt, Livingston and Mclean Counties Regional Office of Education #17 in the current climate.
Health insurance continues to increase. The prospect of retirement benefit costs being shifted
from the State of Illinois to the employers (Regional Office) is a very real possibility in the next 6
months. General State Aid payments for the Regional Alternative School are likely to be prorated
between 5-10%. Combined, these factors present an uncertain economic future for the Regional
Office of Education #17.
31
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2011
CONTACTING DEWITT, LIVINGSTON, AND MCLEAN COUNTIES REGIONAL OFFICE OF
EDUCATION #17'S FINANCIAL MANAGEMENT
This financial report is designed to provide DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's citizens, taxpayers, and customers with a general overview of DeWitt,
Livingston, and Mclean Counties Regional Office of Education #17's finances and to
demonstrate DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's
accountability for the money it receives. If you have questions about this report or need
additional financial information, contact DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17, 905 N. Main St.- Suite #1, Normal, Illinois 61761.
32
BASIC FINANCIAL STATEMENTS
33
EXHIBIT A
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
STATEMENT OF NET ASSETS
June 30, 2011
Primary Government
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and cash equivalents $ 1,962,028 $ 124,860 $ 2,086,888
Due from other governments 932,045 932,045
Total current assets 2,894,073 124,860 3,018,933
Non-current assets:
Capital assets, being depreciated, net 441,443 441,443
Total assets 3,335,516 124,860 3,460,376
LIABILITIES
Current liabilities:
Accounts payable 1,976 1,976
Accrued expenses 201,062 201,062
Due to other governments 160,927 2,626 163,553
Total current liabilities 363,965 2,626 366,591
Noncurrent liabilities:
Net OPES obligations 2,403 2,403
Total liabilities 366,368 2,626 368,994
NET ASSETS
Investment in capital assets 441,443 441,443
Unrestricted 2,039,078 122,234 2,161,312
Restricted for educational purposes 488,627 488,627
Total net assets $ 2,969,148 $ 122,234 $ 3,091,382
The accompanying notes are an integral part of the financial statements.
34
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES EXHIBIT B
REGIONAL OFFICE OF EDUCATION #17
STATEMENT OF ACTIVITIES
Year Ended June 30, 2011
Net(Expenses)Revenues
Program Revenues and Changes in Net Assets
Operating Primary Government
Charges for Grants and Governmental Business-Type
FUNCTIONS/PROGRAMS Ex(!enses Services Contributions Activities Activities Total
Primary government:
Governmental activities:
Instructional services:
Salaries $ 2,619,502 $ - $ 1,622,601 $ (996,901) $ - $ (996,901)
Employee benefits 615,337 381,509 (233,828) (233,828)
Purchased services 1,681,488 - 1,042,523 (638,965) - (638,965)
Supplies and materials 220,856 - 136,931 (83,925) (83,925)
Payments to other governments 660,397 - 409,446 (250,951) - (250,951)
Other objects 238 - 148 (90) (90)
Depreciation 67,600 - (67,600) (67,600)
Capital outlay 15,477 - 10,042 (5,435) (5,435)
Administrative:
On-behalf payments 504,490 (504,490) - (504,490)
Total governmental activities 6,385,385 3,603,200 (2,782, 185) - (2,782,185)
Business-type activities:
Registration fees 69,066 39,992 (29,074) (29,074)
Total primary government $ 6,454,451 $ 39,992 $ 3,603,200 (2,782, 185) (29,074) (2,811 ,259)
General revenues:
Local sources 2,451,121 - 2,451 '121
State sources 154,661 154,661
On-behalf payments 504,490 504,490
Transfers (2,997) 2,997
Total general revenues and transfers 3,107,275 2,997 3,110,272
CHANGES IN NET ASSETS 325,090 (26,077) 299,013
NET ASSETS, BEGINNING OF YEAR
AS RESTATED 2,644,058 148,311 2,792,369 -
NET ASSETS, END OF YEAR $ 2,969,148 $ 122,234 $ 3,091,382
The accompanying notes are an integral part of the financial statements.
35
EXHIBIT C
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2011
Special Revenue
Other Total
General Institute Education Non major Governmental
Fund Fund Fund Funds Funds
ASSETS
Cash and cash equivalents $ 1,390,229 $ 102,265 $ 411,552 $ 57,982 $ 1,962,028
Due from other governments 366,775 - 565,270 - 932,045
Due from other funds 585,103 - - - 585,103
TOTAL ASSETS $ 2,342,107 $ 102,265 $ 976,822 $ 57,982 $ 3,479,176
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ - $ 1,976 $ $ - $ 1,976
Accrued expenses 200,910 152 - 201,062
Due to other governments 13,836 - 146,065 1,026 160,927
Due to other funds 76,933 508,170 - 585,103
Deferred revenue 8,947 - 260,389 - 269,336
Total liabilities 300,626 1,976 914,776 1,026 1,218,404
FUND BALANCE
Restricted 100,289 290,160 56,956 447,405
Assigned 19,782 - - 19,782
Unassigned 2,021,699 - (228,1 14) - 1,793,585
Total fund balance 2,041,481 100,289 62,046 56,956 2,260,772
TOTAL LIABILITIES AND FUND BALANCE $ 2,342 ,107 $ 102,265 $ 976,822 $ 57,982 $ 3,479,176
The accompanying notes are an integral part of the financial statements.
36
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2011
EXHIBIT D
Total fund balance of governmental funds (page 36) $ 2,260,772
Amounts reported for governmental activities in the
Statement of Net Assets are different because:
Capital assets used in governmental activities are not
financial resources and, therefore, are not reported
in the funds. 441,443
Receivables not collected within 60 days of year end are not
available soon enough to pay for the current period's
expenditures and, therefore, are deferred in the funds. 269,336
The OPEB obligations resulting from annual required contributions
in excess of actual contributions are not due and payable in
the current period and therefore, are not reported in the funds. (2,403)
Net assets of governmental activities (page 34) $ 2,969,1 48
The accompanying notes are an integral part of the financial statements.
37
EXHIBIT E
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
Year Ended June 30,2011
Special Revenue
Other Total
General Institute Education Non major Governmental
Fund Fund Fund Funds Funds
REVENUES:
Local sources $ 1 ,035,121 $ 66,887 $ 1,322,827 $ 26,286 $ 2.451 '121
State sources 1,977,557 958,211 1,546 2,937,314
Federal sources 179,514 645,980 825.494
On-behalf payments 504.490 504.490
Total revenues 3,696,682 66,887 2,927,018 27,832 6,718.419
EXPENDITURES:
Instructional services:
Salaries 1,784,412 17,574 810,913 4,200 2,617,099
Employee benefits 416,393 9,108 189,515 321 615,337
Purchased services 405,089 32.710 1 ,236,119 7,570 1,681,488
Supplies and materials 54,604 4.494 152,997 8,761 220,856
Payments to other governments 179,563 12,703 468,131 660,397
Other objects 158 80 238
On-behalf payments 504,490 504,490
Capital outlay 14,245 1,952 16,197
Total expenditures 3,358,954 76,589 2,859,627 20,932 6,316,102
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 337,728 (9,702) 67,391 6,900 402,317
OTHER FINANCING SOURCES (USES)
Transfer in 40 40
Transfer out (3,037) (3,037)
Total other financing sources (uses) (2,997) (2,997)
NET CHANGE IN FUND BALANCE 337,728 (9,702) 64,394 6,900 399,320
FUND BALANCE, BEGINNING
OF YEAR AS RESTATED 1,703,753 109,991 (2,348) 50,056 1,861.452
FUND BALANCE, END OF YEAR $ 2,041,481 $ 100,289 $ 62,046 $ 56,956 $ 2,260,772
The accompanying notes are an integral part of the financial statements.
38
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
EXHIBIT F
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
Year Ended June 30, 2011
Net change in fund balance (page 38) $ 399,320
Amounts reported for governmental activities in the
Statement of Activities are different because:
Governmental funds report capital outlays as expenditures.
However, in the Statement of Activities the cost of those
assets is allocated over their estimated useful lives and
reported as depreciation expense.
Capital outlay $ 720
Depreciation (67,600) (66,880)
Some receivables will not be collected for several months
after fiscal year end, so they are not considered as
"available" revenues in the governmental funds, and
they are instead counted as deferred revenues. They
are, however, recorded as revenues in the Statement
of Activities. (4,947)
Some expenses in the Statement of Activities do not require
the use of current financial resources and therefore, are
not reported as expenditures in the governmental funds.
These expenses consist of an increase in OPES expense. (2,403)
Change in net assets of governmental activities (page 35) $ 325,090
The accompanying notes are an integral part of the financial statements.
39
ASSETS
Current assets:
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
June 30, 2011
Cash and cash equivalents
LIABILITIES
Current liabilities:
Due to other governments
NET ASSETS
Unrestricted
EXHIBIT G
Business-Type
Activities -
Enterprise Fund
lnservice
$ 124,860
2,626
$ 122,234
The accompanying notes are an integral part of the financial statements.
40
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
EXHIBIT H
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
Year Ended June 30, 2011
OPERATING REVENUES:
Local sources
OPERATING EXPENSES:
Salaries
Employee benefits
Purchased services
Supplies and materials
Payments to other governments
Capital outlay
Total operating expenses
Operating loss before transfers
TRANSFERS:
Transfer in
Transfer out
Total transfers
CHANGE IN NET ASSETS
TOTAL NET ASSETS, BEGINNING OF YEAR
TOTAL NET ASSETS, END OF YEAR
Business-Type
Activities -
Enterprise Fund
lnservice
$
$
39,992
2,950
3,533
27,477
26,370
8,016
720
69,066
(29,074)
3,037
{40)
2,997
(26,077)
148,311
122,234
The accompanying notes are an integral part of the financial statements.
41
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Year Ended June 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from workshops
Payments to suppliers and providers of goods and services
Payments to employees
Net cash used in operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfer from other funds
Transfer to other funds
Net cash provided by noncapital financing activities
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
Reconciliation of operating loss to net cash
used in operating activities:
Operating loss
Adjustments to reconcile operating loss
to net cash provided by operating
activities:
Change in assets and liabilities:
Increase in accounts payable
Net cash used in operating activities
EXHIBIT I
Business-Type
Activities -
Enterprise Fund
lnservice
$
$
$
$
39,992
(61,114)
(6,483)
(27,605)
3,037
{40)
2,997
(24,608)
149,468
124,860
(29,074)
1,469
{27,605)
The accompanying notes are an integral part of the financial statements.
42
ASSETS
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
June 30, 2011
Cash and cash equivalents
Due from other governments
TOTAL ASSETS
LIABILITIES
Due to other governments
EXHIBIT J
Agency
Funds
$ 20,383
315,484
$ 335,867
$ 335,867
The accompanying notes are an integral part of the financial statements.
43
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 is an entity that is
a result of an Educational Service Region becoming a Regional Office of Education as of
August 7, 1995. The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
operates under the School Code (1 05 llCS 5/3 and 5/3A). The Regional Office of Education #17
encompasses DeWitt, Livingston, and Mclean Counties in Illinois. A Regional Superintendent of
Schools serves as chief administrative officer and is elected pursuant to 105 llCS 5/3 and 5/3A of
the School Code. The principal financial duty of the Regional Superintendent is to receive and
distribute monies due to school districts from general state aid, state categorical grants, and
various other sources.
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's reporting entity
includes all related organizations for which the Regional Office of Education #17 exercises
oversight responsibility in accordance with Statement No. 14 of the Governmental Accounting
Standards Board.
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. Further, the superintendent receives an allocation of school funds from the State
Board of Education and apportions these funds to the school districts in accordance with the State
Board of Education's formula.
The Superintendent has developed criteria to determine whether outside agencies with activities
which benefit the citizens served by the Regional Office of Education #17 should be included
within its financial reporting entity. The criteria includes, but is not limited to whether the
Superintendent (1) selects the governing authority or management, (2) has the ability to
significantly influence operations, or (3) has accountability for fiscal matters (i.e., financial budget
approval, management of assets, etc.). The Superintendent has determined that no outside
agency meets the above criteria and, therefore, no agency has been included as a component
unit in the financial statements. In addition, the Superintendent is not aware of any entity which
would exercise such oversight which would result in the Regional Office of Education #17 being
considered a component unit of the entity.
44
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Presentation
Government-wide Financial Statements - The Statement of Net Assets and the Statement of
Activities report information on all of the activities of DeWitt, Livingston, and Mclean Counties
Regional Office of Education #17. For the most part, the effect of interfund activity has been
removed from these statements. Governmental activities are normally supported by
intergovernmental and local revenues.
The Statement of Net Assets presents DeWitt, Livingston, and Mclean Counties Regional Office
of Education #17's nonfiduciary assets and liabilities, with the difference reported as net assets.
Net assets are reported in three categories:
Invested in capital assets, net of related debt consists of capital assets, net of accumulated
depreciation and reduced by outstanding balances for any debt attributable to the acquisition,
construction or improvement of those assets.
Restricted net assets result when constraints placed on net asset use are either externally
imposed or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net assets consist of net assets that do not meet the definition of the two
preceding categories. Unrestricted net assets often have constraints on resources imposed by
management which can be removed or modified.
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 clearly
identifiable with a specific function. Program revenues include 1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges provided by
a given function and 2) grants, contributions and interest restricted to meeting the operational
requirements of a particular function. Other items not properly included among program
revenues are reported instead as general revenues.
Fund Financial Statements - Separate financial statements are provided for governmental
funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the
government-wide financial statements. Major individual governmental funds and major
individual enterprise funds are reported as separate columns in the fund financial statements.
Nonmajor funds are consolidated into a single column within the governmental funds in the
financial section of the basic financial statements and are detailed in the supplemental
information.
45
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DeWitt, Livingston, and McLean Counties Regional Office of Education #17 reports the following
major governmental funds:
The General Fund is the operating fund of the DeWitt, Livingston, and McLean Counties
Regional Office of Education #17. The General Fund accounts for all financial resources
except those required to be accounted and reported for in another fund. The following
funds are the general funds of the DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17.
County Fund -this fund accounts for DeWitt, Livingston, and Mclean Counties support
which helps fund the operation of the Regional Office of Education #17.
Indirect Cost and Interest Fund - this fund accounts for indirect cost allowed by the
Adult Education Grants.
Regional Safe Schools - these are alternative programs for disruptive youths in grades
6-12. Students eligible for this program must have been suspended or expelled by a
local school district.
Regional Alternative School - this is a state-wide program leading to a high school
diploma for students with truancy and discipline problems.
Penny Severns Grant - this is a summer program designed to serve 30 families with
children aged 6 weeks to 12 years who are currently enrolled in English as a second
language. The families are assisted with reading, writing, and parenting skills.
Partnering No Child Left Behind (NCLB) - this program provides schools within the
region with online resources for the use of the students.
Induction Leadership - this program develops educational materials that support a
statewide program based on the Illinois State Board of Education initiative "Induction
and Mentoring for Education Administrators".
Implementing Math - this program integrates Mathematics Performance Descriptors
and Classroom Assessment into the classroom, as well as, preparing training
materials for statewide workshops.
Chestnut - this is a contract with a local drug/alcohol rehabilitation center for GED
preparation services.
Donations Literacy lnservice - this program is funded by corporate and private sources
to facilitate learning projects in literacy, GED, and English as a Second Language
classes.
46
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Youthbuild - this program is funded by local organizations dedicated to rehabilitation,
education, and development of job skills for students.
Youth Impact - this program is a cooperative between the cities of Normal,
Bloomington, and Mclean County to prevent and assist individuals in staying away
from gang activity.
Scoop Dreams GED - Scoop Dreams, an ice cream parlor, contracts with the Adult
Education Department of the Regional Office of Education #17 to provide GED
preparation for students.
Ross Grant - this program provides adult education classes in public housing facilities,
which may include transportation and childcare for housing residents while taking
classes.
Good Neighbor Program - State Farm Companies Foundation provides financial
support to our STAR Literacy to enhance volunteer efforts in the community.
Reluctant Learner - this hands-on training engages educators by showing them how to
use the entire Internet to search lesson plan databases, directories, and search
engines to quickly and systematically capture lesson plans that will motivate their
students.
Illinois Educators' Roundtable - this program is for a group of superintendents to meet
on emerging issues affecting the education system.
EIU Cohort - this program provides a three semester hour graduate course to teachers
in an agreement with Eastern Illinois University.
College Credit - this program provides professional development through colleges.
ISU Cohort - this program serves as a fiscal agent for classes in agreement with Illinois
State University.
Major Special Revenue Funds - Special Revenue Funds are used to account for and
report the proceeds of specific revenue sources (other than fiduciary or major capital
projects) that are restricted to expenditures for specified purposes. Major special revenue
funds include the following:
47
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Institute Fund - this fund accounts for teacher certificate registration, issuance, and
evaluation fees for processing certificates, and expenses of meetings of a professional
nature. All funds generated remain restricted until expended only on the aforementioned
activities.
Education Fund - to account for State and Federal grant monies received for, and
payment of, administering numerous grant awards which include:
Department of Rehabilitation Services (D.O.R.S.) Program Step Grant- this program
is for severely handicapped students making the transition from high school to the
work place.
Secretary of State's Literacy Grant - this program supports literacy activities from the
Secretary of State.
Truants Alternative/Optional Education - this program assists in prevention of truancy
within the Alternative School.
Adult Education Programs - this program is funded by the Illinois Community College
Board to assist individuals with literacy, GED prep, and English as a Second Language
classes.
SOS Family Literacy - this program serves parents and their children ages 0 to 5 who
are enrolled in Evenstart or Heartland Head Start to provide activities that encourage
literacy development and enable parents to be their child's first and best teacher
through workshops, field trips, and a partnership with the public libraries to provide
activities.
ROE/ISC School Improvement - this program provides training and reading workshops
for local teachers.
Early Childhood Block Grant - this program offers intensive home visits, drop in and
play sessions, parent education, hospital consultations, and referrals for at risk
children.
Evenstart Family Literacy - this program provides early childhood education, adult
English as a Second Language education, parenting and parent-child interactions for
low income and limited English speaking families with children aged 6 weeks to 3
years.
English Language Civics Grant - this program provides immigrants and other limited
English proficient persons with skills to understand and navigate governmental
workplace systems and key institutions, such as banking and healthcare.
48
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Illinois Violence Prevention Authority - this program assists in prevention of domestic
violence.
Title I - Reading First - SEA Part B - this program assists K-2 teachers with
professional development and the 5 essential components of early reading instruction.
Continuum of Care - this program assists participants in obtaining and remaining in
permanent housing.
Heart of Illinois Low Incidence - this program promotes, establishes, and maintains
comprehensive special education services for children with hearing, vision, and
physical disabilities.
ROE/ISC Operations Fund - this fund accounts for the State grant that provides the
funding for the Regional Office of Education #17.
Title I Neglect - this program provides a teacher for the Juvenile Detention Center for
GED preparation classes.
Illinois Reading Grant- this program provides standards aligned for reading teachers.
Standards Aligned Classroom - this program provides standards aligned classroom
initiatives, coaching, and support teams.
Title II Teacher Quality- this program provides teacher workshops.
Teacher Mentoring- this program is used for new teacher training.
Manufacturing Innovation - this program provides assistance to students who need
increased basic skills to pass the entrance test to enter Manufacturing Essentials at
Heartland Community College.
Title I Migrant Education - this program assists with the educational needs for the
agricultural migrant population in the region for the summer.
Respro Title I - this program assists local school districts with school improvement
planning and activities related to Title I instruction.
Gifted Education - this program provides professional development for teachers in the
gifted areas.
Principal Mentoring - this program provides mentoring for new principals.
SCORE United Way- this program provides assistance jo students from United Way.
49
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
HUD Technology Grant - this grant is for technology purposes with the City of
Bloomington.
McKinney Homeless Grant - this program assists with the federal requirement to
provide support to homeless students and their families to remove barriers to attending
school while displaced.
Transitional Specialist - this program is administered by Illinois Department of Human
Services to provide support for Individualized Education Plan (IEP) students to
transition from high school to higher education and/or adult employment.
Illinois Children's Healthcare Foundation - this program provides resources to
overcome barriers to address children's mental health issues.
American Recovery and Reinvestment Act (ARRA) - Title I School Improvement -
allocations utilized specifically to assist low-performing schools/districts to increase
student achievement through school improvement activities.
The Regional Office of Education #17 reports the following non major governmental funds:
Nonmajor Special Revenue Funds - Special Revenue Funds are used to account for and report
the proceeds of specific revenue sources (other than fiduciary or major capital projects) that are
legally restricted to expenditures for specified purposes. Nonmajor special revenue funds
include the following:
Bus Driver Training - this fund accounts for State and local receipts and expenses as a
result of training school district bus drivers.
General Education Development - this fund accounts for the receipts and expenses
pertaining to the GED/High School Equivalency program for high school dropouts.
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.
The Regional Office of Education #17 reports the following major proprietary fund:
Proprietary funds are those in which revenues and expenses related to services provided to
organizations inside the Regional Office of Education #17 on a cost reimbursement basis are
reported.
lnservice - used to account for the workshop fees and expenses of the Regional Office of
Education #17.
50
DEWITI, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Regional Office of Education #17 also reports the following agency funds:
Agency Funds are used to account for assets held by the Regional Office of Education #17 in a
trustee capacity or as an agent for individuals, private organizations, other governmental units,
and/or other funds. Agency funds are custodial in nature (assets equal liabilities) and do not
involve measurement of results of operations. Agency funds include the following:
Distributive - this fund distributes money received from the State out to the school districts
and other entities.
Regional Board of School Trustees - this fund accounts for the Regional Office of
Education's operating accounts.
Cooperative Purchasing - this fund is used to purchase paper and supplies in quantity as a
single unit by participating schools in the Regional Office of Education #17.
The school district boards within the Regional Office of Education #17 have signed formal
agreements that allow the Regional Office of Education #17 to retain any interest earned during
the year.
Measurement Focus and Basis of Accounting
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when earned
and expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been satisfied.
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 after year end. 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.
Intergovernmental revenues (shared revenues, grants and reimbursements from other
governments) and interest associated with the current fiscal period are all considered to be
susceptible to accrual. All other revenue items are considered to be measurable and available
only when cash is received by the DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17.
51
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 records on-behalf
payments made by the State to the Teachers' Retirement System as revenue and
expenditures.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
Capital asset acquisitions are reported as expenditures in governmental funds.
Under the terms of grant agreements, DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17 funds certain programs by a combination of specific cost­reimbursement
grants and general revenues. Thus, when program expenses are incurred,
there are both restricted and unrestricted funding sources available to finance the program. It is
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's policy to first
apply cost-reimbursement grant resources to such programs, and then general revenues. It is
the. Regional Office of Education #17's policy to first apply restricted funds, then unrestricted.
For unrestricted fund balance, committed funds are used first, then assigned funds, then
unassigned if any.
Proprietary funds distinguish operating revenues and expenses from non-operating 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 of the DeWitt, Livingston, and Mclean Counties Regional Office of
Education #17's enterprise fund are charges to customers for sales and services. Operating
expenses for enterprise funds include the cost of sales and services, administrative expenses,
and depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as non-operating revenues and expenses.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 maintains its
financial records on the cash basis. The financial statements of DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17 are prepared by making memorandum
adjusting entries to the cash basis financial records.
Assets, Liabilities and Fund Equity
The following accounting policies are followed in preparing the balance sheet:
Cash and investments - The cash and investment balances of DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17 are valued at cost.
For purposes of the Statement of Cash Flows, all short-term cash investments that are
highly liquid are considered to be cash equivalents. Cash equivalents are readily
convertible to known amounts of cash and, at the day of purchase, have a maturity date
no longer than three months.
52
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Due from other governments - Due from other governments represents amounts due
from the Illinois State Board of Education and other local governments.
Capital assets - Capital assets, which include property, furniture and equipment, are
reported in the government-wide Statement of Net Assets. Capital assets are recorded
at historical cost. Donated capital assets are recorded at estimated fair market value at
the date of donation. The costs of normal maintenance and repair that do not add to the
value of the asset or materially extend asset lives are not capitalized. Capital assets are
defined by DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
as assets with an initial, individual cost in excess of $500 and estimated useful lives in
excess of two years. Capital assets are depreciated using the straight line method over
3-50 years.
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 reviews
long-lived assets for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future
undiscounted net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the assets exceeds the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
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 of
vacation days may never exceed 30 days. In the event that a program terminates, no
vacation days will be honored past the ending date of the program. Certified employees
who work less than 12 calendar months per year do not earn vacation days. 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. There are no material accumulations of sick pay or vacation pay
at June 30, 2011 .
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:
Nonspendab/e 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 currently no funds with nonspendable fund balances.
53
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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: D.O.R.S. Program Step
Grant, SOS Family Literacy, ROE/ISC School Improvement, English Language
Civics Grant, Illinois Violence Prevention Authority, Heart of Illinois Low Incidence,
ROE/ISC Operations Fund, Title I Neglect, Illinois Reading Grant, Standards Aligned
Classroom, Manufacturing Innovation, and SCORE United Way. The following
funds are restricted by Illinois Statute: Institute Fund, Bus Driver Training, General
Education Development, and Supervisory.
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 currently no funds with 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 Illinois
Educators' Roundtable fund balance is currently assigned.
Unassigned Fund Balance - available expendable financial resources in a
governmental fund that are not designated for a specific purpose. The following
accounts comprise unassigned fund balance: County Fund, Indirect Cost and
Interest Fund, Regional Safe Schools, Regional Alternative School, Penny Severns
Grant, Partnering NCLB, Induction Leadership, Implementing Math, Chestnut,
Donations Literacy lnservice, Youthbuild, Youth Impact, Scoop Dreams GED, Ross
Grant, State Farm Grants, Reluctant Learner, EIU Cohort, College Credit, ISU
Cohort, Secretary of State's Literacy Grant, Truants Alternative/Optional Education,
Adult Education Programs, Early Childhood Block Grant, Evenstart Family Literacy,
Title I - Reading First- SEA Part B, Continuum of Care, Teacher Mentoring, Title I
Migrant Education, Gifted Education, Principal Mentoring, HUD Technology Grant,
McKinney Homeless Grant, Transitional Specialist, Illinois Children's Healthcare
Foundation, and ARRA Title I - School Improvement.
Net assets present the difference between assets and liabilities in the Statement of Net
Assets. Net assets of the Regional Office of Education are classified as follows:
Invested in Capital Assets - represents the Regional Office of Education's total
investment in capital assets.
Restricted Net Assets - represents net assets that are restricted due to constraints
placed on the net asset use that are either externally imposed by creditors, grantors,
contributors, or laws and regulations of other governments or imposed by law
through constitutional provisions or enabling legislation.
54
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Unrestricted Net Assets - represents resources used for transactions relating to the
general operations of the Regional Office of Education and may be used at the
discretion of management to meet expenses for any purpose.
Budgets and Budgetary Accounting
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 prepares a
budget for each of its grants and for the support it receives from its three counties. Some of these
budgets cover different periods than the Regional Office of Education #17's fiscal year.
The DeWitt, Livingston, and Mclean Counties Regional Office of Education #17's accounting
records must be sophisticated enough to both (1) assure and demonstrate compliance with each
budget during the period it covers and (2) also permit the reporting of the financial position and
results of operations of each fund and fund type in GAAP financial statements covering its fiscal
year.
Budgetary comparisons and budgetary compliance are discussed in Note 7 - Budgetary
Comparisons and Budgetary Compliance.
Subsequent Events
Management has evaluated subsequent events through April 17, 2012, the date the financial
statements were available to be issued.
NOTE 2- CASH AND CASH EQUIVALENTS
The deposit of DeWitt, Livingston, and Mclean Counties Regional Office of Education #17
monies is governed by the provisions of the Illinois Compiled Statutes.
Deposits
At June 30, 2011, the carrying amount of DeWitt, Livingston, and Mclean Counties Regional
Office of Education #17's deposits was $2,107,271 and the bank balance was $2,900,481.
Custodial Credit Risk - Custodial credit risk is the risk that in the event of a bank failure, DeWitt,
Livingston, and Mclean Counties Regional Office of Education #17's deposits may not be
returned. DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 does not
have a deposit policy for custodial credit risk. As of June 30, 2011, all of DeWitt, Livingston, and
Mclean Counties Regional Office of Education #17's deposits were covered by FDIC insurance
or covered by collateral held by the financial institution in DeWitt, Livingston, and Mclean
Counties Regional Office of Education #17's name.
55
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 2- CASH AND CASH EQUIVALENTS (CONTINUED)
A reconciliation of cash as shown on the Statement of Net Assets for the primary government is
as follows:
Cash - Primary Government
Cash - Agency
Total
NOTE 3- ON-BEHALF PAYMENTS
Carrying
Amount
$ 2,086,888
20,383
$ 2.107.271
The salaries and fringe benefits of the Regional Superintendent and the Assistant Regional
Superintendent are paid by the State of Illinois.
The breakdown of on-behalf payments for the year ended June 30, 2011 is as follows:
Regional Superintendent - salary $ 100,762
Regional Superintendent - benefits
(includes state paid insurance) 16,345
Assistant Regional Superintendent - salary 90,686
Assistant Regional Superintendent - benefits
(includes state paid insurance) 25,008
TRS on-behalf payments 263,342
THIS on-behalf payments 8 347
Total on-behalf payments $ 504,490
Salary and benefit data for the Regional Superintendent and the Assistant Regional
Superintendent was calculated based on data provided by the Illinois State Board of Education.
NOTE 4- EMPLOYEE BENEFIT PLAN
The Regional Office of Education #17's employees are covered under the Illinois Municipal
Retirement Fund. Contributions to the Fund are made by DeWitt, Livingston, and Mclean
Counties and the Regional Office of Education #17 through grant monies on behalf of the
DeWitt, Livingston, and Mclean Counties Regional Office of Education staff employees and
grant coordinators.
56
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 4- EMPLOYEE BENEFIT PLAN (CONTINUED)
DeWitt, Livingston, and Mclean Counties are participating members of the Illinois Municipal
Retirement Fund whose coverage includes all Regional Office of Education #17 employees
who:
a. Occupy a job normally requiring 1 ,000 hours or more per year;
b. are paid on a regular payroll from County or Regional Office of Education #17 funds;
c. were under age sixty when first entering employment; and
d. are not covered by another State created retirement system for the same service.
Employees not qualifying above are considered as "nonparticipating employees" and are
covered under Social Security.
The Superintendent of DeWitt, Livingston, and Mclean Counties Regional Office of Education
#17 is paid by the State of Illinois. Certain staff employees of the Regional Office of Education
#17's office are employed and paid by DeWitt, Livingston, and Mclean Counties (other support
staff and grant coordinators are paid by the Region through grant monies). DeWitt, Livingston,
and Mclean Counties Regional Office of Education #17 has no separate employee benefit
plan.
Illinois Municipal Retirement Fund
Plan Description. The Regional Office of Education #17'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 #17's plan
is affiliated with the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer plan.
Benefit provisions are established by statute and may only be changed by the General
Assembly of the State of Illinois. IMRF issues a publicly available financial report that includes
financial statements and required supplementary information. That report may be obtained on­line
at www.imrf.org.
Funding Policy. As set by statute, the Regional Office of Education #17'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 contribution rate for
calendar year 2010 used by Regional Office of Education #17 was 12.82 percent of annual
covered payroll. The Regional Office of Education #17's annual required contribution rate for
calendar year 2010 was 13.05 percent. The Regional Office of Education #17 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. For calendar year ending December 31, 2010, the Regional Office of
Education #17's actual contributions for pension cost for the Regular plan were $159,902. Its
required contribution for calendar year 2010 was $162,771.
57
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 4- EMPLOYEE BENEFIT PLAN (CONTINUED)
THREE YEAR TREND INFORMATION FOR THE REGULAR PLAN
Calendar Percentage
Year Annual Pension ofAPC Net Pension
Ending Cost {APC} Contributed Obligation
12/31/10 $ 162,771 98% $ 2,869
12/31/09 125,709 100%
12/31/08 110,800 100%
The required contribution for 2010 was determined as part of the December 31 , 2008, actuarial
valuation using the entry age normal actuarial cost method. The actuarial assumptions at
December 31, 2008, included (a) 7.5 percent investment rate of return (net of administrative
and direct investment expenses), (b) projected salary increases of 4.00% a year, attributable to
inflation, (c) additional projected salary increases ranging from 0.4% to 10% per year
depending on age and service, attributable to seniority/merit, and (d) post retirement benefit
increases of 3% annually. The actuarial value of the Regional Office of Education #17'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% corridor between
the actuarial and market value of assets. The Regional Office of Education #17's Regular plan's
unfunded actuarial accrued liability at December 31, 2008 is being amortized as a level
percentage of projected payroll on an open 10 year basis.
Funded Status and Funding Progress. As of December 31, 2010, the most recent actuarial
valuation date, the Regular plan was 66.7 4 percent funded. The actuarial accrued liability for
benefits was $2,440,889 and the actuarial value of assets was $1,629,018, resulting in an
underfunded actuarial accrued liability (UAAL) of $811,871. The covered payroll for calendar
year 2010 (annual payroll of active employees covered by the plan) was $1,247,286 and the
ratio of the UAAL to the covered payroll was 65 percent.
The schedule of funding progress, presented as RSI following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
NOTE 5 - RETIREMENT PLANS
Teachers' Retirement System of the State of Illinois
The Regional Office of Education #17 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.
58
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 5- RETIREMENT PLANS (CONTINUED)
The Illinois Pension Code outlines the benefit provisions of TRS, and amendments to the plan
can be made only by legislative action with the Governor's approval. The state of Illinois
maintains primary responsibility for funding the plan, but contributions from participating
employers and members are also required. The TRS Board of Trustees is responsible for the
system's administration.
TRS members include all active 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 Jan. 1, 2011,
the effective date of the benefit changes contained in Public Act 96-0889. These contributions,
which may be paid on behalf of employees by the employer, are submitted to TRS by the
employer. The active member contribution rate was also 9.4 percent for the years ended June
30, 2010 and 2009.
The state of Illinois makes contributions directly to TRS on behalf of the Regional Office of
Education #17's TRS-covered employees.
• On-behalf Contributions. The state of Illinois makes employer pension contributions on
behalf of the Regional Office of Education #17. For the year ended June 30, 2011, the
state of Illinois contributions were based on 23.10 percent of creditable earnings not paid
from federal funds and the Regional Office of Education #17 recognized revenue and
expenditures of $263,342 in pension contributions that the state of Illinois paid directly to
TRS. For the years ended June 30, 2010 and June 30, 2009 the state of Illinois contribution
rates as percentages of creditable earnings not paid from federal funds were 23.38 percent
($283,985) and 17.08 percent ($211 ,803), respectively.
DeWitt, Livingston, and Mclean Counties Regional Office of Education #17 makes other types
of employer contributions directly to TRS.
• 2.2 Formula Contributions. Employers contribute 0.58 percent of creditable earnings for
the 2.2 formula change. This rate is specified by statute. Contributions for the year ended
June 30, 2011 were $5,502. Contributions for the years ending June 30, 2010 and
June 30, 2009 were $5,935 and $7,192, 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 #17, there
is a statutory requirement for the Regional Office of Education #17 to pay an employer
pension contribution from those funds. Under a policy adopted by the TRS Board of
Trustees that was first effective in the fiscal year ended June 30, 2006, employer
contributions for employees paid from federal and special trust funds will be the same as
the state contribution rate for TRS.
59
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 5- RETIREMENT PLANS (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 23.38 and 17.08 percent of salaries paid from
federal and special trust funds, respectively. For the year ended June 30, 2011, there
were no salaries eligible for federal and special trust funds contributions for employees.
For the years ended June 30, 2010 and June 30, 2009, required employer contributions
were $0 and $33,265, respectively.
• Early Retirement Option. The Regional Office of Education #17 is also required to make
one-time employer contributions to TRS for members retiring under the Early Retirement
Option (ERO). The payments vary depending on the age and salary of the member. The
maximum employer ERO contribution is 117.5 percent and applies when the member is age
55 at retirement. For the years ended June 30, 2011, June 30, 2010 and June 30, 2009,
the Regional Office Education #17 paid no ERO contributions.
• 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 years ended June 30, 2011, June 30, 2010, and June 30, 2009, the Regional
Office of Education #17 did not make any contributions to TRS for 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 final average salary, and the TRS total normal cost rate
( 18.03 percent of salary during the year ended June 30, 2011, as recertified pursuant to
Public Act 96-1511 ). For the years ended June 30, 2011, June 30, 2010, and June 30,
2009, the Regional Office of Education #17 did not make any contributions to TRS for sick
leave days granted in excess of the normal annual allotment.
TRS financial information, an explanation of TRS benefits, and descriptions of member,
employer and state funding requirements can be found in the TRS Comprehensive Annual
Financial Report for 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, 2815 West Washington Street, P.O. Box 19253, Springfield, IL 62794-9253. The most
current report is also available on the TRS Web site at http://trs.illinois.gov.
60
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 6 - OTHER POSTEMPLOYMENT BENEFITS
Plan Description
The Regional Office of Education #17 provides postemployment health care benefits (OPEB)
for eligible retired employees through a single employer defined benefit plan. The benefits,
benefit levels, employee contributions and employer contributions are governed by the Regional
Office of Education #17 and can be amended by the Regional Office of Education #17 through
its personnel manual, except for the implicit subsidy which is governed by the State Legislature
and Illinois Compiled Statutes (ILCS). The plan is not accounted for as a trust fund, as an
irrevocable trust has not been established to account for the plan. The plan does not issue a
separate report. The activity of the plan is reported in the Regional Office of Education #17's
governmental funds.
Benefits Provided
The Regional Office of Education #17 provides continued health insurance coverage at the
blended employer rate to all eligible retirees in accordance with Illinois Compiled Statutes,
which creates an implicit subsidy of retiree health insurance. To be eligible for benefits, an
employee must qualify for retirement under the Regional Office of Education #17 retirement
plan. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and
the retiree is no longer eligible to participate in the plan, but can purchase a Medicare
supplement plan from the Regional Office of Education #17 insurance provider.
Membership
At June 1, 2011, membership consisted of:
Retirees and Beneficiaries Currently Receiving Benefits
Terminated Employees Entitled
to Benefits but not yet Receiving Them
Active Employees
Total
Participating Employers
Funding Policy
1
38
39
1
The Regional Office of Education #17 is not required to and currently does not advance fund
the cost of benefits that will become due and payable in the future. Active employees do not
contribute to the plan until retirement.
61
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 6- OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
Annual OPEB Costs and Net OPEB Obligation
The Regional Office of Education #17 first had an actuarial valuation performed for the plan as
of June 30, 2011 to determine the funded status of the plan as of that date as well as the
employer's annual required contribution (ARC) for the fiscal year ended June 30, 2011. The
Regional Office of Education #17's annual OPEB cost (expense) of $9,854 was equal to the
ARC for the fiscal year, as the transition liability was set at zero as of June 30, 2010. The
Regional Office of Education #17's annual OPEB cost, the percentage of annual OPEB cost
contributed to the plan and the net OPEB obligation for fiscal year 2011 was as follows
(information for the two preceding years is not available as an actuarial valuation was
performed for the first time as of June 30, 2011 ):
Fiscal Percentage of
Year
Ended
Annual
OPEB
Cost
Employer Annual OPEB
Contributions Cost Contributed
June 30, 2011 $
Annual Required Contribution
Annual OPES Cost
Contributions Made
9,854 $
Increase in Net OPEB Obligation
Net OPES Obligation Beginning of Year
Net OPEB Obligation End of Year
Funded Status and Funding Progress
75.6%
The funded status of the plan as of June 30, 2011, was as follows:
Actuarial Accrued Liabilitiy (AAL)
Actuarial Value of Plan Assets
Unfunded Actuarial Accrued Liability (UAAL)
Funded Ratio (Actuarial Value of Plan Assets/AAL)
Covered Payroll (Active Plan Members)
UAAL as a Percentage of Covered Payroll
62
$
Net OPES
Obligation
2,403
$ 9,854
9,854
(7.451)
2,403
$ 2.403
$125,262
125,262
0.0%
$3,253,278
3.9%
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 6 - OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and the annual required contributions of the
employer are subject to continual revision as actual results are compared with past
expectations and new estimates are made about the future. The schedule of funding progress,
presented as required supplementary information following the notes to the financial
statements, presents multi-year trend information that shows whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for
benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The actuarial methods and
assumptions used include techniques that are designed to reduce short-term volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term
perspective of the calculations.
In the June 30, 2011, actuarial valuation, the unit credit cost method was used. The actuarial
assumptions included a discount rate of 5.00% and an initial healthcare cost trend rate of
8.00% with a ultimate healthcare inflation rate of 6.00% increase for 2015 and later years. Both
rates include a 3.00% inflation assumption. The actuarial value of assets was not determined
as the Regional Office of Education #17 has not advance funded its obligation. The plan's
unfunded actuarial accrued liability is being amortized using a closed, level dollar method. The
remaining amortization period at June 30, 2011 was 30 years.
Teachers Health Insurance Security Fund
The Regional Office of Education #17 participates in the Teacher Health Insurance Security
(THIS) Fund, a cost-sharing, multiple-employer defined benefit postemployment healthcare plan
that was established by the Illinois legislature for the benefit of Illinois public school teachers
employed outside the city of Chicago. The THIS Fund provides medical, prescription, and
behavioral health benefits, but 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.
63
DEWITT, LIVINGSTON, AND MCLEAN COUNTIES
REGIONAL OFFICE OF EDUCATION #17
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 6 - OTHER POSTEMPLOYMENT BENEFITS (CONTINUED)
The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions
of THIS Fund and amendments to the plan can be made only by legislative action with the
Governor's approval. The Illinois Department of Healthcare and Family Services (HFS) and the
Illinois Department of Central Management Services (CMS) administer the plan with the
cooperation of TRS. The director of HFS determines the rates and premiums for annuitants
and dependent beneficiaries and establishes the cost-sharing parameters. Section 6.6 of the
State Employees Group Insurance Act of 1971 requires all active contributors to the TRS who
are not employees of the state make a contribution to THIS Fund.
The percentage of employer required contributions in the future will be determined by the
director of Healthcare and Family Services and will not exceed 105 percent of the percentage of
salary actually requir