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ROCKY MOUNTAIN ACADEMY OF EVERGREEN

BASIC FINANCIAL STATEMENTS

June 30, 2011

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TABLE OF CONTENTS

PAGE

INTRODUCTORY SECTION

Title Page

Table of Contents

FINANCIAL SECTION

Independent Auditors Report

Managements Discussion and Analysis i - iii

Basic Financial Statements

Statement of Net Assets 1

Statement of Activities 2

Balance Sheet Governmental Funds 3

Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 4

Reconciliation of the Statement of Revenues, Expenditures and Changes

in Fund Balances of Governmental Funds to the Statement ofActivities 5

Notes to the Financial Statements 6 16

Required Supplementary Information

Budgetary Comparison Schedule General Fund 17

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FINANCIAL SECTION

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60017TH STREET SUITE 2800SOUTH DENVER,COLORADO 80202TEL303.634.2259FAX 303.496.4631

Board of DirectorsRocky Mountain Academy of EvergreenEvergreen, Colorado

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying financial statements of the governmental activities and each major fund of RockyMountain Academy of Evergreen, component unit of Jefferson County School District No. R-1, as of and for the yearended June 30, 2011, which collectively comprise the basic financial statements of the Academy, as listed in the tableof contents. These financial statements are the responsibility of Rocky Mountain Academy of Evergreensmanagement. 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.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statementpresentation. 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 respectivefinancial position of the governmental activities and each major fund of Rocky Mountain Academy of Evergreen, asof June 30, 2011, and the respective changes in financial position for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

The managements discussion and analysis and required supplementary information listed in the table of contents arenot a required part of the basic financial statements but is supplementary information required by the GovernmentalAccounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods of measurement and presentation of the supplementary information. However,we did not audit the information and express no opinion on it.

April 3, 2012

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Managements Discussion and analysis (MD&A)Required Supplementary Information (RSI)

June 30, 2011

The Subsequent Management Discussion and Analysis (MD&A) of Rocky MountainAcademy of Evergreen Financial performance provides an overall review of financialactivities for the fiscal year ended June 30, 2011. The intent of this narrative overviewand analysis is to review the schools financial performance as a whole.

FINANCIAL HIGHLIGHTS

The period from July 1, 2010 through June 30, 2011 is the tenth year of Rocky MountainAcademy of Evergreen. As of June 30, 2011, net assets are $200,788. Basic schooloperations are primarily supported by funding provided in the Colorado State SchoolFinance Act. Per Pupil revenue for the year July 1, 2010 June 30, 2011 was $2,147,761.

Overview of Financial Statements

This financial review is intended to serve as an introduction to Rocky MountainAcademy of Evergreen basic financial statements. The basic statements are comprised ofthree components: 1) government-wide financial statements, 2) fund financial statements,and 3) notes to the financial statements.

Government wide Financial Statements

Government-wide financial statements are prepared to provide interested parties with a

broad overview of the schools financial reporting in similar format to private-sectorbusiness. The statement of net assets presents information related to assets and liabilitiesand remaining assessment of financial value. With historical data, increases or decreasesin net assets may serve as a useful indicator of whether the financial position of theschool is improving or deteriorating.

Fund Financial Statements

A fund is a grouping of related activities that is used to maintain control over resourcesthat have been segregated for specific activities or objectives, as designated by ColoradoState Statute. Rocky Mountain Academy of Evergreen monitors these funds to ensure and

demonstrate compliance with finance-related legal requirements.

Rocky Mountain Academy of Evergreen adopts an annual budget for the general fund. Abudgetary comparison has been provided for the general fund to demonstrate compliancewith this budget as part of the required supplementary information included in the auditedfinancial statements.

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Governmental-wide Financial Analysis

For the year ending June 30, 2011, the net assets of Rocky Mountain Academy ofEvergreen totaled $200,788.

Table I: Net Assets

2011 Activities

ASSETS

Capital Assets, Net 4,038,226

Other Assets 1,395,144

Total Assets 5,433,370

LIABILITIES

Long Term Liabilities 5,007,414Other Liabilities 225,168

Total Liabilities 5,232,582

NET ASSETS

Invested in Capital Assets (299,982)

Restricted for Debt Service

Restricted for Capital Purposes

Restricted for Emergencies 81,967

Unrestricted 418,803

TOTAL NET 200,788

Table II: Changes in Net Assets

2011

REVENUES

General Revenues

Per Pupil Revenue 2,147,761

Capital Construction Funding 33,242

Grants 451,513

Investment Earnings 4,881

Mill Levy Override 32,091

Charges for Services 449,529

TOTAL REVENUE 3,119,017

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iii

EXPENSES

Instruction 1,197,624

Supporting Services1,629,092

Interest on Long Term Debt 331,915

TOTAL EXPENDITURES 3,158,631

Changes in Net Assets (39,614)

Net Assets, Beginning 240,402

Net Assets, Ending 200,788

Fund Financial Statements

General Fund

Income Total gross revenue for the period of July 1, 2010 June 30, 2011 was$2,452,542. The majority of income was received in the form of Per Pupil Revenue

allocated to Rocky Mountain Academy of Evergreen from the state of Colorado throughthe charter authorizer Jefferson County School District. Donations were received throughParent Teacher organization and other parent donations in the amount of $98,827.

Expenditures Total expenditures for the period of July 1, 2010 June 30, 2011 were$2,566,634. Salaries were $1,674,403 benefits were $248,906, purchased/contractedservices were $567,766, and materials and supplies were $75,559.

Economic Factors and Next Years Budget

The primary factor driving the budget for the school is student enrollment. Enrollment for

the 11-12 school year October count is 347. Student growth, facility costs and additionalconsiderations specific to the school were all considered in the strategic 5 year budgetingprocess for the 2011/12 2014-2015.

Request for Information

The financial report is designed to provide a general overview of Rocky MountainAcademy of Evergreens finances for all those with an interest in the school. Questionsconcerning any of the information provided in this report or requests for additionalinformation should be addressed to:

Rocky Mountain Academy of Evergreen2959 Royale Elk WayEvergreen, CO 80439

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BASIC FINANCIAL STATEMENTS

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ActivitiesASSETS

Cash and Investments 476,700$

Restricted Cash and Investments 751,173

Accounts Receivable 3,409

Bond Issue Costs 163,862

Capital Assets, Not Depreciated 79,925

Capital Assets, Depreciated, Net of Accumulated Depreciation 3,958,301

TOTAL ASSETS 5,433,370

LIABILITIES

Accounts Payable 1,487Accrued Salaries 137,170

Accrued Interest 58,664

Deferred Revenues 27,847

Noncurrent Liabilities

Due in One Year -

Due in More Than One Year 5,007,414

TOTAL LIABILITIES 5,232,582

NET ASSETS

Invested in Capital Assets, Net of Related Debt (299,982)

Restricted for Emergencies 81,967

Unrestricted 418,803

TOTAL NET ASSETS 200,788$

Governmental


STATEMENT OF NET ASSETS

As of June 30, 2011

The accompanying notes are an integral part of the financial statements.

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Revenue and

PROGRAM REVENUES

Operating CapitalCharges for Grants and Grants and

FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities

PRIMARY GOVERNMENT

Governmental Activities

Instruction 1,197,624$ 449,529$ 96,827$ -$ (651,268)$

Supporting Services 1,629,092 - 53,089 301,597 (1,274,406)

Interest on Long-Term Debt 331,915 - - - (331,915)

Total Governmental Activities 3,158,631$ 449,529$ 149,916$ 301,597$ (2,257,589)

GENERAL REVENUES

Per Pupil Revenue 2,147,761Mill Levy Override 32,091

Interest 4,881

Other 33,242

TOTAL GENERAL REVENUES 2,217,975

CHANGE IN NET ASSETS (39,614)

NET ASSETS, Beginning 240,402

NET ASSETS, Ending 200,788$

Change in

Net AssetsGovernmental


STATEMENT OF ACTIVITIES

Year Ended June 30, 2011

Net (Expense)


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GENERAL BUILDINGFUND CORPORATION TOTAL

ASSETS

Cash and Investments 476,700$ -$ 476,700$

Restricted Cash and Investments 81,967 669,206 751,173

Accounts Receivable 3,409 - 3,409

TOTAL ASSETS 562,076$ 669,206$ 1,231,282$

LIABILITIES AND FUND BALANCES

LIABILITIES

Accounts Payable 1,487$ -$ 1,487$

Accrued Salaries and Benefits 137,170 - 137,170Deferred Revenues 27,847 - 27,847

TOTAL LIABILITIES 166,504 - 166,504

FUND BALANCES

Restricted for Emergencies 81,967 - 81,967

Unassigned, reported in

General Fund 313,605 - 313,605

Debt Service Fund - 669,206 669,206

TOTAL FUND BALANCES 395,572 669,206 1,064,778

TOTAL LIABILITIES AND

FUND BALANCES 562,076$ 669,206$

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. 4,038,226

Long-term liabilities and related assets are not due and payable in the current period and, therefore

are not reported in the funds. This amount is comprised of the bonds payable ($5,385,000),accrued interest ($58,664), bond issuance costs of $163,862, and bond discount of $377,586. (4,902,216)

Net assets of governmental activities 200,788$

ROCKY MOUNTAIN ACADEMY EVERGREEN

BALANCE SHEET

GOVERNMENTAL FUNDS

June 30, 2011


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GENERAL BUILDING

FUND CORPORATION TOTAL

REVENUES

Local Sources 2,355,715$ 636,685$ 2,992,400$

State Sources 96,827 29,790 126,617

TOTAL REVENUES 2,452,542 666,475 3,119,017

EXPENDITURES

Current

Instruction 1,197,624 - 1,197,624

Supporting Services 1,369,010 416,283 1,785,293Bond Issuance Costs - 169,324 169,324

Capital Outlay - 962,986 962,986

Debt Service

Interest - 277,516 277,516

TOTAL EXPENDITURES 2,566,634 1,826,109 4,392,743

OTHER SOURCES AND USES

Proceeds from Bond Issuance - 5,385,000 5,385,000

Amounts paid to Escrow Agent - (3,838,709) (3,838,709)

TOTAL OTHER SOURCES AND USES - 1,546,291 1,546,291

NET CHANGE IN FUND BALANCES (114,092) 386,657 272,565

FUND BALANCES, Beginning 509,664 282,549 792,213

FUND BALANCES, Ending 395,572$ 669,206$ 1,064,778$

ROCKY MOUNTAIN ACADEMY EVERGREEN

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS



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Amounts Reported for Governmental Activities in the Statement of Activities

are Different Because:

Net Changes in Fund Balances - Total Governmental Funds 272,565$

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. This is the amount that capital outlay exceeded $962,986, depreciation expense ($114,535)

for the current year. 848,451

Lease proceeds are reported as financing sources in the governmental funds and increase

fund balance. In the government-wide financial statements, however, issuing debt increaseslong-term liabilities in the statement of net assets and does not effect the statement of

activities. (5,385,000)

Repayment of long-term debt and related costs are reported as an expenditure in the

governmental funds and decrease fund balance. For the Academy as a whole, however,

these costs and payments reduce the liabilities or are capitalized in the statement of net assets

and do not result in an expense in the statement of activities. 3,737,321

Some expenses reported in the statement of activities do not require current financial resources and

are not reported in the funds. These include cost of bond issuance and discounts $559,496

amortization of deferred charges ($18,048) an in increase in accrued interest ($54,399). 487,049

Change in Net Assets of Governmental Activities (39,614)$



RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES


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NOTES TO THE FINANCIAL STATEMENTSJune 30, 2011

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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Rocky Mountain Academy of Evergreen (the Academy) was organized pursuant to theColorado Charter Schools Act to form and operate a charter school within the Jefferson CountySchool District No. R-1 of the State of Colorado.

The accounting policies of the Academy conform to generally accepted accounting principles asapplicable to governmental units. Following is a summary of the more significant policies.

Reporting Entity

The financial reporting entity consists of the Academy and organizations for which the Academy

is financially accountable. All funds, organizations, institutions, agencies, departments andoffices that are not legally separate are part of the Academy. In addition, any legally separateorganizations for which the Academy is financially accountable are considered part of thereporting entity. Financial accountability exists if the Academy appoints a voting majority of theorganizations governing board and is able to impose its will on the organization, or if theorganization provides benefits to, or imposes financial burdens on the Academy.

The Academy includes the RMAE Building Corporation (the Building Corporation) within itsreporting entity. The Building Corporation was formed to support and assist the Academy toperform its function and to carry out its purpose, specifically to assist in the financing of theAcademys facilities. The Building Corporation is blended into the Academys financial

statements as a debt service fund. Separate financial statements are not available for this entity.The Academy is a component unit of Jefferson County School District No. R-1.

Government-Wide and Fund Financial Statements

The Academy financial statements (i.e., the statement of net assets and the statement ofactivities) report information on all of the activities of the Academy. For the most part, theeffect of interfund activity has been removed from these statements. Governmental activities,which normally are supported by intergovernmental revenues, are reported in a single column.

The statement of activities demonstrates the degree to which the direct expenses of the givenfunction or segment are offset by program revenues. Direct expenses are those that are clearly

identifiable with a specific function or segment. Program revenues include 1) charges tostudents or others who purchase, use, or directly benefit from goods, services, or privilegesprovided by a given function or segment and 2) grants and contributions that are restricted tomeeting the operational or capital requirements of a particular function or segment.Unrestricted intergovernmental revenues not properly included among program revenues arereported instead as general revenues. Major individual governmental funds are reported inseparate columns in the fund financial statements.

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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting. Revenues are recorded when earnedand expenses are recorded when a liability is incurred, regardless of the timing of related cashflows. Grants and similar items are recognized as revenue as soon as all eligibility requirementsimposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resourcesmeasurement 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 whenthey are collected within the current period or soon enough thereafter to pay liabilities of thecurrent period, not to exceed 60 days. Expenditures generally are recorded when a liability isincurred, as under accrual accounting. However, debt service expenditures are recorded onlywhen payment is due.

Intergovernmental revenues, grants, and interest associated with the current fiscal period are allconsidered to be susceptible to accrual and so have been recognized as revenues of the currentfiscal period. All other revenue items are considered to be measurable and available only whencash is received by the Academy.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,generally are followed in the government-wide financial statements to the extent that thosestandards do not conflict with or contradict guidance of the Governmental AccountingStandards Board.

Internally dedicated resources are reported as general revenues rather than as program revenues.

When both restricted and unrestricted resources are available for use, it is the Academys policyto use restricted resources first and the unrestricted resources as they are needed.

The Academy reports the following major governmental funds:

General Fund This fund is the general operating fund of the Academy. It is used toaccount for all financial resources except those required to be accounted for in anotherfund.

Building Corporation This fund is used to account for the debt service activities of theAcademy.

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Assets, Liabilities and Fund Balance/Net Assets

Investments Investments are recorded at fair value.

Capital Assets Capital assets, which include property and equipment, are reported in thegovernmental activities column in the government-wide financial statements. Capital assets aredefined by the Academy as assets with an initial, individual cost of more than $5,000 and anestimated useful life in excess of one year. Such assets are recorded at historical cost orestimated historical cost if purchased or constructed. Donated capital assets are recorded atestimated fair market value at the date of donation. Capital Assets are depreciated using the

straight line method over an estimated useful life of 30 years.

Long-term Debt In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, as well as issuancecosts, are deferred and amortized over the life of the bonds using the straight-line method. Inthe fund financial statements, governmental fund types recognize bond premiums anddiscounts, as well as bond issuance costs, during the current period. The face amount of debtissued is reported as other financing sources. Premiums received on debt issuances are reportedas other financing sources while discounts on debt issuances are reported as other financinguses. Issuance costs, whether or not withheld from the actual debt proceeds received, arereported as current expenditures.

Fund Balance Classification The governmental fund financial statements present fund balancesbased on classifications that comprise a hierarchy that is based primarily on the extent to whichthe Academy is bound to honor constraints on the specific purposes for which amounts in therespective governmental funds can be spent. The classifications used in the governmental fundfinancial statements are as follows:

Nonspendable This classification includes amounts that cannot be spent eitherbecause they are not in a spendable form or because they are legally or contractuallyrequired to be maintained intact.

Restricted This classification includes amounts for which constraints have been placedon the use of the resources either (a) externally imposed by creditors (such as through adebt covenant), grantors, contributors, or laws or regulations of other governments, or(b) imposed by law through constitutional provisions or enabling legislation. TheAcademy has classified Emergency Reserves as being restricted because their use isrestricted by State Statute for declared emergencies.

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Assets, Liabilities and Fund Balance/Net Assets

Committed This classification includes amounts that can be used only for specificpurposes pursuant to constraints imposed by formal action of the Board of Directors.These amounts cannot be used for any other purpose unless the Board of Directorsremoves or changes the specified use by taking the same type of action (ordinance orresolution) that was employed when the funds were initially committed. Thisclassification also includes contractual obligations to the extent that existing resourceshave been specifically committed for use in satisfying those contractual requirements.The Academy did not have any committed resources as of June 30, 2011.

Unassigned This classification includes the residual fund balance for the GeneralFund. The Unassigned classification also includes negative residual fund balance of anyother governmental fund that cannot be eliminated by offsetting of Assigned fundbalance amounts.

The Academy would typically use Restricted fund balances first, followed by Committedresources, and then Assigned resources, as appropriate opportunities arise, but reserves the rightto selectively spend UnassignedCompensated Absences

The Academys policy allows employees to accumulate sick leave. Upon termination ofemployment, no financial compensation is paid for unused sick days. Therefore, no liability foraccumulated sick leave is reported in the financial statements.

Risk Management

The Academy is exposed to various risks of loss related to torts; theft of, damage to, anddestruction of assets; injuries to employees; and natural disasters. The District carriescommercial insurance for these risks of loss, and bills the Academy for its portion of coverage.

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NOTE 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Budgets and Budgetary Accounting

A budget is adopted for the General Fund on a basis consistent with generally acceptedaccounting principles.

Academy management submits to the Board of Directors a proposed budget for the fiscal yearcommencing the following July1. The budget is adopted by the Board of Directors prior toJune 30. Expenditures may not legally exceed appropriations at the fund level. Revisions mustbe approved by the Board of Directors. The budget includes proposed expenditures and themeans of financing them. All appropriations lapse at fiscal year end.

NOTE 3: CASH AND INVESTMENTS

A reconciliation of the cash and investment components on the balance sheet to the cash andinvestments categories in this footnote are as follows:

Petty Cash $ 498Pooled Cash with the District 558,169Investments 669,206

Total Cash and Investments $ 1,227,873

Cash and Investments are reported in the financial statements as follows:

Cash and Investments $ 476,700Restricted Cash and Investments 751,173

Total $ 1,227,873

Deposits

Custodial Credit Risk Deposits

Custodial credit risk is the risk that in the event of a bank failure, the governments deposits maynot be returned to it. The Colorado Public Deposit Protection Act (PDPA) requires that allunits of local government deposit cash in eligible public depositories. Eligibility is determinedby state regulations. At June 30, 2011, State regulatory commissioners have indicated that allfinancial institutions holding deposits for the Academy are eligible public depositories.

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NOTE 3: CASH AND INVESTMENTS(Continued)

Amounts on deposit in excess of federal insurance levels must be collateralized by eligiblecollateral as determined by the PDPA. PDPA allows the financial institution to create a singlecollateral pool for all public funds held. The pool is to be maintained by another institution, orheld in trust for all the uninsured public deposits as a group.

The market value of the collateral must be at least equal to 102% of the uninsured deposits. TheAcademy has no policy regarding custodial credit risk for deposits.

Pooled Cash with the District

Cash deposits are pooled with the District cash and investments which were held by severalbanking institutions. Pooled investments represent investments in local government investmentpools or in money market funds. At June 30, 2011 the Academys balance in equity in bothrestricted and unrestricted pooled cash of the District totaled $558,169.

Investments

Interest Rate Risk

The Academy does not have a formal investment policy that limits investment maturities as ameans of managing its exposure to fair value losses arising from increasing interest rates.

Credit Risk

Colorado statutes specify in which instruments units of local government may invest, whichinclude:

Obligations of the United States and certain U.S. Government Agency securitiesGeneral obligation and revenue bonds of U.S. local government entitiesBankers acceptances of certain banksLocal government investment poolsWritten repurchase agreements collateralized by certain authorized securitiesCertain money market fundsGuaranteed investment contracts

State statutes limit investments in money market funds to those that maintain a constant shareprice, with a maximum remaining maturity in accordance with Rule 2a-7, and either have assetsof one billion dollars or the highest rating issued by a nationally recognized statistical ratingorganization (NRSRO). At June 30, 2011, the Academy had $669,206 invested in a moneymarket fund. The fund invests only in U.S. Treasury obligations and is rated AAAm byStandard and Poors.

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NOTE 3: CASH AND INVESTMENTS(Continued)

The Academy has no policy for managing credit risk or interest rate risk.

Restricted Cash and Investments

Cash and Investments of $669,206 are restricted in the Building Corporation Fund for projectcosts and bond reserves. Cash in the amount of $81,967 is also restricted in the General Fundas an emergency reserve related to the TABOR amendment.

NOTE 4: CAPITAL ASSETS

Capital Assets activity for the year ended June 30, 2011 is summarized below.

Balance BalanceJune 30, 2010 Additions Deletions June 30, 2011

Governmental ActivitiesCapital Assets, not depreciated

Land $ 79,925 $ - $ - $ 79,925

Capital Asset, depreciatedBuilding 3,893,819 962,986 - 4,856,805

Accumulated DepreciationBuilding 783,969 114,535 - 898,504

Capital Assets, depreciated, net 3,109,850 848,451 - 3,958,301

Total Capital Assets $ 3,189,775 $ 848,451 $ - $ 4,038,226

Depreciation has been charged to the Supporting Services Program of the Academy.

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NOTE 5: LONG-TERM DEBT

Following is a summary of the Academys long-term debt transactions for the year ended June30, 2011:

Balance Balance Due InJune 30, 2010 Additions Payments June 30, 2011 One Year

2008 Building Lease $ 3,838,709 $ - $ 3,838,709 $ - $ -2010 Building Lease - 5,385,000 - 5,385,000 -Bond Discount - (390,172) (12,586) (377,586) -

Total $ 3,838,709 $ 4,994,828 $ 3,826,123 $ 5,007,414 $ -

Building Lease

In December, 2010, the Colorado Educational and Facilities Authority (CECFA) issued$5,085,000 Charter School Refunding & Improvement Revenue Bonds, Series 2010A and$300,000 of Series 2010B. These bonds were issued to fully refund the 2008B Charter SchoolRevenue Bonds and construct additional facility improvement. The Academy is obligated undera lease agreement to make monthly lease payments to the Building Corporation for use of thefacilities. The Building Corporation is obligated under the loan agreement to make similarpayments to the trustee, for payment of the bonds. For the Series 2010A bonds, interest accruesat rates ranging from 6.45% to 6.9% and the bonds mature on November 1, 2040. For the

Series 2010B bonds interest accrues at 8% and the bonds mature on November 2, 2019.

Future debt service requirements are as follows:

Year Ended June 30, Principal Interest Total

2012 $ - $ 351,983 $ 351,9832013 90,000 348,848 438,8482014 95,000 342,416 437,4162015 100,000 335,663 435,6632016 110,000 328,386 438,3862017 2021 630,000 1,512,739 2,142,739

2022 2026 635,000 1,309,189 1,944,1892027 2031 870,000 1,067,798 1,937,7982032 2036 1,200,000 736,913 1,936,9132037 2041 1,655,000 280,414 1,935,414

Total $ 5,385,000 $ 6,614,349 $ 11,999,349

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NOTE 5: LONG-TERM DEBT(Continued)

Refunding Bonds

In December of 2010, the Academy issued Charter School Refunding and Improvement BondsSeries 2010A and 2010B in the amount of $5,085,000 and $300,000, respectively. Most of theproceeds of the bonds were used to refund the 2008 Charter School Revenue Bonds. Theproceeds of the bonds were placed in an irrevocable trust for the purpose of generatingresources for future debt service payments of the refunded bonds. As a result, the refundedbonds are considered defeased and the liability has been removed from the statement of netassets. This refunding did not result in a present value gain.

Defeased Bonds

On June 30, 2011, the balance of defeased bonds outstanding was as follows:

2008 Charter School Revenue Bonds $ 3,838,709

NOTE 6: FUNDS PAYABLE TO EXCEL ACADEMY

The Colorado General Assembly enacted the Charter School Capital Facilities Financing Act toencourage school districts to include their charter schools capital construction in a district ballot

question seeking approval of bonded indebtedness. The Board of Education subsequentlysubmitted to voters of the Jefferson County School District a ballot question (3B) seeking voterauthorization to increase the School Districts bonded indebtedness to be used for charterschool and district facilities and grounds. The voters approved this ballot question in 2005.Excel Academy could not utilize their portion of the proceeds due to the fact that they did nothave any capital needs related to its facilities or ground at that time. In order to make fundsavailable for the benefit of the Academy, the Executive Boards of Excel and the Academyentered into a letter of agreement which stated that the Academy would receive Excels 3Bportion of bond funds in order to acquire land and build a new facility. In return, the Academyagreed to repay Excel in quarterly installments, over a ten year period. This agreement alsoincludes a stipulation for the payment of 1.5% APR interest to be calculated retroactively if theprincipal balance is not repaid within three years, or 3% APR interest to be calculated

retroactively if the principal balance is not repaid with five years. This interest is to be paidwhen the Academy pays the full amount of the agreement, but not later than the tenth year. Therepayment is subject to annual appropriation by the Academy and is nontransferable. As aresult, the payable to Excel has not been recorded in the financial statements. Instead, thepayments will be recorded as expense when paid. During the fiscal year ended June 30, 2011,the Academy made payments amounting to $60,000 that has been recorded by the Academy asother expense.

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NOTE 7: DEFINED BENEFIT PENSION PLAN

Plan Description. The Academy contributes to the School Division Trust Fund (SDTF), acost-sharing multiple-employer defined benefit pension plan administered by the PublicEmployees Retirement Association of Colorado (PERA). The SDTF provides retirement anddisability, post-retirement annual increases, and death benefits for members or theirbeneficiaries. All employees of the Academy are members of the SDTF. Title 24, Article 51 ofthe Colorado Revised Statutes (CRS), as amended, assigns the authority to establish benefitprovisions to the State Legislature. PERA issues a publicly available annual financial report thatincludes financial statements and required supplementary information for the SDTF. Thatreport may be obtained online at www.copera.org or by writing to Colorado PERA, 1300 LoganStreet, Denver, Colorado 80203 or by calling PERA at 303-832-9550 or 1-800-759-PERA

(7372).

Funding Policy. The Academy is required to contribute member and employer contributionsto PERA at a rate set by statute. The contribution requirements of plan members and theAcademy are established under Title 24, Article 51, Part 4 of the CRS, as amended. Thecontribution rate for members is 8.0 % and for the Academy it is 10.15 % of covered salary. Aportion of the Academys contribution (1.02 % of covered salary) is allocated to the Health CareTrust Fund (See Note 8). If the Academy rehires a PERA retiree as an employee or under anyother work arrangement, it is required to report and pay employer contributions on the amountspaid for the retiree, the employee is required to contribute 8% of covered payroll. The Academyis also required to pay an amortization equalization disbursement equal to 4.6 % of the total

payroll for the calendar year 2011, (3.7 % of total payroll for the calendar year 2010). For theyear ended June 30, 2011, the Academys employer contribution for the SDTF was $214,033,equal to their required contribution for the year.

NOTE 8: POSTEMPLOYMENT HEALTHCARE BENEFITS

Plan Description. The Academy contributes to the Health Care Trust Fund (HCTF), a cost-sharing multiple-employer post employment healthcare plan administered by PERA. The HCTFprovides a health care premium subsidy to PERA participating benefit recipients and theireligible beneficiaries. Title 24, Article 51, Part 12 of the CRS, as amended, assigns the authorityto establish the HCTF benefit provisions to the State Legislature. PERA issues a publicly

available annual financial report that includes financial statements and required supplementaryinformation for the HCTF. That report may be obtained online at www.copera.org or bywriting to Colorado PERA, 1300 Logan Street, Denver, Colorado 80203 or by calling PERA at303-832-9550 or 1-800-759-PERA (7372).

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NOTE 8: POSTEMPLOYMENT HEALTHCARE BENEFITS(Continued)

Funding Policy. The Academy is required to contribute at a rate of 1.02% of covered salary forall PERA members as set by statute. No member contributions are required. The contributionrequirements for the Academy are established under Title 24, Article 51, Part 4 of the CRS, asamended. The apportionment of the contribution to the HCTF is established under Title 24,Article 51, Section 208 of the Colorado Revised Statutes, as amended. For the year ended June30, 2011, the Academys employer contribution to the HCTF was $15,083 equal to theirrequired contributions for the year.

NOTE 9: COMMITMENTS AND CONTINGENCIES

Claims and Judgments

The Academy participates in a number of federal and state programs that are fully or partiallyfunded by grants received from other governmental units. Expenditures financed by grants aresubject to audit by the appropriate grantor government. If expenditures are disallowed due tononcompliance with grant program regulations, the Academy may be required to reimburse thegrantor government. As of June 30, 2011, significant amounts of grant expenditures have notbeen audited, but the Academy believes that disallowed expenditures, if any, based onsubsequent audits will not have a material effect on the overall financial position of theAcademy.

Facility Use Agreement

The Academy has entered into an operating lease with the neighboring church to use a portionof the facility for the preschool program. Under the terms of the lease, the Academy is requiredto pay an annual use fee of $30,000 payable in ten monthly installments (August to May). Theagreement renews annually and the current agreement expires on July 31, 2012.

Tabor Amendment

In November 1992, Colorado voters passed the Tabor Amendment to the State Constitution,which limits state and local government tax powers and imposes spending limitations. Fiscal

year 1993 provides the basis for limits in future years to which may be applied allowableincreases for inflation and student enrollment. Revenue received in excess of the limitationsmay be required to be refunded. The Academy believes it has complied with the Amendment.As required by the Amendment, the Academy has established a reserve for emergencies. AtJune 30, 2011, the reserve of $81,967 was recorded as a reservation of fund balance in theGeneral Fund. The District also holds $81,967 in pooled cash on behalf of the Academy for thisreserve.

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REQUIRED SUPPLEMENTARY INFORMATION

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VARIANCE

ORIGINAL FINAL PositiveBUDGET BUDGET ACTUAL (Negative)

REVENUES

Local Sources

Per Pupil Revenue 2,431,467$ 1,998,241$ 1,787,764$ (210,477)$

Mill Levy Override 56,595 48,143 32,091 (16,052)

Charges for Services 387,020 348,450 449,529 101,079

Interest - -

Donations 77,000 77,000 53,089 (23,911)

Other 2,500 2,500 33,242 30,742

State Sources

Grants and Donations 76,670 26,953 96,827 69,874

TOTAL REVENUES 3,031,252 2,501,287 2,452,542 (48,745)

EXPENDITURES

Salaries 1,623,163 1,576,877 1,674,403 (97,526)

Employee Benefits 326,947 323,789 248,906 74,883

Purchased Services 1,037,012 776,402 567,766 208,636

Supplies and Materials 80,900 63,900 75,559 (11,659)

TOTAL EXPENDITURES 3,068,022 2,740,968 2,566,634 174,334

NET CHANGE IN FUND BALANCE (36,770) (239,681) (114,092) 125,589

FUND BALANCE, Beginning 152,078 608,000 509,664 (98,336)

FUND BALANCE, Ending 115,308$ 368,319$ 395,572$ 27,253$


GENERAL FUND

BUDGETARY COMPARISON SCHEDULE


2010-2011 audit

Documents