sacramento children’s home, inc. · phone:916.646.6464 fax:916.929.6836 gilbertcpa.com 2880...

SACRAMENTO CHILDREN’S HOME, INC.

FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR’S REPORT AND SUPPLEMENTAL SCHEDULES

YEARS ENDED JUNE 30, 2018 AND 2017


TABLE OF CONTENTS JUNE 30, 2018 AND 2017

Independent Auditor’s Report 1

Statements of Financial Position 3

Statements of Activities 4

Statement of Functional Expenses 5

Statements of Cash Flows 7

Notes to Financial Statements 8

Schedule of Revenue and Expenses for First 5 Funding 17

Note to Schedule of Revenue and Expenses for First 5 Funding 18

Schedules of Group Home Program Costs 19

PHONE:916.646.6464 FAX:916.929.6836 GilbertCPA.com

2880 GATEWAY OAKS DRIVE, SUITE 100, SACRAMENTO, CA 95833 101 PARKSHORE DRIVE, SUITE 100, FOLSOM, CA 95630

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INDEPENDENT AUDITOR’S REPORT

Board of Directors Sacramento Children’s Home, Inc. Sacramento, California

Report on the Financial Statements

We have audited the accompanying financial statements of Sacramento Children's Home, Inc. (SCH), which comprise the statements of financial position as of June 30, 2018 and 2017, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Board of Directors Sacramento Children’s Home, Inc. Page 2

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sacramento Children's Home, Inc. as of June 30, 2018 and 2017, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Other Information

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of revenue and expenses for First 5 Funding and schedules of Group Home Program Costs are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audits of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 18, 2018, on our consideration of the SCH’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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the SCH’s internal control over financial reporting and compliance.

GILBERT ASSOCIATES, INC. Sacramento, California

October 18, 2018

2018 2017ASSETS

CURRENT ASSETS:Cash and cash equivalents 8,855,672$ 8,124,993$ Contracts, grants, and other receivables, net 1,720,594 2,272,177 Prepaid expenses and other assets 261,693 232,351

Total current assets 10,837,959 10,629,521

NONCURRENT ASSETS:Investments 15,960,158 13,887,317 Property and equipment, net 6,819,819 7,468,648

Total noncurrent assets 22,779,977 21,355,965

TOTAL ASSETS 33,617,936$ 31,985,486$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES:Accounts payable 607,773$ 591,700$ Accrued expenses and other liabilities 602,095 515,500 Deferred revenues 1,231,972 1,166,778 Current portion of long-term obligations 1,424

Total current liabilities 2,441,840 2,275,402

NET ASSETS:Unrestricted 20,549,188 19,818,054 Temporarily restricted 5,506,466 5,054,643 Permanently restricted 5,120,442 4,837,387

Total net assets 31,176,096 29,710,084

TOTAL LIABILITIES AND NET ASSETS 33,617,936$ 31,985,486$

SACRAMENTO CHILDREN'S HOME, INC.

STATEMENTS OF FINANCIAL POSITIONJUNE 30, 2018 AND 2017

The accompanying notes are an integral part of these financial statements. 3

2018 2017UNRESTRICTED NET ASSETS:REVENUES:

Governmental grants and contracts 11,826,139$ 11,493,212$ Contributions, grants, and bequests 1,287,540 1,017,464 Rental income 516,042 517,377 Interest and investment income 220,020 356,207 Special events 355,746 352,200 United Way 45,297 36,697 Other income 119,112 2,326 Net assets released from restriction 580,020 535,701

Total revenues 14,949,916 14,311,184

EXPENSES:Program services:

Family support services 4,381,038 4,136,352 Residential treatment and educational services 3,711,674 3,368,988 Mental health clinical services 3,409,397 3,282,961

Total program services 11,502,109 10,788,301 Supporting services:

General and administrative 1,973,855 2,014,812 Philanthropy 742,818 652,444

Total expenses 14,218,782 13,455,557

INCREASE IN UNRESTRICTED NET ASSETS 731,134 855,627

TEMPORARILY RESTRICTED NET ASSETS:Contributions, grants, bequests, and other income 398,442 402,519 Special events 326,196 193,465 Interest and investment income 303,786 592,284 Other income 3,419 8,840 Net assets released from restriction (580,020) (535,701)

INCREASE IN TEMPORARILY RESTRICTED NET ASSETS 451,823 661,407

PERMANENTLY RESTRICTED NET ASSETS:Investment gain 283,055 296,027

INCREASE IN NET ASSETS 1,466,012 1,813,061

NET ASSETS, Beginning of Year 29,710,084 27,897,023

NET ASSETS, End of Year 31,176,096$ 29,710,084$


STATEMENTS OF ACTIVITIESYEARS ENDED JUNE 30, 2018 AND 2017


Residential Mental Family Treatment & Health Total

Support Educational Clinical Program General & Services Services Services Services Admin. Philanthropy Total

Salaries 2,559,237$ 2,052,261$ 2,019,882$ 6,631,380$ 1,107,003$ 247,877$ 7,986,260$ Employee benefits 366,083 284,648 337,657 988,388 99,838 26,494 1,114,720 Payroll taxes and insurance 230,148 261,420 182,447 674,015 100,299 19,855 794,169

Total compensation 3,155,468 2,598,329 2,539,986 8,293,783 1,307,140 294,226 9,895,149

Direct support for clients 260,228 470,540 445,435 1,176,203 1,176,203 Occupancy 290,843 167,442 54,550 512,835 108,131 28,444 649,410 Professional fees 265,422 82,089 48,175 395,686 133,098 6,900 535,684 Depreciation 57,001 96,697 97,197 250,895 241,154 14,761 506,810 Events, conferences, and meetings 552 5,138 713 6,403 3,952 279,013 289,368 Travel 79,604 126,914 56,913 263,431 8,035 6,445 277,911 Communications 79,067 39,543 54,322 172,932 24,790 13,224 210,946 Supplies 86,090 33,882 31,428 151,400 17,590 5,010 174,000 Insurance 42,078 41,059 31,827 114,964 29,243 1,590 145,797 Equipment repairs and rentals 18,458 22,320 20,713 61,491 43,937 14,727 120,155 Furniture and equipment 27,016 19,774 23,858 70,648 6,200 3,933 80,781 Printing and publications 9,897 999 2,277 13,173 3,830 49,612 66,615 Dues and memberships 275 2,250 530 3,055 18,318 2,741 24,114 Miscellaneous 9,039 4,698 1,473 15,210 28,437 22,192 65,839

Total expenses 4,381,038$ 3,711,674$ 3,409,397$ 11,502,109$ 1,973,855$ 742,818$ 14,218,782$


YEAR ENDED JUNE 30, 2018

Supporting Services

STATEMENT OF FUNCTIONAL EXPENSES

Program Services


Residential Mental Family Treatment & Health Total

Support Educational Clinical Program General & Services Services Services Services Admin. Philanthropy Total

Salaries 2,332,019$ 1,886,532$ 1,876,746$ 6,095,297$ 1,099,883$ 236,393$ 7,431,573$ Employee benefits 330,753 254,960 317,404 903,117 117,921 27,245 1,048,283 Payroll taxes and insurance 221,561 282,675 182,139 686,375 85,406 18,785 790,566

Total compensation 2,884,333 2,424,167 2,376,289 7,684,789 1,303,210 282,423 9,270,422

Direct support for clients 254,171 366,443 417,713 1,038,327 1,038,327 Occupancy 322,985 129,428 56,034 508,447 108,849 17,787 635,083 Professional fees 256,025 76,532 71,944 404,501 163,036 8,886 576,423 Depreciation 57,960 98,815 97,602 254,377 255,854 13,694 523,925 Events, conferences, and meetings 53 1,894 1,947 7,816 189,863 199,626 Travel 73,410 91,484 66,130 231,024 9,030 11,254 251,308 Communications 82,679 43,221 58,746 184,646 27,521 14,731 226,898 Supplies 66,741 41,066 29,090 136,897 16,767 7,009 160,673 Insurance 49,616 46,038 34,780 130,434 32,238 1,943 164,615 Equipment repairs and rentals 16,285 15,922 25,878 58,085 46,918 12,128 117,131 Furniture and equipment 55,784 21,704 42,559 120,047 7,208 347 127,602 Printing and publications 8,973 1,237 3,619 13,829 6,669 72,209 92,707 Dues and memberships 110 1,711 528 2,349 17,497 2,440 22,286 Miscellaneous 7,227 9,326 2,049 18,602 12,199 17,730 48,531

Total expenses 4,136,352$ 3,368,988$ 3,282,961$ 10,788,301$ 2,014,812$ 652,444$ 13,455,557$

Supporting Services


STATEMENT OF FUNCTIONAL EXPENSESYEAR ENDED JUNE 30, 2017

Program Services


2018 2017CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from contracts and grants 12,442,916$ 11,121,899$ Cash received from public support 2,406,424 2,051,314 Cash received from other sources 532,331 557,406 Cash received from interest and dividends 226,444 213,861 Cash paid for employee salaries (7,899,665) (7,455,523) Cash paid for services and goods (5,736,803) (5,420,134)

Net cash provided by operating activities 1,971,647 1,068,823

CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments (4,139,672) (5,814,242) Proceeds from sale and maturity of investments 2,647,248 3,979,620 Purchases of property and equipment (189,570) (144,186) Proceeds from sale of property and equipment 442,450 1,705

Net cash used for investing activities (1,239,544) (1,977,103)

CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on debt (1,424) (4,008)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 730,679 (912,288)

CASH AND CASH EQUIVALENTS, Beginning of Year 8,124,993 9,037,281

CASH AND CASH EQUIVALENTS, End of Year 8,855,672$ 8,124,993$

CASH FLOWS FROM OPERATING ACTIVITIES:Increase in net assets 1,466,012$ 1,813,061$ Adjustments to reconcile to net cash provided by

operating activities:Net realized and unrealized gain on investments (580,417) (1,030,657) Depreciation 506,810 523,925 Loss (gain) on sale of property and equipment (106,242) 29,296 Receipt of donated property and equipment (4,619) Changes in operating assets and liabilities:

Contracts, grants, and other receivables, net 551,583 (960,484) Prepaid expenses and other assets (29,342) 86,481 Accounts payable 16,073 41,980 Accrued expenses and other liabilities 86,595 (23,950) Deferred revenues 65,194 589,171

Net cash provided by operating activities 1,971,647$ 1,068,823$


STATEMENTS OF CASH FLOWSYEARS ENDED JUNE 30, 2018 AND 2017



NOTES TO FINANCIAL STATEMENTS JUNE 30, 2018 AND 2017

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1. ORGANIZATION AND CURRENT PROGRAMS

Sacramento Children’s Home, Inc. (SCH) is Sacramento County’s oldest private 501(c)(3) not-for-profit organization dedicated to serving children and families at risk. All of the service operations provided by the SCH have been accredited by the Council on Accreditation.

Originally founded as an orphanage in 1867, the SCH has changed with the times and the needs of the community. Today, the SCH programs throughout Sacramento County provide diverse services for children and their families, all designed toward our mission of “Opening doors to the future by maximizing the potential of children and families.”

In order to fulfill that mission, SCH provides a broad range of resources for families including:

Family Support Services: A wide variety of family support services are provided in high-risk communities through family resource centers. The purpose of these programs is to eliminate substantiated complaints to Child Protective Services through in-home visitation and counseling, pre-natal counseling, parenting classes, and peer-family support programs. The innovative Sacramento Crisis Nursery provides short-term respite care for children from birth to age five for families in crisis. The nursery case managers provide problem solving and referrals to parents in order to develop long-term solutions to the crisis while their children are in a safe and caring environment. The anti-bullying and anti-violence program is curriculum based and is provided in schools, the community, and in-home to families with a propensity to family violence. The school based programs are designed to reduce bullying and violence on school campuses.

Residential Treatment/Wraparound Program: SCH has a residential capacity for 30 boys ages 6 to 19 at the main 15-acre campus. The residential care team includes licensed therapists, social workers, residential counselors, medical support staff and therapeutic recreation program staff. The teams provide 24-hour-a-day care and trauma treatment to children overcoming issues stemming from neglect, abandonment, sexual or physical abuse, mental health issues or serious family conflict. Emphasis is placed on behavioral stabilization, both in home and in school and in the community in order to move the boys to a home and family. The Residential and Wraparound goal is to move the children to a family that will provide a stable home and support system for life.

Educational Services: The SCH provides literacy programs and afterschool tutoring assistance for foster youth as well as provides social skills, violence prevention and conflict management services designed to provide social skills and conflict management skills for youth, and their families, to help them navigate away from bullying and violence while also building positive relationships.

Mental Health Clinical Services: A wide range of clinical intervention is provided to children and families throughout the Sacramento region based on treatment modalities that have been proven to be effective. Treatment interventions are tailored to the specific needs of each child and family based on a needs assessment agreed upon between the clinical services provider and the child/family. Mental Health services are provided at the on-campus clinics as well as in schools, in the community and in home. Mental Health intervention provides a range of services from prevention and early intervention to intensive trauma treatment.



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2. SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting and financial statement presentation – The SCH’s financial statements areprepared on the accrual basis of accounting in conformity with professional standards applicableto not-for-profit entities. The SCH reports information regarding its financial position andactivities according to three classes of net assets: unrestricted, temporarily restricted, andpermanently restricted.

Revenue recognition – Revenues from government grants and contracts are recognized whenqualifying expenses are incurred.

Contributions are recognized in full when received or unconditionally pledged, in accordancewith professional standards. All contributions are considered available for unrestricted use unlessspecifically restricted by donors for future periods or specific purposes. Donor-restrictedamounts are reported as increases in temporarily or permanently restricted net assets.Temporarily restricted net assets become unrestricted, and are reported in the statement ofactivities as net assets released from restrictions, when the time restrictions expire or thecontributions are used for the restricted purpose. Temporarily restricted contributions whoserestrictions are met in the same reporting period are shown as unrestricted.

Donated materials, equipment, and professional services are recorded as in-kind donations andrecognized at the estimated fair value as of the date of donation or service. Contributed servicesthat do not meet the criteria for recognition under professional standards are not reflected in thefinancial statements.

Cash and cash equivalents – For financial statement purposes, the SCH considers allinvestments with a maturity at purchase of three months or less to be cash equivalents, unlessheld for long-term purposes.

The SCH minimizes credit risk associated with cash by periodically evaluating the credit qualityof its primary financial institution. The balance at times may exceed federally insured limits.The SCH has not experienced any losses in such accounts and management believes the SCH isnot exposed to any significant credit risk related to cash.

Contracts, grants, and other receivables are comprised of amounts due to the SCH and areexpected to be received within the next fiscal year. An allowance of $18,843 for the years endedJune 30, 2018 and 2017 has been recorded. The allowance is based on historical experience ofuncollected receivables for which documentation of the receivable may be discrepant with thecontracting agency. Management reviews all receivables on a monthly basis and follows up forcollection.

Investments are stated at fair value and held for long-term purposes.

Property and equipment are stated at cost or, if donated, at the estimated fair value at the timeof donation. The SCH capitalizes all expenditures of property and equipment in excess of $5,000.Assets are depreciated using the straight-line method over estimated useful lives of 3 to 30 years.



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Functional allocation of expenses – Expenses have been summarized on a functional basis in the statements of activities and of functional expenses. Most expenses may be directly identified to their related program or supporting service function, and are recorded accordingly. Indirect expenses have been allocated based on a percentage of each program’s compensation and direct costs over total program costs, or on other bases considered appropriate given the nature of the expense.

Income taxes – The SCH is exempt from income taxes under Section 501(c)(3) of the U. S. Internal Revenue Code and corresponding California state codes. Contributions to the SCH are deductible to the full extent allowable under these laws.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Fair value measurements – Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same; to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). In order to increase consistency and comparability in fair value measurements, a fair value hierarchy that prioritizes observable and unobservable inputs is used to measure fair value into three broad levels, as follows:

Level 1 Inputs Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 Inputs Inputs other than quoted prices in active markets that are observable either directly or indirectly.

Level 3 Inputs Unobservable inputs for the asset or liability.

Subsequent events have been evaluated through October 18, 2018, the date the financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2018 that require recognition or disclosure in the financial statements.



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3. INVESTMENTS

Corporate bonds and U.S. Treasury notes are classified within Level 2 of the fair value hierarchybecause they are valued using observable inputs other than quoted market prices. All otherinvestments are classified within Level 1 of the fair value hierarchy because they are measured bypricing on publicly traded markets with reasonable levels of price transparency. Investmentsconsist of the following:

2018 2017 Fixed income:

U.S. Treasury notes $ 2,167,715 $ 1,069,435Domestic mutual funds 1,131,299 1,209,953Corporate bonds 459,998 680,566International mutual funds 357,549 388,763

Stock funds: Domestic mutual funds 2,956,329 2,220,004International mutual funds 1,911,738 2,013,335Information technology 885,754 665,283International equities 467,683 482,168Health care 474,583 459,288Financials 488,851 451,878Consumer discretionary 392,857 328,344Consumer staples 278,644 322,607Industrials 306,489 313,615Energy 223,391 176,296Utilities 178,320 153,465Materials 111,413 104,610Telecommunication services 83,722 74,582Special equities 9,409 14,093

Long/short equity fund 1,451,634 1,355,580Real asset funds 1,289,350 1,067,591Managed futures fund 293,236 294,948Multialternative fund 10,636 10,743Other 29,558 30,170

Total investments $ 15,960,158 $ 13,887,317

Interest and investment income consist of the following:

2018 2017

Interest and dividends $ 226,444 $ 213,861Net realized gain (loss) (4,708) 444,250Net unrealized gain 585,125 586,407

Total interest and investment income $ 806,861 $ 1,244,518

Interest and investment income is shown net of investment fees of $99,579 and $94,814 in 2018 and 2017, respectively.



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4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

2018 2017

Land $ 469,350 $ 639,350Buildings and improvements 12,113,683 12,297,488Furniture and equipment 469,693 454,409Automobiles 116,869 139,213Construction in progress 19,797 21,150

Total 13,189,392 13,551,610Less accumulated depreciation (6,369,573) (6,082,962)

Property and equipment, net $ 6,819,819 $ 7,468,648

5. LINE OF CREDIT

The SCH has a revolving line of credit up to $1,500,000 with interest equal to the prime rateannounced by Wells Fargo Bank minus 1.25%, maturing February 2021. Investments arepledged in an amount equal to the outstanding balance, if applicable. No amounts wereoutstanding as of June 30, 2018 and 2017.

6. OPERATING LEASE AGREEMENTS

The SCH leases certain office space and equipment under non-cancelable operating leases andmonth-to-month leases. Total expense under these leases was $326,011 for 2018 and $441,323for 2017. Future minimum lease payments on non-cancelable leases are as follows:

Fiscal year ending June 30:

2019 $ 317,980 2020 253,543 2021 9,423 2022 3,034

Total $ 583,980

The SCH receives rental income for certain property under non-cancelable operating leases and month-to-month leases. Total revenue under these leases was $516,042 for 2018 and $517,377 for 2017. During 2015, SCH entered into a long-term non-cancelable operating lease agreement with CVS that expires in January 2041.



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Future minimum rentals are to be received on non-cancelable leases as follows:

Fiscal year ending June 30:

2019 $ 461,573 2020 439,406 2021 389,244 2022 370,127 2023 210,000 Thereafter 3,675,000

Total $ 5,545,350

7. NET ASSETS

Unrestricted net assets are as follows:

2018 2017 Board designated:

Board designated endowment funds:Operating reserve $ 2,199,275 $ 1,209,716Strategic fund 1,950,396 1,655,185Deferred maintenance fund 1,505,776 1,256,252Promise fund 882,680 826,037

Subtotal, board designated endowment funds 6,538,127 4,947,190Community outreach 448,286 434,189Employee recruitment 216,661 234,695

Total board designated 7,203,074 5,616,074Undesignated 13,346,114 14,201,980

Total unrestricted net assets $ 20,549,188 $ 19,818,054

Temporarily restricted net assets are available for the following purposes:

2018 2017 Operating funds:

Family support services $ 2,764,449 $ 2,441,661Residential treatment services 2,243,102 2,226,196Educational services 26,605 26,605

Subtotal, operating funds 5,034,156 4,694,462

Assets held for scholarship endowments 372,676 346,506Other 99,634 13,675

Total temporarily restricted net assets $ 5,506,466 $ 5,054,643



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Permanently restricted net assets are invested in perpetuity for the following purposes:

2018 2017

Residential treatment services $ 4,441,106 $ 4,158,051 Crisis nursery 500,000 500,000Scholarship and other 179,336 179,336

Total permanently restricted net assets $ 5,120,442 $ 4,837,387

The SCH’s funds include both donor-restricted endowment funds and funds designated by the Board of Directors (Board) to function as endowments. As required by professional standards, net assets associated with endowment funds, including funds designated by the Board to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.

The SCH classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) accumulated unrealized appreciation and depreciation of endowment investments if directed by the donor gift instrument, (c) the original value of subsequent gifts to the permanent endowments, and (d) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund, and are to be invested in perpetuity and interest and dividends to be used for operating or other purposes as designated by the Board.

Board designated funds have been established to allow for funding of various strategic programs, outreach programs, and capital improvements. During fiscal year 2016, the Board set a goal to have a balance of $1,000,000 for a board designated operating reserve, with a future goal to reach 25% of operating expenses over the next three years. During fiscal year 2018 and 2017, the Board contributed $1,000,000 each year, towards this goal. Permanently restricted net assets consist of several endowment funds for residential care, providing music lessons and instruments, and scholarships.

The primary investment objectives of the fund's investment policies, approved by the Board, are to preserve principal, to provide a dependable and reasonable rate of return consistent with appropriate investment risk, and to maximize income within a framework of moderate risk assumptions. The Board designated fund objectives are to protect the principal in order to generate interest and appreciation for availability by the Board for the fund’s intended use.



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Changes in endowment net assets are as follows:

Year ending June 30, 2018: Unrestricted Temporarily

Restricted Permanently

Restricted

Endowment net assets, beginning of year $ 4,947,190 $ 1,994,941 $ 4,837,387 Investment return:

Investment income, net of fees 64,320 98,928 Realized/unrealized gain 139,616 28,794 283,055

Total investment income 203,936 127,722 283,055 Contributions 1,387,000 Endowment expenditures (103,045)

Endowment net assets, end of year $ 6,538,126 $ 2,019,618 $ 5,120,442

Year ending June 30, 2017: Unrestricted Temporarily

Restricted Permanently

Restricted

Endowment net assets, beginning of year $ 3,185,465 $ 1,674,100 $ 4,541,360 Investment return:

Investment income, net of fees 58,950 93,224 Realized/unrealized gain 268,775 252,347 296,027

Total investment income 327,725 345,571 296,027Contributions 1,434,000 Endowment expenditures (24,730)

Endowment net assets, end of year $ 4,947,190 $ 1,994,941 $ 4,837,387

8. RETIREMENT PLAN

The SCH has a defined contribution retirement plan under Internal Revenue Code Section 403(b).Employees are eligible to participate upon date of hire. On a discretionary basis, the SCHcontributes amounts equal to 50% of employee contributions up to 3% of annual salary. Planexpense totaled $144,414 and $151,499 in 2018 and 2017, respectively.

9. CONCENTRATION

The SCH receives a significant portion of its public support and revenue from variousgovernment agencies. These funds are subject to audit by agents of the funding authorities, thepurpose of which is to ensure compliance with conditions precedent to providing such funds.Management believes that any liability for reimbursement that may arise as the result of suchaudits would not be material. However, if a significant reduction in funding from thesegovernment agencies occurred, the SCH’s ability to maintain related programs wouldsignificantly decrease.



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10. OVERHEAD PERCENTAGE

The SCH measures the ratio of its supporting service expenses to its total revenues as follows:

2018 2017

Amounts % of TotalRevenues Amounts

% of TotalRevenues

Supporting service expenses: General and administrative $ 1,973,855 12.6% $ 2,014,812 13.2%Philanthropy 742,818 4.7% 652,444 4.3%

Total supporting services $ 2,716,673 17.3% $ 2,667,256 17.5%

Total revenues: Total unrestricted revenues $ 14,949,916 $ 14,311,184 Increase in temporarily restricted

net assets 451,823 661,407 Increase in permanently restricted

net assets 283,055 296,027

Total revenues $ 15,684,794 $ 15,268,618

Crisis Nurseries

Family Resource Centers Total

REVENUES:First 5 program income 1,427,251$ 2,117,235$ 3,544,486$

Total revenues 1,427,251 2,117,235 3,544,486

EXPENSES:Salaries 1,014,746 1,121,882 2,136,628 Employee benefits 164,954 188,190 353,144 Payroll taxes and insurance 75,044 81,498 156,542

Total compensation 1,254,744 1,391,570 2,646,314

Occupancy 52,934 181,746 234,680 Professional fees 43,421 115,209 158,630 Communications 35,031 116,468 151,499 Travel 19,464 42,588 62,052 Direct support for clients 23,462 35,390 58,852 Depreciation 52,495 52,495 Supplies 15,457 25,212 40,669 Insurance 22,914 15,198 38,112 Furniture and equipment 3,760 9,767 13,527 Miscellaneous 2,575 30 2,605 Indirect 219,882 281,395 501,277

Total expenses 1,746,139 2,214,573 3,960,712

TOTAL NET DEFICIT (318,888)$ (97,338)$ (416,226)$


SCHEDULE OF REVENUE AND EXPENSES FOR

YEAR ENDED JUNE 30, 2018FIRST 5 FUNDING



NOTE TO SCHEDULE OF REVENUE AND EXPENSES FOR FIRST 5 FUNDING

YEAR ENDED JUNE 30, 2018

18

1. BASIS OF PRESENTATION

The accompanying schedule of revenue and expenses for First 5 funding of SacramentoChildren’s Home, Inc. (SCH) is presented on the accrual basis of accounting. The information inthis schedule is presented in accordance with the requirements of First 5. It is not representativeof the full spending of the programs and only includes spending related to First 5. Therefore,some amounts presented in this schedule may differ from amounts presented in, or used in thepreparation of, the basic financial statements.

STATE OF CALIFORNIA - HEALTH AND HUMAN SERVICES AGENCY

GROUP HOME PROGRAM COSTS REPORT (SR 3)

This form is to collect cost information for the group home program. Report actual allowable and reasonable costs. If the corporation operates more than one group home programand/or the program provides other services (example: day care, on-site education, adult services, foster family agency, etc.) costs must be allocated to the appropriate activity andonly the allowable group home program costs for the program are to be reported. Describe the methodology used to allocate costs if other than the standard allocation methodologyindicated in current regulations (MPP Section 11-402.8 et seq.) NOTE: A separate cost report form must be completed for each group home program operated by the corporation.

Number of months in cost reporting period _________________________

CALIFORNIA DEPARTMENT OF SOCIAL SERVICES

A

TOTAL PROGRAM

COSTSOFFSETS REASONABLENESS

ADJUSTMENTS

FINAL COSTS(COL. A MINUS

COLS. B &C)

PERCENTAGE OF TOTAL

COSTSCDSS USE ONLY

COST GROUPSB C D E F

CORPORATE NAME: PROGRAM NAME (IF DIFFERENT) CORPORATE NUMBER PROGRAM NUMBER PROVIDER FISCAL YEAR(MO/YR - MO/YR)

1

2

3

4a

4b

4c

5

6

7

8

9a

9b

9c

9d

9e

9f

Child Care & Supervision

Social Work Activities

Food

Shelter Costs - Building Rent & Leases

Shelter Costs - Acquisition Mortgage: Principal & Interest

Building & Equipment

Utilities

Vehicles & Travel

Child-Related

Executive Director Salary

Assistance Director Salary

Administrator Salary

All Other Admin. Salaries

Financial Audit Costs

Administration (Minus Admin. Salaries and Financial Audit Costs)

TOTAL

Shelter Costs - Approved by Attorney GeneralSelf-Dealing Transactions Affiliated Leases

KDE DATECDSS USE ONLY

SR 3 (12/04)

William.Partmann

Stamp

BG_GILB18P

Text Box

19

STATE OF CALIFORNIA—HEALTH AND HUMAN SERVICES AGENCY CALIFORNIA DEPARTMENT OF SOCIAL SERVICES

GROUP HOME PROGRAMPAYROLL & FRINGE BENEFIT REPORT (SR 4)

Number of months in cost reporting period: _____

CORPORATE/LICENSEE NAME: CORPORATE NUMBER: PROGRAM NUMBER PROVIDER FISCAL YR(MO/ YR - MO /YR)

(1) (2) (3)Child Care & Supervision Social Work Activities CDSS USE ONLY

I. PAYROLL (DO NOT INCLUDE BENEFITS)

II. FRINGE BENEFIT EXPENSE

1. FICA Employer Tax (include MEDICARE)

2. Unemployment Coverage (State & Federal)

3. Workers’ Compensation Insurance

4. Medical Insurance Expense

5. Retirement

6. Other (Specify on back of form)

TOTAL FRINGE BENEFITS(Add Lines 1 through 6)

III. TOTAL PAYROLL & FRINGE BENEFITS

IV. CONTRACTOR COSTS

V. TOTAL (Add Line III and Line IV)Transfer to Column A, Lines 1 and 2, Cost Report (SR 3)

CDSS USE ONLY

SR 4 (12/04) 20

sacramento children’s home, inc. · phone:916.646.6464 fax:916.929.6836 gilbertcpa.com 2880...

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