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SEMINOLE SCIENCECHARTER SCHOOL

(A CHARTER SCHOOL UNDER DISCOVERYEDUCATIONAL SERVICES, INC.)

A Charter School and Component Unit of theDistrict School Board of Seminole County, Florida

INDEPENDENT AUDITOR’S REPORT

for the fiscal year ended JUNE 30, 2017

King & Walker, CPAs, PL______________________________________________________________________________________________________________________

Certified Public Accountants

THIS PAGE IS INTENTIONALLY BLANK.

SEMINOLE SCIENCE CHARTER SCHOOL(A CHARTER SCHOOL UNDER DISCOVERY EDUCATIONAL SERVICES, INC.)

TABLE OF CONTENTS

PAGENO.

FINANCIAL SECTION

Independent Auditor’s Report 1

Management’s Discussion and Analysis – (Unaudited) 3

Basic Financial Statements

Government-Wide Financial Statements:Statement of Net Position 8Statement of Activities 9

Fund Financial Statements:Balance Sheet – Governmental Funds 10Reconciliation of the Governmental Funds Balance Sheet to the Statement

of Net Position 11Statement of Revenues, Expenditures, and Changes in Fund Balances -

Governmental Funds 12Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures, and Changes in Fund Balances to the Statementof Activities 13

Notes to Financial Statements 14

Other Required Supplementary InformationBudgetary Comparison Schedule – General Fund and Major

Special Revenue Fund – (Unaudited) 33Schedule of Proportionate Share of Net Pension Liability - FRS 34Schedule of Contributions - FRS 35Schedule of Proportionate Share of Net Pension Liability - HIS 36Schedule of Contributions - HIS 37Note to Required Supplementary Information 38

COMPLIANCE AND INTERNAL CONTROL

Independent Auditor’s Report on Internal Control Over Financial Reportingand on Compliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance with Governmental Auditing Standards 39

Management Letter as required by Rules of the Florida Auditor General,Chapter 10.850, Florida Statutes, Charter School Audits 41

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Members: 2803 W. Busch Blvd Ste 106Florida Institute of CPAs Tampa, FL 33618American Institute of CPAs office (813) 892-4274 fax (813) 932-1913Government Audit Quality Center www.KingandWalker.com

Independent Auditor's Report

To the Board of Directors of Seminole Science Charter School(A charter school under Discovery Educational Services, Inc.)

a Charter School and Component Unit of the DistrictSchool Board of Seminole County, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each majorfund, and the aggregate remaining fund information of Seminole Science Charter School, a charterschool under Discovery Educational Services, Inc. and component unit of the District School Board ofSeminole County, Florida, as of and for the year ended June 30, 2017, and the related notes to thefinancial statements, which collectively comprise the School’s basic financial statements as listed inthe table of contents.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Governmental AuditingStandards, issued by the Comptroller General of the United States. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements arefree from material misstatement.

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

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

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, each major fund, and the aggregateremaining fund information of the School, as of June 30, 2017, and the respective changes infinancial position thereof for the year ended in accordance with accounting principles generallyaccepted in the United States of America.

Emphasis of Matter

As described in Note 1, the accompanying financial statements referred to above present only thefinancial position of Seminole Science Charter School at June 30, 2017, and the respective changes infinancial position for the year then ended, and is not intended to be a complete presentation of DiscoveryEducational Services, Inc. These financial statements do not purport to and do not present fairly thefinancial position of Discovery Educational Services, Inc. as of June 30, 2017 and its changes in financialposition for the year then ended in conformity with accounting principles generally accepted in the UnitedStates of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that theManagement’s Discussion and Analysis, the Budgetary Comparison Schedule and the Note toRequired Supplementary Information, as shown in the table of contents be presented to supplementthe basic financial statements. Such information, although not a part of the basic financialstatements, is required by the Governmental Accounting Standards Board who considers it to be anessential part of financial reporting for placing the basic financial statements in an appropriateoperational, economic, or historic context. We have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in theUnited States of America, which consisted of inquiries of management about methods of preparingthe information and comparing the information for consistency with management’s responses to ourinquiries, the basic financial statements, and other knowledge we obtained during our audit of thebasic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence to express anopinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September5, 2017 on our consideration of the School’s internal control over financial reporting and on our testsof its compliance with certain provisions of laws, regulations, contracts, and grant agreements andother matters. The purpose of that report is to describe the scope of our testing of internal controlover financial reporting and compliance and the results of that testing, and not to provide an opinionon internal control over financial reporting or on compliance. That report is an integral part of anaudit performed in accordance with Government Auditing Standards in considering the School’sinternal control over financial reporting and compliance.

Respectfully submitted,

September 5, 2017Tampa, Florida

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SEMINOLE SCIENCE CHARTER SCHOOL(A CHARTER SCHOOL UNDER DISCOVERY EDUCATIONAL SERVICES, INC.)

A Charter School and Component Unit of the District School Board of Seminole County, Florida

MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_______________________________________________________________________________________________________________

The Management’s Discussion and Analysis (MD&A) section of the annual financial report ofSeminole Science Charter School (“School”) provides an overview of the School’s activities forthe fiscal year ended June 30, 2017.

Because the information contained in the MD&A is intended to highlight significanttransactions, events, and conditions, it should be considered in conjunction with the School’sfinancial statements and notes to financial statements found in the table of contents.

FINANCIAL HIGHLIGHTS

For the fiscal year ended June 30, 2017, the School’s revenue exceeded expenses asshown on the School’s statement of activities by $263,082.

As shown on the statement of net position, the School reported an unrestricted netposition balance of $573,823.

OVERVIEW OF THE FINANCIAL STATEMENTS

The basic financial statements consist of three components:

Government-wide financial statements

Fund financial statements

Notes to financial statements

Government-Wide Financial Statements

The government-wide financial statements provide both short-term and long-term informationabout the School’s overall financial condition in a manner similar to those of a private-sectorbusiness. The statements include a statement of net position and a statement of activities that aredesigned to provide consolidated financial information about the governmental activities of theSchool presented on the accrual basis of accounting. The statement of net position providesinformation about the government’s financial position, its assets and liabilities, using aneconomic resources measurement focus. The difference between the assets and liabilities, thenet position, is a measure of the financial health of the School. The statement of activitiespresents information about the change in the School’s net position and the results of operations,during the fiscal year. An increase or decrease in net position is an indication of whether theSchool’s financial health is improving or deteriorating. To assess the overall financial positionof the School, one needs to consider additional non-financial factors such as changes in theSchool student base funding level.

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Fund Financial Statements

Fund financial statements are one of the components of the basic financial statements. A fund isa grouping of related accounts that is used to maintain control over resources that have beensegregated for specific activities or objectives. Fund financial statements provide more detailedinformation about the School’s financial activities, focusing on its most significant funds ratherthan fund types. This is in contrast to the entity-wide perspective contained in the government-wide statements.

Governmental Funds. Governmental funds are used to account for essentially the same functionsreported as governmental activities in the government-wide financial statements. However, thegovernmental funds utilize a spendable financial resources measurement focus rather than theeconomic resources measurement focus found in the government-wide financial statements. Thefinancial resources measurement focus allows the governmental fund statements to provideinformation on near-term inflows and outflows of spendable resources as well as balances ofspendable resources available at the end of the fiscal year.

The governmental fund statements provide a detailed short-term view that may be used toevaluate the School’s near-term financing requirements. This short-term view is useful whencompared to the long-term view presented as governmental activities in the government-widefinancial statements. To facilitate this comparison, both the governmental funds balance sheetand the governmental funds statement of revenues, expenditures, and changes in fund balancesprovide a reconciliation of governmental fund to governmental activities.

The governmental funds balance sheet and statement of revenues, expenditures, and changes infund balances provide detailed information about the School’s most significant funds. TheSchool operates two funds; a General Fund and a Special Revenue Fund. The School considersboth of these funds to be major funds.

The School adopts an annual budget for its governmental funds. A budgetary comparisonschedule, as required, has been provided for the General Fund and Major Special Revenue Fundto demonstrate compliance with the budget.

Notes to Financial Statements

The notes provide additional information that is essential for a full understanding of the dataprovided in the government-wide and fund financial statements.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net position may serve over time as a useful indicator of a government’s financial position. Thefollowing is a summary of the School’s net position as of June 30, 2016 and June 30, 2017:

6-30-16 6-30-17

Increase(Decrease)

ASSETS

Current and Other Assets 344,714$ 760,398$ 415,684$

Capital Assets, net 175,264 183,346 8,082

Total Assets 519,978 943,744 423,766

DEFERRED OUTFLOWS OF RESOURCES

Deferred Outflow Related to Pensions 794,423 794,423

Total Deferred Outflows of Resources - 794,423 794,423

LIABILITIES

Current Liabilities 76,971 146,607 69,636

Long-term Liabilities 16,610 837,821 821,211

Total Liabilities 93,581 984,428 890,847

DEFERRED INFLOWS OF RESOURCES

Deferred Inflow Related to Pensions 4,943 4,943

Total Deferred Inflows of Resources - 4,943 4,943

NET POSITION

Net Investment in Capital Assets 158,654 174,973 16,319

Unrestricted 267,743 573,823 306,080

Total Net Position 426,397$ 748,796$ 322,399$

Net Position, End of Year

Governmental Activities

The Current Assets of the School primarily consist of cash and cash equivalents. Liabilitiesconsist primarily of accounts payable, salaries and benefits payable, a capital lease payable, andthe net pension liability. Net Position is comprised of the School’s investment in capital assets,net of related debt and depreciation, and the results of the current year’s operations.

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The key elements of the changes in the School’s Net Position for the fiscal years ended June 30,2016, and June 30, 2017 are as follows:

The largest revenue sources for the School are from the State of Florida (87 percent). Revenuesfrom State sources for current operations are primarily received through the Florida EducationFinance Program (FEFP) funding formula. The FEFP formula utilizes student enrollment data todetermine the funds available for the School. The implementation grant is received throughFLDOE for new schools to aid in initial start-up costs. As a result of increased studentenrollment, State revenue sources increased by $622,910.

The largest concentration of expenses is Instruction, which accounted for 56 percent of totalexpenditures, and consists primarily of teachers’ salaries. Expenditures increased from the priorfiscal year due to the increase in student enrollment and the associated costs related to thatincrease.

6-30-16 6-30-17

Increase

(Decrease)

Revenues:

Federal Through State and Local 283,605$ 306,395$ 22,790$

State Sources 2,531,433 3,154,343 622,910

Local and Other 149,744 153,144 3,400

Total Revenues 2,964,782 3,613,882 649,100

Expenses:

Instruction 1,421,633 1,891,419 469,786

Instructional Media 21,150 44,051 22,901

Instructional & Curriculum Development 50,470 57,601 7,131

Instructional Staff Training 10,093 8,010 (2,083)

Board of Education 54,370 57,718 3,348

General Administration 21,218 158,312 137,094

School Administration 260,820 360,049 99,229

Fiscal Services 169,088 140,081 (29,007)

Food Services 70,364 70,555 191

Central Services 566 500 (66)

Operation of Plant 286,961 356,304 69,343

Maintenance of Plant 21,747 33,477 11,730

Administrative Technology Services 10,324 24,620 14,296

Community Service 95,100 98,456 3,356

Interest & Fiscal Charges 4,277 1,405 (2,872)

Unallocated Depreciation 21,306 48,242 26,936

Total Expenses 2,519,487 3,350,800 831,313

Increase/(Decrease) in Net Position 445,295$ 263,082$ (182,213)$

Governmental Activities

Operating Results for the Year

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FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS

Governmental Funds

As the School completed the year, its governmental funds reported a total fund balance of$613,791.

BUDGETARY HIGHLIGHTS

The general and special revenue fund budgets for the fiscal year ended June 30, 2017 weredeveloped based on the School’s anticipated revenues and expenditures, the expected studentpopulation for the school year, and federal grants. Over the course of the year, the schoolrevised its general and special revenue fund budget. Refer to the Budgetary ComparisonSchedule for additional reference.

CAPITAL ASSETS

The School’s investment in capital assets for its governmental activities as of June 30, 2017,amounts to $183,346 (net of accumulated depreciation). This investment in capital assetsincludes furniture, fixtures, and equipment, leasehold improvements and assets under capitallease. Additional information regarding the School’s capital assets can be found in the notes tothe financial statements.

LONG-TERM DEBT

At June 30, 2017, the School had $837,821 in long-term debt outstanding, a net increase of$821,211 from last year. Additional information regarding the School’s long-term debt can befound in the subsequent notes to the financial statements.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the School’s finances.Questions concerning any of the information provided in this report or requests for additionalfinancial information should be addressed to the Principal, Seminole Science Charter School3580 N. US. Hwy 17-92, Lake Mary, FL 32746.

Cash and Cash Equivalents $ 748,343

Deposits 12,055

Capital Assets:

Furniture, Fixtures, and Equipment, Net 124,465

Leasehold Improvements, Net 42,412

Assets Under Capital Lease, Net 16,469

Total Capital Assets, Net 183,346

TOTAL ASSETS 943,744

Deferred outlow related to pensions 794,423

TOTAL DEFERRED OUTFLOWS OF RESOURCES 794,423

Accounts Payable 24,141

Salaries and Benefits Payable 122,466

Long-Term Liabilities

Capital Leases Payable, due within one year 8,373

Net Pension Liability 829,448

TOTAL LIABILITIES 984,428

Deferred inflow related to pensions 4,943

TOTAL DEFERRED INFLOWS OF RESOURCES 4,943

Net Investment in Capital Assets 174,973

Unrestricted 573,823

TOTAL NET POSITION $ 748,796

NET POSITION

Activities

STATEMENT OF NET POSITION

June 30, 2017

Governmental

LIABILITIES

DEFERRED INFLOWS OF RESOURCES

(A CHARTER SCHOOL UNDER DISCOVERY EDUCATION SERVICES, INC.)

A CHARTER SCHOOL AND COMPONENT UNIT OF THE

DISTRICT SCHOOL BOARD OF SEMINOLE COUNTY, FLORIDA

ASSETS

SEMINOLE SCIENCE CHARTER SCHOOL

DEFERRED OUTFLOWS OF RESOURCES

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

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Net (Expenses)

Revenue

Expenses and Changes

Charges Operating Capital Net Position

for Grants and Grants and Governmental

Services Contributions Contributions Activities

Governmental Activities:

Instruction $ 1,891,419 $ - $ 228,515 $ - $ (1,662,904)

Instructional Media 44,051 7,255 (36,796)

Instruction & Curriculum Development 57,601 (57,601)

Instructional Staff Training 8,010 5,354 (2,656)

Board of Education 57,718 7,000 (50,718)

General Administration 158,312 1,947 (156,365)

School Administration 360,049 (360,049)

Fiscal Services 140,081 (140,081)

Food Services 70,555 40,848 (29,707)

Central Services 500 (500)

Operation of Plant 356,304 (356,304)

Maintenance of Plant 33,477 (33,477)

Administrative Technology Services 24,620 (24,620)

Community Service 98,456 (98,456)

Interest & Fiscal Charges 1,405 (1,405)

Unallocated Depreciation 48,242 (48,242)

Total Governmental Activities $ 3,350,800 $ 40,848 $ 250,071 $ - (3,059,881)

General Revenues:State Sources 3,154,343Grants & Contributions not restricted to specific program 56,324Local and Other 112,296

Total General Revenues 3,322,963

Change in Net Position 263,082

Net Position - July 1, 2016 426,397

Adjustment to Beginning Net Position 59,317

Restated Net Position - July 1, 2016 485,714Net Position - June 30, 2017 $ 748,796

STATEMENT OF ACTIVITIES

For the Fiscal Year Ended June 30, 2017


Program Revenues





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Special TotalGeneral Revenue Governmental

Fund Fund Funds

Cash and Cash Equivalents $ 748,343 $ - $ 748,343

Deposits 12,055 12,055

TOTAL ASSETS $ 760,398 $ - $ 760,398

Accounts Payable $ 24,141 $ - $ 24,141

Salaries and Benefits Payable 122,466 122,466

Total Liabilities 146,607 - 146,607

Nonspendable 12,055 12,055

Unassigned 601,736 601,736

Total Fund Balances 613,791 - 613,791

TOTAL LIABILITIES AND FUND BALANCES $ 760,398 $ - $ 760,398

FUND BALANCES


ASSETS

LIABILITIES

June 30, 2017

BALANCE SHEET - GOVERNMENTAL FUNDS





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Total Fund Balances - Governmental Funds $ 613,791

Amounts reported for governmental activities in the statement of

net position are different because:

Capital assets, net of accumulated depreciation, used in

governmental activities are not financial resources and

therefore, are not reported as assets in governmental funds. 183,346

Deferred Outflows and Inflows of resoures are not available in the

current period and not reported in the governmental funds. 789,480

Long-term liabilities are not due and payable in the current

period and therefore are not reported as liabilities in the

governmental funds.

Capital Leases Payable (8,373)

Net Pension Liability (829,448) (837,821)

Total Net Position - Governmental Activities $ 748,796

June 30, 2017

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION



SEMINOLE SCIENCE CHARTER SCHOOL(A CHARTER SCHOOL UNDER DISCOVERY EDUCATION SERVICES, INC.)

The accompanying notes to financial statements are an integral part of this statement.

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General Special Total

Fund Revenue Governmental

Fund Funds

Intergovernmental:

Federal Through State and Local $ - $ 306,395 $ 306,395

State Sources 3,154,343 3,154,343Local and Other 112,296 40,848 153,144

Total Revenues 3,266,639 347,243 3,613,882

Current - Education:Instruction $ 1,662,904 $ 228,515 $ 1,891,419Instructional Media 36,796 7,255 44,051Instruction & Curriculum Development 57,601 57,601Instructional Staff Training 2,656 5,354 8,010Board of Education 50,718 7,000 57,718General Administration 156,365 1,947 158,312School Administration 260,764 260,764Fiscal Services 140,081 140,081Food Services 70,555 70,555Central Services 500 500Operation of Plant 356,304 356,304Maintenance of Plant 33,477 33,477Administrative Technology Services 24,620 24,620Community Service 98,456 98,456

Fixed Capital Outlay:Other Capital Outlay 56,324 56,324

Debt Service:Principal 8,237 8,237Interest & Fiscal Charges 1,405 1,405

Total Expenditures 2,890,884 376,950 3,267,834

Excess (Deficiency) of RevenuesOver/(Under) Expenditures 375,755 (29,707) 346,048

Other Financing Sources (Uses):Transfers In 29,707 29,707Transfers (Out) (29,707) (29,707)

Total Other Financing Sources (Uses) (29,707) 29,707 -

Net Change in Fund Balances 346,048 - 346,048Fund Balances, July 1, 2016 267,743 - 267,743

Fund Balances, June 30, 2017 $ 613,791 $ - $ 613,791


Expenditures

IN FUND BALANCES - GOVERNMENTAL FUNDS


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

Revenues




The accompanying notes to financial statements are an integral part of this statement.

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Net Change in Fund Balances - Governmental Funds $ 346,048

Amounts reported for governmental activities in the statement of activities

are different because:

Capital outlays are reported in governmental funds as expenditures.

However, in the statement of activities, the cost of those assets is

allocated over their estimated useful lives as depreciation expense.

This is the amount of capital outlays ($56,324) in excess of

depreciation expense ($48,242) in the current period. 8,082

Principal payments on long-term debt are reported as an expenditure

in the Governmental Funds and a reduction to long-term debt

in the Statement of Activities. 8,237

Net effect of various transactions in the statement of activities that

do not require the use of current financial resources are not

reported in the governmental funds:

Pension Expense (calculated for net pension liability) (181,125)

Pension contributions made subsequent to the

pension liability measurement date of 6/30/16 81,840 (99,285)

Change in Net Position - Governmental Activities $ 263,082



REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

TO THE STATEMENT OF ACTIVITIES





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NOTES TO FINANCIAL STATEMENTSJune 30, 2017

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Seminole Science Charter School (“School”), a charter school underDiscovery Educational Services, Inc., is a component of the District School Boardof Seminole County, Florida (“District”). The School’s charter is held byDiscovery Educational Services, Inc., a not-for-profit corporation organizedpursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit CorporationAct. The governing body of the School is the not-for-profit corporation Board ofDirectors, which is comprised of not less than three members.

The basic financial statements of the School present only the balances, activityand disclosures related to the School. They do not purport to, and do not, presentfairly the financial position of Discovery Educational Services, Inc. as of June 30,2017, and its changes in financial position or budgetary comparisons, whereapplicable, for the year then ended in conformity with accounting principlesgenerally accepted in the United States of America.

The general operating authority of the School is contained in Section 1002.33,Florida Statutes. The School operates under a charter of the sponsoring schooldistrict, the District School Board of Seminole County, Florida, (“District”). Thecurrent charter is effective through June 30, 2020, and is subject to annual reviewand may be renewed by mutual agreement between the School and the District.At the end of the term of the charter, the District may choose not to renew thecharter under grounds specified in the charter. In this case, the District is requiredto notify the school in writing at least 90 days prior to the charter’s expiration.During the term of the charter, the District may also terminate the charter if goodcause is shown. In the event of termination of the charter, the District shallassume operation of the School. The School is considered a component unit ofthe District; therefore, for financial reporting purposes, the School is required tofollow generally accepted accounting principles applicable to state and localgovernmental units.

Criteria for determining if other entities are potential component units whichshould be reported within the School's basic financial statements are identifiedand described in the Governmental Accounting Standards Board's (GASB)Codification of Governmental Accounting and Financial Reporting Standards,Sections 2100 and 2600. The application of these criteria provides foridentification of any entities for which the School is financially accountable andother organizations for which the nature and significance of their relationship withthe School are such that exclusion would cause the School's basic financialstatements to be misleading or incomplete. Based on these criteria, no componentunits are included within the reporting entity of the School.




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Basis of Presentation

Government-wide Financial Statements - Government-wide financial statements,including the statement of net position and the statement of activities, presentinformation about the School as a whole.

Government-wide financial statements are prepared using the economic resourcesmeasurement focus. The statement of activities presents a comparison betweendirect expenses and program revenues for each function or program of theSchool’s governmental activities. Direct expenses are those that are specificallyassociated with a service, program, or department and are thereby clearlyidentifiable to a particular function.

Program revenues include charges paid by the recipient of the goods or servicesoffered by the program and grants and contributions that are restricted to meetingthe operational or capital requirements of a particular program. Revenues that arenot classified as program revenues are presented as general revenues. Thecomparison of direct expenses with program revenues identifies the extent towhich each governmental function is self-financing or draws from the generalrevenues of the School.

Fund Financial Statements - Fund financial statements report detailed informationabout the School in the governmental funds. The focus of governmental fundfinancial statements is on major funds rather than reporting funds by type. Eachmajor fund is reported in a separate column. Because the focus of governmentalfund financial statements differs from the focus of government-wide financialstatements, a reconciliation is presented with each of the governmental fundfinancial statements.

The School’s major governmental funds are as follows:

General Fund – to account for all financial resources not required to beaccounted for in another fund, and for certain revenues from the State that arelegally restricted to be expended for specific current operating purposes.

Special Revenue Fund – to account for certain Federal grant programresources and the food service program.

Basis of Accounting

Basis of accounting refers to when revenues and expenditures, or expenses, arerecognized in the accounts and reported in the financial statements. Basis ofaccounting relates to the timing of the measurements made, regardless of themeasurement focus applied.

The government-wide financial statements are prepared using the accrual basis ofaccounting. Revenues are recognized when earned and expenses are recognizedwhen a liability is incurred, regardless of the timing of the related cash flows.Revenues from grants, entitlements, and donations are recognized in the fiscal




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year in which all eligibility requirements imposed by the provider have beensatisfied.

Governmental fund financial statements are prepared using the modified accrualbasis of accounting. Revenues, except for certain grant revenues, are recognizedwhen they become measurable and available. Revenues are considered to beavailable when they are collectible within the current period or soon enoughthereafter to pay liabilities of the current period. The School considers revenuesto be available if they are collected within 30 days of the end of the current fiscalyear. When grant terms provide that the expenditure of resources is the primefactor for determining eligibility for Federal, State, and other grant resources,revenue is recognized at the time the expenditure is made. Under the modifiedaccrual basis of accounting, expenditures are generally recognized when therelated fund liability is incurred, except for principal and interest on long-termdebt, claims and judgments, and compensated absences, which are recognizedwhen due. Allocations of cost, such as depreciation, are not recognized ingovernmental funds.

Deposits and Investments

Cash and cash equivalents are defined as demand deposits, money marketaccounts, and short term investments with original maturities of eight months orless from date of acquisition. The School considers all demand accounts andmoney market funds which are not subjected to withdrawal restrictions to be cashand cash equivalents. Cash deposits consist of demand deposits with financialinstitutions. Deposits on hand at financial institutions are insured by the FederalDeposit Insurance Company up to $250,000.

Capital Assets

Expenditures for capital assets acquired or constructed for general Schoolpurposes are reported in the governmental fund that financed the acquisition orconstruction. The capital assets so acquired are reported at cost in thegovernment-wide statement of net position but are not reported in thegovernmental fund financial statements. Capital assets are defined by the Schoolas those costing more than $750. Such assets are recorded at historical cost orestimated historical cost if purchased or constructed. Donated assets are recordedat fair value at the date of donation.

Capital assets are depreciated using the straight-line method over the followingestimated useful lives:

Description Estimated Lives

Furniture, Fixtures and Equipment 3 - 7 yearsAssets Under Capital Lease 3 years

Leasehold Improvements 10 years




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Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report aseparate section for deferred outflows of resources. This separate financialstatement element, deferred outflows of resources, represents a consumption ofnet position that applies to a future period(s) and so will not be recognized as anoutflow of resources (expense/expenditure) until then. The School does not haveany items that qualify for reporting in this category.

In addition to liabilities, the statement of financial position will sometimes reporta separate section for deferred inflows of resources. This separate financialstatement element, deferred inflows of resources, represents an acquisition of netposition that applies to a future period(s) and so will not be recognized as aninflow of resources (revenue) until then. The School does not have any items thatqualify for reporting in this category.

Long-term Debt

Long-term obligations that will be financed by resources to be received in thefuture by the general fund are reported in the government-wide financialstatements, not in the general fund. Current-year information relative to changesin long-term debt is described in subsequent notes.

Net Pension Liability

As a participating employer in the Florida Retirement System, the Schoolrecognizes its proportionate share of the collective net pension liabilities of theFRS cost-sharing multiple-employer defined benefit plans. As of June 30, 2017,the School’s proportionate share of the net pension liabilities totaled $829,448.Note 10 includes a complete discussion of defined benefit pension plans.

Net Position and Fund Balance Classification

Government-wide Financial Statements

Net Position are classified and reported in three components:

Net Investment in Capital Assets – consists of capital assets, net ofaccumulated depreciation, and reduced by the outstanding balances of anyborrowings that are attributed to the acquisition or improvement of thoseassets.

Restricted Net Position – consists of net position with constraints placedon their use either by external groups such as creditors, contributors, orlaws or regulations of other governments.

Unrestricted Net Position – all other net position that does not meet thedefinition of “restricted” or “net investment in capital assets.”




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Fund Financial Statements

GASB Codification Section 1800.142, Fund Balance Reporting andGovernmental Fund Type Definitions, defines the different types of fund balancesthat a governmental entity must use for financial reporting purposes. GASBrequires the fund balance amounts to be reported within one of the following fundbalance categories:

Nonspendable – fund balance associated with inventories, prepaidexpenses, long-term loans and notes receivable, and property held forresale (unless the proceeds are restricted, committed or assigned). Allnonspendable fund balances at year end relate to assets that are innonspendable form.

Restricted – fund balance that can be spent only for the specific purposesstipulated by the constitution, external resource providers, or throughenabling legislation.

Committed – fund balance that can be used only for the specific purposesdetermined by a formal action of the School’s Board of Governance.

Assigned – fund balance that is intended to be used by the School’smanagement for specific purposes but does not meet the criteria to beclassified as restricted or committed.

Unassigned – fund balance that is the residual amount for the School’sgeneral fund and includes all spendable amounts not contained in the otherclassifications.

Order of Fund Balance Spending Policy

The School’s policy is to apply expenditures against nonspendable fund balance,restricted fund balance, committed fund balance, assigned fund balance, andunassigned fund balance at the end of the fiscal year. First, nonspendable fundbalances are determined. Then restricted fund balances for specific purposes aredetermined (not including nonspendable amounts). Any remaining fund balanceamounts for the non-general funds are to be classified as restricted fund balance.It is possible for the non-general funds to be classified as restricted fund balance.It is possible for the non-general funds to have negative unassigned fund balancewhen nonspendable amounts plus the amount of restricted fund balances forspecific purposes exceed the positive fund balance for non-general fund.

Revenue Sources

Revenues for current operations are received primarily from the District pursuantto the funding provisions included in the School’s charter. In accordance with thefunding provisions of the charter and Section 1002.33(17), Florida Statutes, the




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School reports the number of full-time equivalent students and related data to theDistrict.

Under provisions of Section 1011.62, Florida Statutes, the District reports thenumber of full-time equivalent students and related data to the FloridaDepartment of Education (FDOE) for funding through the Florida EducationFinance Program (FEFP). Funding for the School is adjusted during the year toreflect the revised calculations by the FDOE under the FEFP and the actualweighted full-time equivalent students (FTE) reported by the School duringdesignated full-time equivalent student survey periods. The Department may alsoadjust subsequent fiscal period allocations based upon an audit of the School'scompliance in determining and reporting FTE and related data. Normally, suchadjustments are treated as reductions or additions of revenue in the year when theadjustments are made.

The basic amount of funding through the FEFP under Section 1011.62 is theproduct of the (1) unweighted FTE, multiplied by (2) the cost factor for eachprogram, multiplied by (3) the base student allocation established by thelegislature. Additional funds for exceptional students who do not have a matrix ofservices are provided through the guaranteed allocation designated in Section1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2017, theSchool reported 468.37 unweighted FTE and 492.3626 Weighted FTE.

FEFP funding may also be adjusted as a result of subsequent FTE auditsconducted by the Florida Auditor General pursuant to Section 1010.305, FloridaStatutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools arerequired to maintain the following documentation for three years or until thecompletion of an FTE audit:

Attendance and membership documentation (Rule 6A-1.044, FAC). Teacher certificates and other certification documentation (Rule 6A-1.0503,

FAC). Documentation for instructors teaching out-of-field (Rule 6A-1.0503, FAC). Procedural safeguards for weighted programs (Rule 6A-6.03411, FAC). Evaluation and planning documents for weighted programs (Section

1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).

The School receives federal or state awards for the enhancement of variouseducational programs. This assistance is generally received based on applicationssubmitted to and approved by various granting agencies. For federal or stateawards in which a claim to these grant proceeds is based on incurring eligibleexpenditures, revenue is recognized to the extent that eligible expenditures havebeen incurred.

The School also receives funding through donations and fundraising efforts,school lunch sales and local property tax collections.




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The School follows the policy of applying restricted resources prior to applyingunrestricted resources when an expense is incurred for purposes for which bothrestricted and unrestricted assets are available.

Income Taxes

The School is exempt from Federal tax under Section 501(c)(3) of the InternalRevenue Code. Accordingly, no provision for income taxes has been included inthe accompanying financial statements. Additionally, no uncertain tax positionshave been made requiring disclosure in the related notes to financial statements.The School’s income tax returns for the past three years are subject toexamination by tax authorities and may change upon examination.

Use of Estimates

In preparing the financial statements in conformity with generally acceptedaccounting principles in the United States management is required to makeestimates and assumptions that affect the reported amounts of assets and liabilitiesas of the date of the statement of net position and affect revenues andexpenditures for the period presented. Actual results could differ from thoseestimates.

Subsequent Events

Management has evaluated all events subsequent to the balance sheet date andthrough the report date, which is the date these financial statements were availableto be issued. Management determined there are no subsequent events whichrequire disclosure.

2. PRIOR PERIOD ADJUSTMENT

The School participates in the Florida Retirement System (FRS) defined benefit pensionplan and the Health Insurance Subsidy (HIS) defined benefit plan administered by FloridaDivision of Retirement. Deferred outflows of resources related to pensions and to theSchool’s contributions subsequent to the measurement date was incorrectly reported inthe prior fiscal year. To account for this error, the beginning net position of $426,397, aspreviously reported, has been increased by $59,317, to a beginning net position of$485,714. This represents the School’s contributions subsequent to the priormeasurement date as of June 30, 2016.

3. CASH DEPOSITS

Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the eventof a bank failure, the School’s deposits may not be returned to the School. The Schooldoes not have a custodial credit risk policy. All cash deposits are held in banks thatqualify as public depositories under Florida law. All such deposits are insured by federaldepository insurance and/or collateralized with securities held in Florida’s multiplefinancial institution collateral pool as required by Chapter 280, Florida Statutes.




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4. CHANGES IN CAPITAL ASSETS

Changes in capital assets are presented in the table below.

Beginning EndingBalance Additions Deletions Balance

Governmental Activities:Furniture, Fixtures and Equipment 111,276$ 56,324$ -$ 167,600$Leasehold Improvements 60,589 60,589Assets Under Capital Lease 24,705 24,705

Total Capital Assets Being Depreciated 196,570 56,324 - 252,894

Less Accumulated Depreciation for:Furniture, Fixtures and Equipment (11,129) (32,006) (43,135)Leasehold Improvements (6,059) (12,118) (18,177)Assets Under Capital Lease (4,118) (4,118) (8,236)

Total Accumulated Depreciation (21,306) (48,242) - (69,548)

Governmental Activities Capital Assets, net 175,264$ 8,082$ -$ 183,346$

All depreciation expense was shown as unallocated on the Statement of Activities.

5. OBLIGATIONS UNDER CAPITAL LEASE

The School is a party of an agreement for computers which is classified as a capital lease.The economic substance of the lease is that the School is financing the acquisition of theassets through the lease and, accordingly, it is recorded in the School’s statement of netposition.

Future minimum capital lease payments and the present value of the minimum leasepayments as of June 30 are as follows:

FiscalYearEndingJune30: Total Principal Interest2018 8,833$ 8,373$ 460$

Total MinimumLeasePayments 8,833$ 8,373$ 460$




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6. CHANGES IN LONG-TERM LIABILITIES

The following is a summary of changes in long-term liabilities:

Beginning Ending Due inBalance Additions Deductions Balance One Year

Governmental Activities:

Capital Leases Payable 16,610$ -$ (8,237)$ 8,373$ 8,373$Net Pension Liability 829,448 829,448 -Total Governmental Activities 16,610$ 829,448$ (8,237)$ 837,821$ 8,373$

7. INTERFUND TRANSFERS

The General Fund transferred $29,707 to the Special Revenue Fund to cover the costs ofthe food service program. The amounts of interfund transfers are netted together and notreported in the statement of net position and the statement of activities.

8. SCHEDULE OF STATE REVENUE SOURCES

The following is a schedule of the School’s State revenue for the 2017 fiscal year:

Source Amount

Florida Education Finance Program 2,032,484$

Class Size Reduction 543,645

Discretionary Local Effort 153,459

ESE Guarantee 128,747

Supplementary Academic Instruction 109,913

Discretionary Millage 58,003

School Recognition 37,727

Instructional Materials 36,224

Reading Allocation 20,277

Digital Classroom Allocation 10,838

Safe Schools 8,561

Discretionary Lottery 7,648

Best and Brightest Teachers Program 6,817

Total State Revenue 3,154,343$

As provided in the charter school contract, the District has charged the School anadministrative fee of $82,948.




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9. FUNDING AND CREDIT RISK CONCENTRATIONS

The School receives substantially all of its support and revenue from federal, state andlocal funding sources, passed through the District, in the form of performance and budgetbased contracts. Continuing operation of the School is greatly dependent upon thecontinued support of these governmental agencies.

10. FLORIDA RETIREMENT SYSTEM (FRS) – Defined Benefit Pension Plans

General Information about the Florida Retirement System (FRS)

The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefitpension plan for participating public employees. The FRS was amended in 1998 to addthe Deferred Retirement Option Program (DROP) under the defined benefit plan andamended in 2000 to provide a defined contribution plan alternative to the defined benefitplan for FRS members effective July 1, 2002. This integrated defined contributionpension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established theHIS Program, a cost-sharing multiple-employer defined benefit pension plan to assistretired members of any State-administered retirement system in paying the costs of healthinsurance.

Essentially all regular employees of the School are eligible to enroll as members of theState-administered FRS. Provisions relating to the FRS are established by Chapters 121and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, FloridaStatutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility,contributions, and benefits are defined and described in detail. Such provisions may beamended at any time by further action from the Florida Legislature. The FRS is a singleretirement system administered by the Florida Department of Management Services,Division of Retirement, and consists of two cost-sharing multiple-employer definedbenefit plans and other nonintegrated programs. A comprehensive annual financial reportof the FRS, which includes its financial statements, required supplementary information,actuarial report, and other relevant information, is available from the Florida Departmentof Management Services’ Web site (www.dms.myflorida.com).

The School’s FRS and HIS pension expense totaled $181,125 for the fiscal year endedJune 30, 2017.

FRS Pension Plan

Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employerdefined benefit pension plan, with a DROP for eligible employees. The general classesof membership are as follows:

Regular Class – Members of the FRS who do not qualify for membership in theother classes.

Employees enrolled in the Plan prior to July 1, 2011, vest at 6 years of creditable serviceand employees enrolled in the Plan on or after July 1, 2011, vest at 8 years of creditableservice. All vested members, enrolled prior to July 1, 2011, are eligible for normal




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retirement benefits at age 62 or at any age after 30 years of service. All membersenrolled in the Plan on or after July 1, 2011, once vested, are eligible for normalretirement benefits at age 65 or any time after 33 years of creditable service. Employeesenrolled in the Plan may include up to 4 years of credit for military service towardcreditable service. The Plan also includes an early retirement provision; however, thereis a benefit reduction for each year a member retires before his or her normal retirementdate. The Plan provides retirement, disability, death benefits, and annual cost-of-livingadjustments to eligible participants.

DROP, subject to provisions of Section 121.091, Florida Statutes, permits employeeseligible for normal retirement under the Plan to defer receipt of monthly benefit paymentswhile continuing employment with an FRS-participating employer. An employee mayparticipate in DROP for a period not to exceed 60 months after electing to participate.During the period of DROP participation, deferred monthly benefits are held in the FRSTrust Fund and accrue interest. The net pension liability does not include amounts forDROP participants, as these members are considered retired and are not accruingadditional pension benefits.

Benefits Provided. Benefits under the Plan are computed on the basis of age and/or yearsof service, average final compensation, and service credit. Credit for each year of serviceis expressed as a percentage of the average final compensation. For members initiallyenrolled before July 1, 2011, the average final compensation is the average of the 5highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, theaverage final compensation is the average of the 8 highest fiscal years’ earnings. Thetotal percentage value of the benefit received is determined by calculating the total valueof all service, which is based on retirement plan and/or the class to which the memberbelonged when the service credit was earned. Members are eligible for in-line-of-duty orregular disability and survivors’ benefits. The following chart shows the percentagevalue for each year of service credit earned:

Class, Initial Enrollment, and Retirement Age/Years of Service % Value

Regular Class members initially enrolled before July 1, 2011

Retirement up to age 62 or up to 30 years of service 1.60

Retirement at age 63 or with 31 years of service 1.63


Retirement at age 65 or with 33 or more years of service 1.68

Regular Class members initially enrolled on or after July 1, 2011

Retirement up to age 65 or up to 33 years of service 1.60



Retirement at age 68 or with 36 or more years of service 1.68

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in theFRS before July 1, 2011, and all service credit was accrued before July 1, 2011, theannual cost-of-living adjustment is 3 percent per year. If the member is initially enrolledbefore July 1, 2011, and has service credit on or after July 1, 2011, there is an




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individually calculated cost-of-living adjustment. The annual cost-of-living adjustment isa proportion of 3 percent determined by dividing the sum of the pre-July 2011 servicecredit by the total service credit at retirement multiplied by 3 percent. Plan membersinitially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment afterretirement.

Contributions. The Florida Legislature establishes contribution rates for participatingemployers and employees. Contribution rates during the 2016-17 fiscal year were asfollows:

Percent of Gross SalaryClass Employee Employer (1)

FRS, Regular 3.00 7.52

FRS, Reemployed Retiree (2) (2)

Notes: (1) Employer rates include 1.66 percent for the postemploymenthealth insurance subsidy. Also, employer rates, other thanfor DROP participants, include 0.06 percent foradministrative costs of the Investment Plan.

(2) Contribution rates are dependent upon retirement class inwhich reemployed.

The School’s contributions to the Plan totaled $57,592 for the fiscal year ended June 30,2017.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and DeferredInflows of Resources Related to Pensions. At June 30, 2017, the School reported aliability of $434,181 for its proportionate share of the net pension liability. The netpension liability was measured as of June 30, 2016, and the total pension liability used tocalculate the net pension liability was determined by an actuarial valuation as of July 1,2016. The School’s proportionate share of the net pension liability was based on theSchool’s 2015-16 fiscal year contributions relative to the total 2015-16 fiscal yearcontributions of all participating members. At June 30, 2016, the School’s proportionateshare was .001719522 percent, which was an increase of .001719522 percent from itsproportionate share measured as of June 30, 2015.

For the fiscal year ended June 30, 2017, the School recognized pension expense of$104,049. In addition, the School reported deferred outflows of resources and deferredinflows of resources related to pensions from the following sources:




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Deferred Outflows Deferred Inflows

Description of Resources of Resources

Differences between expected andactual experience 33,244$ 4,043$

Change of assumptions 26,267Net difference between projected and actualearnings on FRS Plan investments 112,230

Changes in proportion and differences betweenSchool FRS contributions and proportionateshare of contributions 204,366

School FRS contributions subsequent tothe measurement date 57,592

Total 433,699$ 4,043$

The deferred outflows of resources related to pensions totaling $57,592, resulting fromSchool contributions subsequent to the measurement date, will be recognized as areduction of the net pension liability in the fiscal year ending June 30, 2018. Otheramounts reported as deferred outflows of resources and deferred inflows of resourcesrelated to pensions will be recognized in pension expense as follows:

Fiscal Year Ending June 30 Amount

2018 23,100$2019 23,1002020 66,8542021 45,7542022 6,730Thereafter 2,161

Total 167,699$

Actuarial Assumptions. The total pension liability in the July 1, 2016, actuarial valuationwas determined using the following actuarial assumptions, applied to all periods includedin the measurement:

Inflation 2.60 percent

Salary increases 3.25 percent, average, including inflation

Investment rate of return 7.60 percent, net of pension plan investment

expense, including inflation

Mortality rates were based on the Generational RP-2000 with Projection Scale BB.

The actuarial assumptions used in the July 1, 2016, valuation were based on the results ofan actuarial experience study for the period July 1, 2008, through June 30, 2013.

The long-term expected rate of return on pension plan investments was not based onhistorical returns, but instead is based on a forward-looking capital market economicmodel. The allocation policy’s description of each asset class was used to map the targetallocation to the asset classes shown below. Each asset class assumption is based on aconsistent set of underlying assumptions, and includes an adjustment for the inflation




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assumption. The target allocation and best estimates of arithmetic and geometric realrates of return for each major asset class are summarized in the following table:

Compound

Annual Annual

Target Arithmetic (Geometric) Standard

Asset Class Allocation (1) Return Return Deviation

Cash 1% 3.0% 3.0% 1.7%

Fixed Income 18% 4.7% 4.6% 4.6%

Global Equity 53% 8.1% 6.8% 17.2%

Real Estate (Property) 10% 6.4% 5.8% 12.0%

Private Equity 6% 11.5% 7.8% 30.0%

Strategic Investments 12% 6.1% 5.6% 11.4%

Total 100%

Assumed inflation - Mean 2.6% 1.9%

Note: (1) As outlined in the Plan's investment policy.

Discount Rate. The discount rate used to measure the total pension liability was 7.60percent. The Plan’s fiduciary net position was projected to be available to make allprojected future benefit payments of current active and inactive employees. Therefore,the discount rate for calculating the total pension liability is equal to the long-termexpected rate of return.

Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes inthe Discount Rate. The following presents the School’s proportionate share of the netpension liability calculated using the discount rate of 7.60 percent, as well as what theSchool’s proportionate share of the net pension liability would be if it were calculatedusing a discount rate that is 1 percentage point lower (6.60 percent) or 1 percentage pointhigher (8.60 percent) than the current rate:

1% Current 1%Decrease Discount Rate Increase(6.60%) (7.60%) (8.60%)

School's proportionate share ofthe net pension liability 799,356$ 434,181$ 130,220$

Pension Plan Fiduciary Net Position. Detailed information about the Plan’s fiduciary netposition is available in the separately issued FRS Pension Plan and Other StateAdministered Systems Comprehensive Annual Financial Report.

HIS Pension Plan

Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employerdefined benefit pension plan established under Section 112.363, Florida Statutes, andmay be amended by the Florida Legislature at any time. The benefit is a monthlypayment to assist retirees of State-administered retirement systems in paying their health




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insurance costs and is administered by the Florida Department of Management Services,Division of Retirement.

Benefits Provided. For the fiscal year ended June 30, 2017, eligible retirees andbeneficiaries received a monthly HIS payment of $5 for each year of creditable servicecompleted at the time of retirement with a minimum HIS payment of $30 and amaximum HIS payment of $150 per month, pursuant to Section 112.363, FloridaStatutes. To be eligible to receive a HIS benefit, a retiree under a State-administeredretirement system must provide proof of health insurance coverage, which can includeMedicare.

Contributions. The HIS Plan is funded by required contributions from FRS participatingemployers as set by the Florida Legislature. Employer contributions are a percentage ofgross compensation for all active FRS members. For the fiscal year ended June 30, 2017,the contribution rate was 1.66 percent of payroll pursuant to Section 112.363, FloridaStatutes. The School contributed 100 percent of its statutorily required contributions forthe current and preceding 3 years. HIS Plan contributions are deposited in a separatetrust fund from which HIS payments are authorized. HIS Plan benefits are notguaranteed and are subject to annual legislative appropriation. In the event the legislativeappropriation or available funds fail to provide full subsidy benefits to all participants,benefits may be reduced or canceled.

The School’s contributions to the HIS Plan totaled $24,248 for the fiscal year ended June30, 2017.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and DeferredInflows of Resources Related to Pensions. At June 30, 2017, the School reported a netpension liability of $395,267 for its proportionate share of the net pension liability. Thecurrent portion of the net pension liability is the School’s proportionate share of benefitpayments expected to be paid within one year, net of the School’s proportionate share ofthe HIS Plan’s fiduciary net position available to pay that amount. The net pensionliability was measured as of June 30, 2016, and the total pension liability used tocalculate the net pension liability was determined by applying update procedures to theHIS Plan actuarial valuation as of July 1, 2016. The School’s proportionate share of thenet pension liability was based on the School’s 2015-16 fiscal year contributions relativeto the total 2015-16 fiscal year contributions of all participating members. At June 30,2016, the School’s proportionate share was .003391517 percent, which was an increase.003391517 percent from its proportionate share measured as of June 30, 2015.

For the fiscal year ended June 30, 2017, the School recognized pension expense of$77,075. In addition, the School reported deferred outflows of resources and deferredinflows of resources related to pensions from the following sources:




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Deferred Outflows Deferred Inflows

Description of Resources of Resources

Differences between expected andactual experience -$ 900$

Change of assumptions 62,027Net difference between projected and actualearnings on HIS Plan investments 200

Changes in proportion and differences betweenSchool HIS contributions and proportionateshare of contributions 274,249

School HIS contributions subsequent tothe measurement date 24,248

Total 360,724$ 900$

The deferred outflows of resources totaling $24,248, resulting from School contributionssubsequent to the measurement date, will be recognized as a reduction of the net pensionliability in the fiscal year ending June 30, 2018. Other amounts reported as deferredoutflows of resources and deferred inflows of resources related to pensions will berecognized in pension expense as follows:

Fiscal Year Ending June 30 Amount

2018 10,982$2019 10,9822020 10,9442021 10,9252022 9,452Thereafter 8,043

Total 61,327$

Actuarial Assumptions. The total pension liability at July 1, 2016, determined byapplying update procedures to the actuarial valuation at July 1, 2014, used the followingactuarial assumptions, applied to all periods included in the measurement:

Inflation 2.60 percent

Salary increases 3.25 percent, average, including inflation

Municipal bond rate 2.85 percent

Mortality rates were based on the Generational RP-2000 with Projected Scale BB.

While an experience study had not been completed for the HIS Plan, the actuarialassumptions that determined the total pension liability for the HIS Plan were based oncertain results of the most recent experience study for the FRS Plan.

Discount Rate. The discount rate used to measure the total pension liability was 2.85percent. In general, the discount rate for calculating the total pension liability is equal tothe single rate equivalent to discounting at the long-term expected rate of return forbenefit payments prior to the projected depletion date. Because the HIS benefit isessentially funded on a pay-as-you-go basis, the depletion date is considered to be




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immediate, and the single equivalent discount rate is equal to the municipal bond rateselected by the plan sponsor. The Bond Buyer General Obligation 20-Bond MunicipalBond Index was adopted as the applicable municipal bond index.

Sensitivity of the School’s Proportionate Share of the Net Pension Liability to Changes inthe Discount Rate. The following presents the School’s proportionate share of the netpension liability calculated using the discount rate of 2.85 percent, as well as what theSchool’s proportionate share of the net pension liability would be if it were calculatedusing a discount rate that is 1 percentage point lower (1.85 percent) or 1 percentage pointhigher (3.85percent) than the current rate:

1% Current 1%Decrease Discount Rate Increase(1.85%) (2.85%) (3.85%)

School's proportionate share ofthe net pension liability 453,461$ 395,267$ 346,969$

Pension Plan Fiduciary Net Position. Detailed information about the HIS Plan’sfiduciary net position is available in the separately issued FRS Pension Plan and OtherState Administered Systems Comprehensive Annual Financial Report.

11. FRS – Defined Contribution Pension Plans

The SBA administers the defined contribution plan officially titled the FRS InvestmentPlan (Investment Plan). The Investment Plan is reported in the SBA’s annual financialstatements and in the State of Florida Comprehensive Annual Financial Report.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect toparticipate in the Investment Plan in lieu of the FRS defined benefit plan. Schoolemployees already participating in the State School System Optional Retirement Programor DROP are not eligible to participate in the Investment Plan. Employer and employeecontributions are defined by law, but the ultimate benefit depends in part on theperformance of investment funds. Service retirement benefits are based upon the value ofthe member’s account upon retirement. Benefit terms, including contributionrequirements, are established and may be amended by the Florida Legislature. TheInvestment Plan is funded with the same employer and employee contributions rates, thatare based on salary and membership class (Regular Class, Senior Management ServiceClass, etc.), as the FRS defined benefit plan. Contributions are directed to individualmember accounts, and the individual members allocate contributions and accountbalances among various approved investment choices. Costs of administering theInvestment Plan, including the FRS Financial Guidance Program, are funded through anemployer contribution of 0.06 percent of payroll and by forfeited benefits of InvestmentPlan members. Allocations to the Investment Plan member accounts during the 2016-17fiscal year were as follows:




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Percent of

Gross

Class Compensation

FRS, Regular 6.30

For all membership classes, employees are immediately vested in their own contributionsand are vested after 1 year of service for employer contributions and investment earningsregardless of membership class. If an accumulated benefit obligation for service creditoriginally earned under the FRS Pension Plan is transferred to the Investment Plan, themember must have the years of service required for FRS Pension Plan vesting (includingthe service credit represented by the transferred funds) to be vested for these funds andthe earnings on the funds. Nonvested employer contributions are placed in a suspenseaccount for up to 5 years. If the employee returns to FRS-covered employment withinthe 5 year period, the employee will regain control over their account. If the employeedoes not return within the 5 year period, the employee will forfeit the accumulatedaccount balance. For the fiscal year ended June 30, 2017, the information for the amountof forfeitures was unavailable from the SBA; however, management believes that theseamounts, if any, would be immaterial to the School.

After termination and applying to receive benefits, the member may rollover vested fundsto another qualified plan, structure a periodic payment under the Investment Plan, receivea lump-sum distribution, leave the funds invested for future distribution, or anycombination of these options. Disability coverage is provided in which the member mayeither transfer the account balance to the FRS Pension Plan when approved for disabilityretirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan,or remain in the Investment Plan and rely upon that account balance for retirementincome.

The School’s Investment Plan pension expense totaled $32,485 for the fiscal year endedJune 30, 2017.

12. FACILITY LEASE

The School leases its educational facility under a noncancelable operating lease. TheSchool entered into a 5 year lease for its educational facility through June 30, 2020 with5M Associates, LLC. This lease contains varying renewal options and requires theSchool to pay common area charges including insurance and utility costs. Rentalexpenditures for the 2017 fiscal year totaled $264,000.

13. COMMITMENTS AND CONTINGENT LIABILITIES

The School participates in state grant programs, which are governed by various rules andregulations of the grantor agencies. Costs charged to the respective grant programs aresubject to audit and adjustment by the grantor agencies, therefore, to the extent that theSchool has not complied with the rules and regulations governing the grants, refunds ofany money received may be required and the collectability of any related receivables atJune 30, 2017, may be impaired.




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In the opinion of the School, there are no significant liabilities relating to compliancewith the rules and regulations governing the respective grants; therefore, no provision hasbeen recorded in the accompanying financial statements for such contingencies.

14. RISK MANAGEMENT PROGRAMS

The School is exposed to various risks of loss related to torts; theft of, damage to, anddestruction of assets; errors and omissions; and natural disasters for which the Schoolcarries commercial insurance. There have been no significant reductions in insurancecoverage and settlement amounts have not exceeded insurance coverage for the currentyear or the three prior years.

15. LEGAL MATTERS

In the normal course of conducting its operations, the School occasionally becomes partyto various legal actions and proceedings. In the opinion of management, the ultimateresolution of such legal matters will not have a significant adverse effect on theaccompanying financial statements

Variance with Variance with

Original Final Actual Final Budget - Original Final Actual Final Budget -

Budget Budget Positive Budget Budget Positive

(Negative) (Negative)

Revenues:

Intergovernmental:

Federal Through State and Local $ - $ - $ - $ - $ 241,395 $ 306,395 $ 306,395 $ -

State Sources 2,833,605 3,154,343 3,154,343 - - - -

Local and Other 120,000 112,296 112,296 - 40,000 40,848 40,848 -

Total Revenues 2,953,605 3,266,639 3,266,639 - 281,395 347,243 347,243 -

Expenditures:

Current - Education:

Instruction 1,547,524 1,662,904 1,662,904 - 225,826 228,515 228,515 -

Instructional Media 47,726 36,796 36,796 - 7,274 7,255 7,255 -

Instruction & Curriculum Development 60,000 57,601 57,601

Instructional Staff Training 2,656 2,656 - 6,650 5,354 5,354 -

Board of Education 65,000 50,718 50,718 - 7,000 7,000 -

General Administration 30,000 156,365 156,365 - 1,947 1,947 -

School Administration 278,400 260,764 260,764 - 1,600 - -

Facilities Acquisition 30,000 - - - - -

Fiscal Services 55,000 140,081 140,081 - - -

Food Services - - - 78,000 70,555 70,555 -

Central Services 1,500 500 500 - - -

Operation of Plant 380,000 356,304 356,304 - - -

Maintenance of Plant 23,000 33,477 33,477 - - -

Administrative Technology Services 15,000 24,620 24,620 - - -

Community Service 127,500 98,456 98,456 - - -

Fixed Capital Outlay:

Other Capital Outlay - - - 56,324 56,324 -

Debt Service:

Principal 8,237 8,237 - - - -

Interest Fiscal Charges 1,405 1,405 - - - -

Total Expenditures 2,660,650 2,890,884 2,890,884 - 319,350 376,950 376,950 -

Excess (Deficiency) of Revenues

Over/(Under) Expenditures 292,955 375,755 375,755 (37,955) (29,707) (29,707)

Other Financing Sources (Uses):

Transfers In - - 37,955 29,707 29,707 -

Transfers (Out) (37,955) (29,707) (29,707) - - -

Total Other Financing Sources (Uses) (37,955) (29,707) (29,707) - 37,955 29,707 29,707 -

Net Change in Fund Balances 255,000 346,048 346,048 - -

Fund Balances, July 1, 2016 267,743 267,743 267,743 - - - - -

Fund Balances, June 30, 2017 $ 522,743 $ 613,791 $ 613,791 $ - $ - $ - $ - $ -

General Fund Special Revenue Fund





REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND & MAJOR SPECIAL REVENUE FUND - (UNAUDITED)


See Independent Auditor's Report.

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as of 6/30/16

(Note 1)

Proportion of the net pension liability/(asset) 0.001719522%

Proportionate share of the net pension liability/(asset) $ 434,181

Covered-employee payroll $ 1,046,986

Proportionate share of the net pension liability (asset) as a percentage of itscovered-employee payroll 41%

Plan fiduciary net position as a percentage of the total pension liability (Note 2) 84.88%

Schedule of Proportionate Share of Net Pension Liability

Florida Retirement System

Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled,governments should present information for only those years for which information is available.

Note 2: The Plan's fiduciary net position as a percentage of the total pension liability is published inNote 4 of the Comprehensive Annual Financial Report.





See Independent Auditor's Report

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as of 6/30/17 as of 6/30/16

(Note 1) (Note 1)

Contractually required contribution $ 57,592 $ 41,933

Contributions in relation to the contractually required contribution $ (57,592) $ (41,933)

Contribution deficiency/(excess) 0 0

Covered-employee payroll $ 1,460,415 $ 1,046,986

Contributions as a percentage of covered-employee payroll 3.94% 4.01%

Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled, governments shouldpresent information for only those years for which information is available.





Schedule of Contributions

Florida Retirement System


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as of 6/30/16

(Note 1)

Proportion of the net pension liability/(asset) 0.003391517%

Proportionate share of the net pension liability/(asset) $ 395,267

Covered-employee payroll $ 1,046,986

Proportionate share of the net pension liability/(asset) as a percentage of itscovered-employee payroll 38%

Plan fiduciary net position as a percentage of the total pension liability (Note 2) 0.97%

Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled,governments should present information for only those years for which information is available.

Note 2: The Plan's fiduciary net position as a percentage of the total pension liability is published in Note 4of the Comprehensive Annual Financial Report.





Schedule of Proportionate Share of Net Pension Liability

Health Insurance Subsidy Program


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as of 6/30/17 as of 6/30/16

(Note 1) (Note 1)

Contractually required contribution $ 24,248 $ 17,384

Contributions in relation to the contractually required contribution $ (24,248) $ (17,384)

Contribution deficiency/(excess) 0 0

Covered-employee payroll $ 1,460,415 $ 1,046,986

Contributions as a percentage of covered-employee payroll 1.66% 1.66%

Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled, governments should

present information for only those years for which information is available.





Schedule of ContributionsHealth Insurance Subsidy Program


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NOTE TO REQUIRED SUPPLEMENTARY INFORMATIONJune 30, 2017

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1. BUDGETARY BASIS OF ACCOUNTING

Budgets are presented on the modified accrual basis of accounting. During the fiscalyear, expenditures were controlled at the object level (e.g., salaries and benefits,purchased services, materials and supplies and capital outlay) within each activity (e.g.,instruction, pupil personnel services and school administration). Budgets may beamended by resolution at any Board meeting prior to the date for the annual report.

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Independent Auditor's Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed

in Accordance with Government Auditing Standards



We have audited, in accordance with the auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller General of the United States, the financialstatements of the governmental activities, each major fund, and the aggregate remaining fundinformation of Seminole Science Charter School, a charter school under Discovery EducationalServices, Inc. and component unit of the District School Board of Seminole County, Florida, asof and for the year ended June 30, 2017, and the related notes to the financial statements, whichcollectively comprise the School’s basic financial statements, and have issued our report thereondated September 5, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the School’sinternal control over financial reporting (“internal control”) to determine the audit proceduresthat are appropriate in the circumstances for the purpose of expressing our opinions on thefinancial statements, but not for the purpose of expressing an opinion on the effectiveness of theSchool’s internal control. Accordingly, we do not express an opinion on the effectiveness of theSchool’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct, misstatements on a timely basis. A material weakness is adeficiency, or combination of deficiencies, in internal control, such that there is a reasonablepossibility that a material misstatement of the School’s financial statements will not beprevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,or combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraphof this section and was not designed to identify all deficiencies in internal control that might bematerial weaknesses or significant deficiencies. Given these limitations, during our audit we didnot identify any deficiencies in internal control that we consider to be material weaknesses.However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether the School’s financial statements arefree from material misstatement, we performed tests of compliance with certain provisions oflaws, regulations, contracts, and grant agreements, noncompliance with which could have adirect 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, andaccordingly, we do not express such an opinion. The results of our tests disclosed no instancesof noncompliance or other matters that are required to be reported under Government AuditingStandards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness ofthe School’s internal control or on compliance. This report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the School’sinternal control and compliance. Accordingly, this communication is not suitable for any otherpurpose.



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Management Letter as Required by Rules of the Florida Auditor General,Chapter 10.850, Florida Statutes, Charter School Audits



Report on the Financial Statements

We have audited the financial statements of Seminole Science Charter School, a charter schoolunder Discovery Educational Services, Inc. and component unit of the District School Board ofSeminole County, Florida, as of and for the fiscal year ended June 30, 2017, and have issued ourreport thereon dated September 5, 2017.

Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America; the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States and Chapter 10.850, Rules ofthe Auditor General.

Other Reports and Schedules

We have issued our Independent Auditor's Report on Internal Control over Financial Reportingand Compliance and Other Matters Based on an Audit of the Financial Statements Performed inAccordance with Government Auditing Standards. Disclosures in those reports and schedule,which are dated September 5, 2017, should be considered in conjunction with this managementletter.

Prior Audit Findings

Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or notcorrective actions have been taken to address findings and recommendations made in thepreceding annual financial audit report. There were no prior audit findings or recommendations.

Official TitleSection 10.854(1)(e)5, Rules of the Auditor General, requires the name or official title of theentity. The official title of the entity is Seminole Science Charter School.

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Financial Condition

Sections 10.854(1)(e)2., Rules of the Auditor General, requires that we report the results ofour determination as to whether or not the School has met one or more of the conditionsdescribed in Section 218.503(1), Florida Statutes, and identification of the specificcondition(s) met. In connection with our audit, we determined that the School did not meet anyof the conditions described in Section 218.503(1), Florida Statutes.

Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we appliedfinancial condition assessment procedures for the School. It is management’s responsibility tomonitor the School’s financial condition, and our financial condition assessment was based inpart on representations made by management and the review of financial information provided bysame.

Transparency

Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require that we report theresults of our determination as to whether the School maintains on its Web site the informationspecified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determinedthat the School maintained on its Web site the information specified in Section 1002.33(9)(p),Florida Statutes.

Other Matters

Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in themanagement letter any recommendations to improve financial management. In connection withour audit, we did not have any such recommendations.

Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliancewith provisions of contracts or grant agreements, or abuse, that have occurred, or are likely tohave occurred, that have an effect on the financial statements that is less than material but whichwarrants the attention of those charged with governance. In connection with our audit, we didnot have any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the Legislative AuditingCommittee, members of the Florida Senate and the Florida House of Representatives, theFlorida Auditor General, Federal and other granting agencies, the Board of Directors, applicablemanagement, and the District School Board of Seminole County and is not intended to be andshould not be used by anyone other than these specified parties.



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