west covina unified school district los angeles …

WEST COVINA UNIFIED SCHOOL DISTRICT

LOS ANGELES COUNTY

REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

INCLUDING REPORTS ON COMPLIANCE June 30, 2015


AUDIT REPORT June 30, 2015

CONTENTS

Page INDEPENDENT AUDITOR'S REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS ..................................................... i-x FINANCIAL SECTION

Basic Financial Statements: Government-Wide Financial Statements:

Statement of Net Position ....................................................................................... 1 Statement of Activities ............................................................................................ 2

Fund Financial Statements: Balance Sheet – Governmental Funds ..................................................................... 3 Reconciliation of the Governmental Funds Balance Sheet to the Statement

of Net Position ................................................................................................... 4 Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds ........................................................................................... 5 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures

and Changes in Fund Balances to the Statement of Activities ........................... 6 Statement of Fund Net Position – Proprietary Funds .............................................. 7 Statement of Revenues, Expenses, and Changes in Fund Net Position –

Proprietary Funds ................................................................................................ 8 Statement of Cash Flows – Proprietary Funds ........................................................ 9 Statement of Fiduciary Net Position ........................................................................ 10

Notes to Financial Statements ........................................................................................... 11-49

REQUIRED SUPPLEMENTARY INFORMATION Schedule of Budgetary Comparison for the General Fund ............................................... 50 Schedule of Postemployment Healthcare Benefits Funding Progress .............................. 51 Schedule of District’s Proportionate Share of the Net Pension Liability – State Teachers’ Retirement Plan ...................................................................................... 52 Schedule of District’s Proportionate Share of the Net Pension Liability – California Public Employees’ Retirement System – Schools Pool Plan.......................... 53 Schedule of District Contributions – State Teachers’ Retirement Plan ............................ 54 Schedule of District Contributions – California Public Employees’ Retirement System –

Schools Pool Plan ........................................................................................................ 55 Notes to Required Supplementary Information ............................................................... 56


AUDIT REPORT June 30, 2015

CONTENTS

Page SUPPLEMENTARY INFORMATION

History and Organization .................................................................................................. 57 Schedule of Average Daily Attendance (ADA) ................................................................ 58 Schedule of Instructional Time ......................................................................................... 59 Schedule of Expenditures of Federal Awards ................................................................... 60 Schedule of Financial Trends and Analysis ...................................................................... 61 Schedule of Charter Schools ............................................................................................. 62 Reconciliation of Annual Financial and Budget Report With Audited

Financial Statements .................................................................................................... 63 Notes to Supplementary Information ................................................................................ 64-65

OTHER INDEPENDENT AUDITOR’S REPORTS Independent Auditor’s Report on Internal Control over Financial Reporting and

on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................... 66-67

Independent Auditor’s Report on Compliance for Each Major Federal Program; and Report on Internal Control Over Compliance Required by OMB Circular A-133 ........................................................................................................ 68-70

Independent Auditor’s Report on State Compliance ........................................................ 71-73

FINDINGS AND RECOMMENDATIONS Schedule of Findings and Questioned Costs - Summary of Auditor Results ................... 74 Schedule of Findings and Questioned Costs - Related to Financial Statements ............... 75 Schedule of Findings and Questioned Costs - Related to Federal Awards ....................... 76 Schedule of Findings and Questioned Costs - Related to State Awards ........................... 77 Status of Prior Year Findings and Questioned Costs ........................................................ 78

INDEPENDENT AUDITOR'S REPORT Board of Education West Covina Unified School District 1717 West Merced Avenue West Covina, CA 91790 Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the West Covina Unified School District as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. 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 opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain 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 opinions.

Board of Education West Covina Unified School District Opinions In our opinion, the financial statements listed in the aforementioned table of contents present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the West Covina Unified School District as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 12 to the basic financial statements, in 2015 the West Covina Unified School District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment to GASB Statement No. 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, schedule of postemployment healthcare benefits funding progress, schedule of the District’s proportionate share of the net pension liability, and schedule of District pension contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the West Covina Unified School District’s basic financial statements. The supplementary schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements.

BW Tmtaatpoa O I2racopS

VGD

Board of EduWest Covina

The supplemmanagementto prepare thapplied in thand reconcilthe basic fiprocedures iour opinion, a whole.

Other Repo

In accordanc2015 on ourreporting andagreements acontrol over on the internperformed inSchool Distr

VICENTI, LGlendora, CaDecember 1,

ucation a Unified Sch

mentary sectit and was dehe basic finae audit of thing such infnancial statn accordancthe informa

rting Requi

ce with Govr consideratid on our testand other mafinancial rep

nal control ovn accordancrict’s interna

LLOYD & STalifornia , 2015

hool District

on, includinerived from aancial statemhe basic finanformation ditements or ce with audiation is fairly

ired by Gov

vernment Auion of the Wts of its compatters. The pporting and cver financiae with Govel control ove

TUTZMAN

t

ng the scheduand relates d

ments. Such ncial statemeirectly to theto the basiting standar

y stated in al

vernment Au

uditing StandWest Covinapliance withpurpose of thcompliance l reporting oernment Auder financial r

N LLP

ule of expenddirectly to thinformationents and certe underlyingic financial rds generallyll material re

uditing Stand

dards, we ha Unified Sh certain provhat report isand the resu

or on compliditing Standreporting and

ditures of fehe underlyingn has been sutain additiong accounting

statements y accepted iespects in re

dards

have also issSchool Distrivisions of la

s to describeults of that teiance. That rdards in cond complianc

ederal awardg accountingubjected to

nal procedurg and other

themselvesin the Unitedelation to the

sued our repict's internalaws, regulati the scope o

esting, and nreport is an nsidering thece.

ds is the respg and other rthe auditinges, includingrecords used

s, and otherd States of Ae financial st

port dated Dl control ovions, contracof our testingot to provideintegral parte West Cov

onsibility ofrecords usedg proceduresg comparingd to preparer additionalAmerica. Intatements as

December 1,ver financialcts and grantg of internale an opiniont of an auditvina Unified

f d s g e l n s

l t l n t d

-i-


MANAGEMENT’S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2015

For the Fiscal Year Ended June 30, 2015 This discussion and analysis of West Covina Unified School District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended June 30, 2015. Please read it in conjunction with the District’s financial statements, which immediately follow this section. FINANCIAL HIGHLIGHTS

The District's net position of governmental activities decreased 71.1% over the course of the year. This is due to the implementation of GASB No. 68, Accounting and Financial Reporting for Pensions.

Overall revenues were $105.8 million.

The total cost of basic programs was $99.4 million. Because portions of these costs were paid for with charges, fees, and intergovernmental aid, the net cost that required taxpayer funding was $74.9 million.

Implementation of GASB No. 68, Accounting and Financial Reporting for Pensions in 2014-15 reflects a net pension liability balance of $60.9 million as of June 30, 2015. The payments on general obligation bonds decreased by $1.0 million due to payments.

OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts – management discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District:

The first two statements are district‐wide financial statements that provide both short‐term and long-term information about the District’s overall financial status.

The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District’s operations in more detail than the district‐wide statements.

o The governmental funds statements tell how basic services like regular and special education were financed in the short term as well as what remains for future spending.

-ii-



o The fiduciary funds statement provides information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others to whom the resources belong.

o The proprietary funds statements provide information about the activities that

relate to the District’s self‐insured program for workers compensation.

-iii-



Figure A-2 summarizes the major features of the District’s financial statements, including a portion of the District’s activities they cover and the types of information they contain.

Figure A‐2. Major Features of the District‐Wide and Fund Financial Statements

Typeof

Statements District‐Wide Governmental

Funds ProprietaryFunds

FiduciaryFunds

Scope EntireDistrict,exceptfiduciaryactivities

TheactivitiesoftheDistrictthatarenotproprietaryorfiduciary,suchasspecialeducationandbuildingmaintenance

ActivitiesoftheDistrictthatoperatelikeabusiness,suchasself‐insurancefunds

InstancesinwhichtheDistrictadministersresourcesonbehalfofsomeoneelse,suchasscholarshipprogramsandstudentactivitiesmonies

Requiredfinancialstatements

StatementofNetPositionStatementofActivities

BalanceSheetStatementofRevenues,Expenditures&ChangesinFundBalances

StatementofNetPositionStatementofRevenues,ExpensesandChangesinFundNetPositionStatementofCashFlows

StatementofFiduciaryNetPosition

Accountingbasisandmeasurementfocus

Accrualaccountingandeconomicresourcesfocus

Modifiedaccrualaccountingandcurrentfinancialresourcesfocus



Typeofasset/liabilityinformation

Allassetsandliabilities,bothfinancialandcapital,short‐termandlong‐term

Onlyassetsexpectedtobeusedupandliabilitiesthatcomedueduringtheyearorsoonthereafter;nocapitalassetsincluded

Allassetsandliabilities,bothshort‐termandlong‐term;Thedistrict’sfundsdonotcurrentlycontainnonfinancialassets,thoughtheycan

Allassetsandliabilities,bothshort‐termandlong‐term;TheDistrict’sfundsdonotcurrentlycontainnonfinancialassets,thoughtheycan

Typeofinflow/outflowinformation

Allrevenuesandexpensesduringyear,regardlessofwhencashisreceivedorpaid

Revenuesforwhichcashisreceivedduringorsoonaftertheendoftheyear;expenditureswhengoodsorserviceshavebeenreceivedandpaymentisdueduringtheyearorsoonthereafter

Allrevenuesandexpensesduringtheyear,regardlessofwhencashisreceivedorpaid

Allrevenuesandexpensesduringtheyear,regardlessofwhencashisreceivedorpaid

The remainder of this overview section of management’s discussion and analysis highlights the structure and contents of each of the statements.

-iv-



District‐Wide Statements The district‐wide statements report information about the District as a whole using accounting methods similar to those used by private‐sector companies. The statement of net position includes all of the District’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two district‐wide statements report the District’s net position and how it has changed. Net position – the difference between the District’s assets and deferred outflows of resources and liabilities and deferred inflows of resources – is one way to measure the District’s financial health, or position.

Over time, increases and decreases in the District’s net position are an indicator of whether its financial position is improving or deteriorating, respectively.

To assess the overall health of the District, you need to consider additional nonfinancial factors such as changes in the District’s demographics and the condition of school buildings and other facilities.

In the district‐wide financial statements, the District’s activities are categorized as Governmental Activities. Most of the District’s basic services are included here, such as regular and special education, transportation, and administration. Property taxes and state aid finance most of these activities.

Fund Financial Statements The fund financial statements provide more detailed information about the District’s most significant funds – not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs:

Some funds are required by State law and by bond covenants.

The District establishes other funds to control and manage money for particular purposes (like repaying its long‐term debt) or to show that it is properly using certain revenues.

-v-



The District has three kinds of funds:

Governmental funds – Most of the District’s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year‐end that are available for spending. Consequently, the governmental funds statements provide a detailed short‐term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long‐term focus of the districtwide statements, we provide additional information on a separate reconciliation page that explains the relationship (or differences) between them.

Proprietary funds – When the District charges other District funds for the services it

provides, these services are reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and Statement of Activities. In fact, the District’s internal service fund is included within the governmental activities reported in the district‐wide statements but provide more detail and additional information, such as cash flows. The District uses the internal service fund to report activities that relate to the District’s self‐insured program for workers compensation.

Fiduciary funds – The District is the trustee, or fiduciary, for assets that belong to others,

namely, the student activities funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. All of the District’s fiduciary activities are reported in a separate statement of fiduciary net position. We exclude these activities from the district‐wide financial statements because the District cannot use these assets to finance its operations.

-vi-



FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Net Position. The District’s combined net position was lower on June 30, 2015, than it was the year before – decreasing 71.1% to $26.8 million (See Table A‐1).

Table A‐1

VarianceIncrease

2015 2014* (Decrease)Current assets 51,619$ 48,650$ 2,969$ Non-current assets 1,123 1,119 4 Capital assets 85,619 84,878 741

Total assets 138,361 134,647 3,714

Deferred outflows of resources 5,583 391 5,192

Current liabilities 13,040 12,953 87 Long-term liabilities 87,416 29,217 58,199

Total liabilities 100,456 42,170 58,286

Deferred inflows of resources 16,655 16,655

Net positionNet investment in capital assets 58,489 61,367 (2,878) Restricted 3,600 15,597 (11,997) Unrestricted (35,256) 15,904 (51,160)

Total net position 26,833$ 92,868$ (66,035)

Governmental Activities(in thousands)

*Prior year amounts have not been revised for the implementation of GASB No. 68, Accounting and Financial Reporting for Pensions.

-vii-



Changes in net position, governmental activities. The District’s total revenues increased 9.7% to $105.8 million (See Table A‐2). The increase is due primarily to the increased LCFF (Local Control Funding Formula) gap funding by the State. The total cost of all programs and services increased 2.8% to $99.4 million. The District’s expenses are predominantly related to educating and caring for students. A significant contributor to the increase in costs was due to higher spending on salaries and benefits.

Table A-2

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS The financial performance of the District as a whole is reflected in its governmental funds as well. As the District completed this year, its governmental funds reported a combined fund balance of $40.5 million, which is over last year’s ending fund balance of $35.8 million. General Fund Budgetary Highlights Over the course of the year, the District periodically revised the annual operating budget. A comparison at the original budget and the final budget is shown on page 50. The major budget amendments fall into these categories:

Revenues – increased by $4.5 million, net of on-behalf payments, primarily to reflect changes in federal, state, and local categorical funding.

Salaries and benefits costs – decreased $0.6 million, net of on-behalf payments, due to interim vacancies and unsettled negotiations for 2014-15 as of June 30, 2015

Other non‐capital expenses – increased $3.5 million due to budget carryovers.

VarianceIncrease

2015 2014 (Decrease)Total Revenues 105,791$ 96,393$ 9,398$ Total Expenses 99,417 96,737 2,680

Increase (decrease) in net position 6,374$ (344)$ 6,718$


-viii-



While the District’s final budget for the General Fund anticipated that revenues would exceed expenditures by about $1.0 million, the actual results for the year show that revenues exceeded expenditures by roughly $5.5 million. Actual revenues were $0.1 million less than anticipated, and expenditures were $4.6 million less than budgeted. That amount consists of unrestricted and restricted program dollars that were not spent as of June 30, 2015 that will be carried over into the 2015‐16 budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets By the end of 2014‐15 the District had invested $3.2 million in new capital assets, related to the District’s ongoing modernization program. (More detailed information about capital assets can be found in Note 8 to the financial statements). Total depreciation expense for the year exceeded $2.4 million.

Table A‐3: Capital Assets at Year‐End, Net of Depreciation

VarianceIncrease

2015 2014 (Decrease)Land 1,545$ 1,545$ -$ Buildings and improvements 77,551 79,213 (1,662) Equipment 1,330 1,245 85 Construction in progress 5,193 2,875 2,318

Total 85,619$ 84,878$ 741$


Long‐Term Debt At year‐end the District had $89.3 million in general obligation bonds, capital leases, compensated absences and net pension liability – an increase of 205.6% from last year – as shown in Table A‐4. (More detailed information about the District’s long‐term liabilities is presented in Note 7 to the financial statements).

-ix-



Table A‐4: Outstanding Long‐Term Debt at Year‐End

VarianceIncrease

2015 2014* (Decrease)General obligation bonds 28,020$ 28,886$ (866)$ Compensated absences 360 320 40 Capital leases - 11 (11) Net pension liability 60,911 - 60,911

Total 89,291$ 29,217$ 60,074$


*Prior year amounts have not been revised for the implementation of GASB No. 68, Accounting and Financial Reporting for Pensions.

The District continued to maintain good credit ratings on all of its debt issues. The S&P maintained the rating of A+ during the review of the District’s general obligation bonds. FACTORS BEARING ON THE DISTRICT’S FUTURE Budget Overview The Governor signed the state budget and accompanying trailer bills on June 24, 2015. The budget includes Proposition 98 funding of $68.4 billion for 2015-16, an increase of $7.6 billion over the 2014-15 budget. Since 2011-12, Prop. 98 funding for K-12 education has grown more than $18.6 billion. The Prop. 98 maintenance factor will be reduced to $772 million by the end of 2015-16. Significant Adjustments to Statewide Budget:

Funding for the LCFF of $5.994 billion, 2015-16 gap funding 51.52%.

Cost of Living Adjustment (COLA) of 1.02% to categorical programs outside of LCFF.

Deadline for State Board of Education (SBE) to adopt Local Control Accountability Plan (LCAP) rubrics is extended to October 1, 2016.

-x-



$3.2 billion in one-time Prop. 98 General Fund, down from the May Revision amount of $3.5 billion, to pay down the debt owed to K-12 LEAs for the costs of state-mandated programs. The funding is unrestricted and may be used by LEAs to meet local needs as determined by their governing board. Legislative intent is to prioritize funding for investments necessary to support implementation of Common Core, English language development and Next Generation Science standards.

Establishes the Career Technical Education (CTE) Incentive Grant Program by providing $900 million in one-time Prop. 98 funding over the next three years to establish new or expanded high-quality CTE programs. $400 million is provided in 2015-16. The CTE Incentive Grant Program reserves a specified amount of funds for applicants to compete for grants based on their ADA as well as positive consideration of certain applicant characteristics.

$500 million one-time Prop. 98 General Fund for educator support. $490 million is for activities that promote educator quality and effectiveness. $10 million is allotted to K-12 High Speed Network (HSN) to provide LEAs professional development and technical assistance in network management.

Adult Education funding of $500 million. $375 million is provided to school districts and county offices of education for adult education maintenance of effort on the basis of the 2012-13 maintenance of effort certification. Districts need to be part of a consortium to be eligible for these funds.

$60.1 million directed to Special Education in response to recommendations from the statewide Special Education Task Force. $50.1 million is ongoing and $10 million is one-time.

Routine Restricted Maintenance Account (RRMA) now has extended flexibility delaying full implementation of the 3% requirement until 2019-20.

All of these factors were considered in preparing the West Covina Unified School District budget for the 2015‐16 fiscal year. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the District’s Business Office at 1717 West Merced Avenue, West Covina, CA 91790. The telephone number is (626) 939‐4600.

FINANCIAL SECTION

-1-

Total Governmental

Activities

AssetsCash in county treasury 46,827,364$ Cash in banks 1,404,575 Cash in revolving fund 10,185 Cash with fiscal agent 3,515 Accounts receivable:

Federal and State governments 2,386,661 Miscellaneous 927,431

Inventories 58,952 Prepaid expenditures 134 Postemployment benefit asset 1,123,367 Land 1,544,642 Construction in process 5,192,517 Depreciable assets, net 78,881,468

Total Assets 138,360,811

Deferred Outflows of ResourcesDeferred charge on refunding 368,158

Deferred outflows - pensions 5,215,208

Total Deferred Outflows of Resources 5,583,366

Liabilities Accounts payable and other current liabilities 10,631,410 Accrued interest 532,470 Unearned revenue 1,138 Current portion of long-term liabilities:

Compensated absences 360,189 General obligation bonds 1,515,000

Non-current portion of long term liabilities:General obligation bonds 25,615,000 General obligation bond premium 889,893 Net pension liability 60,910,921

Total Liabilities 100,456,021

Deferred Inflows of ResourcesDeferred inflows - pensions 16,655,273

Total Deferred Inflows of Resources 16,655,273

Net PositionInvested in capital assets, net of related debt 58,488,627 Restricted for:

Debt service 2,056,004 Educational programs 1,544,903

Unrestricted (35,256,651)

Total Net Position 26,832,883$


STATEMENT OF NET POSITIONJune 30, 2015

See the accompanying notes to the financial statements.

-2-

Functions ExpensesCharges for

ServicesOperating Grants and Contributions

Net (Expense) Revene and

Changes in Net Position

Governmental ActivitiesInstruction 53,757,358$ 225,221$ 11,765,647$ (41,766,490)$ Instruction - related services 12,747,019 127,524 3,237,036 (9,382,459) Pupil services 11,562,410 559,488 6,154,110 (4,848,812) Ancillary services 524,379 25,118 36,496 (462,765) Community services 4,240 2,190 2,296 246 General admission 5,983,322 30,896 1,589,206 (4,363,220) Plant services 9,072,953 187,708 547,230 (8,338,015) Other outgoing 2,038,745 36,639 (2,002,106) Debt service - interest 1,239,655 (1,239,655) Depreciation (unallocated) 2,486,582 (2,486,582)

Total Governmental Activities 99,416,663 1,158,145 23,368,660 (74,889,858)

General Revenues Property taxes levied for General Purposes 9,857,580 Debt Service 2,958,867 Federal and state aid not restricted to specific purposes 64,176,037 Interest 218,169 Miscellaneous 4,053,098

Total General Revenues 81,263,751

Change in net position 6,373,893

Net Position - beginning of year, as previously reported 92,868,223

Cumulative effect of change in account principle (see note 12) (72,409,233)

Net Position - beginning of year, after cumulative effect 20,458,990

Net Position - end of year 26,832,883$


GOVERNMENT-WIDE STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2015

Program Revenues


-3-

General Fund Building Fund

Non-Major Governmental

Funds

Total Governmental

Funds

Assets

Cash in county treasury 28,784,016$ 4,553,585$ 12,948,544$ 46,286,145$

Cash in banks 1,404,575 1,404,575

Cash in revolving fund 10,000 185 10,185

Accounts receivable:

Federal and State Governments 2,326,364 60,297 2,386,661 Miscellaneous 851,109 15,369 59,219 925,697

Inventories 58,952 58,952 Prepaid expenditures 134 134

Total Assets 31,971,489$ 4,568,954$ 14,531,906$ 51,072,349$

Liabilities and Fund Balances

Liabilities

Accounts payable 9,392,732$ 346,757$ 864,329$ 10,603,818$ Unearned revenue 1,138 1,138

Total Liabilities 9,393,870 346,757 864,329 10,604,956

Fund BalancesNonspendable 10,000 59,271 69,271 Restricted 1,544,903 4,222,197 9,644,309 15,411,409 Assigned 19,184,257 3,963,997 23,148,254 Unassigned 1,838,459 1,838,459

Total Fund Balances 22,577,619 4,222,197 13,667,577 40,467,393

Total Liabilities and Fund Balances 31,971,489$ 4,568,954$ 14,531,906$ 51,072,349$


BALANCE SHEET - GOVERNMENTAL FUNDSJune 30, 2015


-4-

Amounts reported for governmental funds are different than the statement of net position because:

Total fund balance - governmental funds 40,467,393$

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of the assets is $126,424,330 and the accumulated depreciation is $40,805,703. The net value of capital assets is - 85,618,627

The accrued interest for general obligation bonds is - (532,470)

An internal service fund is used by the District to manage its Self-Insurance Fund. The assets and liabilities of the Self-Insurance Fund are included under governmental activities in the statement of net assets. 518,876

Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.

General obligation bonds principal payable (27,130,000)$ Unmatured premium general obligation bonds (889,893) Unamoritized deferred liability from refunding general obligation bonds 368,158 Compensated absences payable (360,189) Net pension liability (60,910,922)

(88,922,846) In governmental funds, other post-employment benefits (OPEB) costs are recognized as expenditures

in the period they are paid. In the government-wide statements, postemployment benefit costs are recognized in the period that they are incurred. The net OPEB asset at the end of the period is - 1,123,367

In governmental funds, deferred outflows and inflows of resources relating to pensions are not reported

because they are applicable to future periods. In the statement of net position, deferred outflows and

inflows of resources relating to pensions are reported.

Deferred outflows - pensions 5,215,209 Deferred inflows -pensions (16,655,273)

Total net position - governmental activities 26,832,883$

WEST COVINA UNIFIED SCHOOL DISTRICTRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITIONJune 30, 2015


-5-


Non-Major Governmental

Funds

Total Governmental

Funds

RevenuesLocal control funding formula sources: State apportionments 64,249,182$ $ $ 64,249,182$ Local sources 7,171,201 7,171,201

Total local control funding formula sources 71,420,383 - - 71,420,383 Federal sources 4,416,987 3,860,258 8,277,245 Other state sources 7,148,543 339,879 7,488,422 Other local sources 13,277,947 33,891 5,345,795 18,657,633

Total Revenues 96,263,860 33,891 9,545,932 105,843,683

ExpendituresInstruction 53,564,069 53,564,069 Instruction-related services 12,703,871 12,703,871 Pupil services 7,172,394 4,748,745 11,921,139 Ancillary services 527,340 527,340 Community services 4,346 4,346 General administration 5,749,391 255,841 6,005,232 Plant services 8,954,417 1,197,160 2,036,711 12,188,288 Other outgo 2,094,364 2,094,364 Debt service 2,121,438 2,121,438

Total Expenditures 90,770,192 1,197,160 9,162,735 101,130,087

Net changes in fund balances 5,493,668 (1,163,269) 383,197 4,713,596

Fund Balances at Beginning of Year 17,083,951 5,385,466 13,284,380 35,753,797

Fund Balances at End of Year 22,577,619$ 4,222,197$ 13,667,577$ 40,467,393$


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

For the Fiscal Year Ended June 30, 2015


-6-

Net change in fund balances-total governmental funds 4,713,596$

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets with an initial, individual cost of more than $5,000 are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period

Capital asset additions 3,227,318$ Depreciation expense (2,486,582) 740,736

The governmental funds report bond proceeds as an other financing source, while repayment of bond principal is reported as an expenditure. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, interest expense is recognized as it accrues, regardless of when it is due. The net effect of those differences in the treatment of general obligation bonds and related items is as follows:

Bond principal payment 810,000 Bond premium, current year amortization 55,618 Repayment of capital lease 11,093 Deferred charge, current year amortization (23,008) Decrease in accrued interest expense 39,173

Change in long-term bond liability 892,876

In the statement of activities certain operating expenses -- compensated absences, -- are measured by the amounts earned during the year. In the governmental funds, however expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During the year vacation payable increased by (39,727)

In government funds, pension costs are recognized when employer contributions are made. In the statement of activities, pensions costs are recognized on the accrual basis. This year, the difference between accrual-basis pension costs and actual employer contributions was: 58,247

An internal service fund is used by the District to manage the Self-Insurance Fund. The net income is reported with governmental activities. 3,651

Increase in postemployment benefits other than pensions (OPEB) asset 4,514

Change in net position of governmental activities 6,373,893$


RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES

For the Fiscal Year Ended Jun 30, 2015


-7-

Governmental Activities: Internal

Service FundSelf-Insurance

Fund

ASSETS

Cash in county treasury 541,219$

Cash with fiscal agent 3,515

Accounts receivable:Miscellaneous 1,734

TOTAL ASSETS 546,468

LIABILITIES

Accounts payable 27,592

NET POSITIONRestricted 518,876

TOTAL NET POSITION 518,876$


STATEMENT OF FUND NET POSITION - PROPRIETARY FUNDSJune 30, 2015


-8-

Governmental Activities:

Internal Service Self-Insurance

Fund

NON-OPERATING REVENUESInterest income 3,651$

Change in net position 3,651

Net Position at Beginning of Year 515,225

Net Position at End of Year 518,876$


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITIONPROPRIETARY FUNDS



-9-

Governmental Activities: Internal

Service

Self-Insurance Fund

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest income 3,797$

Net Increase in Cash 3,797

Cash - July 1, 2014 540,937

Cash - June 30, 2015 544,734$


STATEMENT OF CASH FLOWSPROPRIETARY FUNDS



-10-

AssetsCash on hand and in banks 90,767$ 6,779$ 347,137$ 444,683$

Stores inventory 17,236 17,236

Total Assets 90,767$ 6,779$ 364,373$ 461,919$

Liabilities

Due to student groups $ $ 364,373$ 364,373$

Due to employees 90,767 6,779 97,546

Total Liabilities 90,767$ 6,779$ 364,373$ 461,919$


STATEMENT OF FIDUCIARY NET POSITIONJune 30, 2015

Totals125 Plan

Fund

Health Retirement

AccountStudent Body

Funds

Agency Funds


-11-


NOTES TO FINANCIAL STATEMENTS June 30, 2015

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The District accounts for its financial transactions in accordance with the policies and procedures of the Department of Education's California School Accounting Manual, updated to conform to the most current financial and reporting requirements promulgated by the California Department of Education. The accounting policies of the District conform to generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB).

The significant accounting policies applicable to the District are described below.

A. BASIS OF PRESENTATION:

The accompanying financial statements have been prepared in conformity with GAAP as prescribed by GASB. The financial statement presentation required by GASB provides a comprehensive, entity-wide perspective of the District’s financial activities. The entity-wide perspective enhances the fund-group perspective previously required. Fiduciary activities are excluded from the basic financial statements and are reported separately in the fiduciary fund statements. The District’s basic financial statements consist of government-wide statements, including a Statement of Net Position, a Statement of Activities, and fund financial statements. 1. Government-wide Financial Statements:

The Statement of Net Position and the Statement of Activities display information about the District as a whole. These statements include the financial activities of the primary government, including governmental activities of proprietary funds. Fiduciary funds are excluded.

-12-



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)

A. BASIS OF PRESENTATION: (continued)

1. Government-wide Financial Statements: (continued)

The Statement of Net Position presents the financial condition of the governmental activities of the District at year-end. The Statement of Activities presents a comparison between direct expenses and program revenues for each program or function of the District’s governmental activities. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Revenues which are not classified as program revenues are presented as general revenues of the District. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the District. Depreciation and interest expense have not been allocated to specific functions.

2. Fund Financial Statements:

During the year, the District segregates transactions related to certain District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the District at this more detailed level. The focus of governmental fund financial statements is on major funds. Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single column. The fiduciary and proprietary funds are reported by type.

-13-




A. BASIS OF PRESENTATION: (continued)

2. Fund Financial Statements: (continued)

The fund financial statement expenditures are presented in a function-oriented format. The following is a brief description of the functions:

Instruction – includes the activities directly dealing with the interaction between teachers and students. Instruction-related services – includes supervision of instruction, instructional library, media and technology, and school site administration. Pupil services – includes home to school transportation, food services and other pupil services. Ancillary services – includes activities that are generally designed to provide students with experiences outside the regular school day. Community services – includes activities that provide services to community participants other than students. General administration – includes data processing services and all other general administration services. Plant services – includes activities of maintaining the physical plant. This also includes facilities acquisition and construction expenditures. Other outgo – includes transfers to other agencies. Debt service – includes principal and interest payments for long term debt.

The proprietary and fiduciary fund expenditures are presented by natural classification.

-14-




B. FUND ACCOUNTING:

To ensure compliance with the California Education Code, the financial resources of the District are divided into separate funds for which separate accounts are maintained for recording cash, other resources and all related liabilities, obligations and equities.

The Statement of Revenues, Expenditures and Changes in Fund Balance are statements of financial activities of the particular fund related to the current reporting period. Expenditures of the various funds frequently include amounts for land, buildings, equipment, retirement of indebtedness, transfers to other funds, etc. Consequently, these statements do not purport to present the result of operations or the net income or loss for the period as would a statement of income for a profit-type organization. The modified accrual basis of accounting is used for all governmental funds.

GOVERNMENTAL FUNDS - MAJOR

General Fund - the general operating fund of the District is used to account for all financial resources except those required to be accounted for in another fund. Due to GASB Statement No. 54, the Special Reserve Fund for Other Than Capital Outlay Fund no longer meets the definition of a special revenue fund as it is no longer primarily composed of restricted or committed revenue sources. The Charter School fund is also presented within the General Fund as the San Jose Charter School is independent. California School Accounting Manual requires the pass-through activity be presented in the General Fund. Therefore, all activities of these funds are reported in the General Fund. Building Fund – used to account for repairs, construction and/or acquisition of major capital facilities; acquisition, retro-fitting, and operation of real property; and proceeds of general obligation bonds. GOVERNMENTAL FUNDS – NON-MAJOR

Debt Service Fund – used to account for the financial resources that are restricted, committed or assigned and the accumulation of resources for the payment of general long-term debt principal, interest, and related costs.

-15-




B. FUND ACCOUNTING: (continued)

GOVERNMENTAL FUNDS – NON-MAJOR (continued)

Special Revenue Funds - used to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes other than debt service or capital projects. 1. Cafeteria Fund - used to account for revenues received and expenditures

made to operate the District's cafeterias.

Capital Projects Funds - used to account for the financial resources that are restricted, committed or assigned for the acquisition and/or construction of major governmental general fixed assets. 1. Capital Facilities Fund - used to account for resources received from

residential and commercial developer impact fees. 2. County School Facilities Fund – used to account for the School Facility

Program grants award for modernization and new construction of various school sites.

3. Special Reserve Fund for Capital Outlay – used to account for specific board-

approved capital expenditures.

PROPRIETARY FUNDS Self-Insurance Fund

Internal Service Fund - used to account for services rendered on a cost-reimbursement basis within the District. The District maintains one internal service fund, the Self-insurance Fund, which is used to account for resources committed to the District’s previously self-insured workers compensation insurance program.

-16-




B. FUND ACCOUNTING: (continued)

FIDUCIARY FUNDS

AGENCY ACTIVITIES

The District operates a warrant pass-through fund as a holding account for amounts collected from employees for federal and state taxes and other contributions. The district had cash in the County Treasury amounting to ($316,046) on June 30, 2015, which represents a prepayment of withholdings payable.

The District maintains an Internal Revenue Code (IRC) Section 125 bank account for employee paid benefits. The HRA account is a Health Retirement account through CalPERS for retirees between ages 55 and 65 for whom the District pays $70 a month toward health insurance. The Associated Student Body Fund is used to account for raising and expending money to promote the general welfare, morale and educational experiences of the student body. The amounts reported represent the combined totals of all schools within the District that operate Associated Student Body funds.

C. BASIS OF ACCOUNTING:

Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of measurement made, regardless of the measurement focus applied. Revenues in governmental fund financial statements are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.

Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds use the accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue, the recording of unearned revenue, and in the presentation of expenses versus expenditures.

-17-




C. BASIS OF ACCOUNTING: (continued)

1. Cash and Cash Equivalents The District’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Cash in the County Treasury is recorded at cost, which approximates fair value.

2. Receivables

Receivables are generally recorded when the amount is earned and can be estimated. All material receivables are considered fully collectible.

3. Inventories

Inventories are presented at cost using the first-in/first-out (FIFO) method and are expensed when used. Inventory consists of expendable supplies held for consumption. At June 30, 2015, the inventory for food is $58,952.

4. Prepaid Expenses

Payments made to vendors for goods or services that will benefit periods beyond June 30, 2015, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the year in which goods or services are consumed.

5. Capital Assets Generally, capital assets result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the Statement of Net Position, but are not reported in the fund financial statements.

-18-




C. BASIS OF ACCOUNTING: (continued) 5. Capital Assets (continued)

Capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. The District maintains a capitalization threshold of $5,000. The District does not own any infrastructure as defined by GASB. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s life are not capitalized. All reported capital assets except for land and construction in progress are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives:

Description Estimated Lives Buildings and Improvements 25-50 years Furniture and Equipment 15-20 years Vehicles 8 years

Depreciation expense reported on the government-wide statement of activities excludes direct depreciation expense recorded to functions where applicable.

6. Deferred Outflows of Resources Deferred outflows of resources represent a consumption of net position or fund balance that applied to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. These amounts are reported in the government-wide statement of net position.

Deferred charge on refunding: A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

-19-





6. Deferred Outflows of Resources (continued)

Deferred outflows – pension contributions: The deferred outflows of resources related to pensions resulted from District contributions to employee pension plans subsequent to the measurement date of the actuarial valuations for the pension plans. The deferred outflows – pension contributions will be recognized as a reduction of the net pension liability in the subsequent fiscal year.

7. Unearned Revenue

Cash received for federal and state special projects and programs is recognized as revenue to the extent that qualified expenditures have been incurred. Unearned revenue is recorded to the extent cash received on specific projects and programs exceed qualified expenditures.

8. Compensated Absences Accumulated unpaid employee vacation benefits are recognized as a liability when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.

Sick leave benefits are accumulated without limit for each employee. The employees do not gain a vested right to accumulated sick leave, therefore accumulated employee sick leave benefits are not recognized as a liability of the District. The District's policy is to record sick leave as an operating expense in the period taken; however, unused sick leave is added to the creditable service period for calculation of retirement benefits when the employee retires.

9. Long-Term Obligations

The District reports long-term debt of governmental funds at face value in the government-wide financial statements. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds.

-20-





9. Long-Term Obligations (continued)

Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures.

10. Net Pension Liability For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the California State Teachers’ Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) plan for schools (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalSTRS and CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Member contributions are recognized in the period in which they are earned. Investments are reported at fair value.

11. Deferred Inflows of Resources

Deferred inflows of resources represent an acquisition of net assets by the District that is applicable to a future reporting period. The deferred inflows of resources – pensions, results from the difference between the estimated and actual return on pension plan investments and the change in the District’s proportionate share of pension contributions. These amounts are deferred and amortized to pension expense over closed periods ranging from 3.9 to 5 years.

-21-




C. BASIS OF ACCOUNTING: (continued) 12. Net Position

Net position represents the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources. Net position invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvements of those assets. Net position is reported as restricted when there are limitations imposed on use through external restrictions imposed by donors, grantors, laws or regulations of other governments or by enabling legislation adopted by the District.

13. Fund Balance Classification

The governmental fund financial statements present fund balance classifications that comprise a hierarchy based on the extent to which the District is bound to honor constraints on the specific purposes for which amounts can be spent. The classifications used in the governmental fund financial statements are as follows:

Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Restricted: Amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. Assigned: Amounts that are constrained by the District’s intent to be used for a specific purpose but are neither restricted nor committed. The Board of Education, through a formal action has given authority to the Superintendent, or his designee, to assign amounts for a specific purpose that is neither restricted nor committed. Unassigned: The residual fund balance for the General Fund and all other spendable amounts.

-22-





14. Spending Order Policy

The District considers restricted amounts to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted net position or fund balance is available. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District’s policy considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Board of Education has provided otherwise in its commitment or assignment functions.

15. Minimum Fund Balance Policy: The District has adopted a minimum fund balance policy in order to protect against revenue shortfalls and unexpected one-time expenditures. The policy requires a Reserve for Economic Uncertainties consisting of unassigned amounts which represent the minimum recommended reserve consistent with the Criteria and Standards for fiscal solvency adopted by the State Board of Education. The minimum recommended reserve for a district this size is 3% of budgeted General Fund expenditures and other financing uses. The District met this requirement before recording the on-behalf payments as described in Note 1C18; this entry has no effect on fund balance.

16. State Apportionments

Certain current year apportionments from the State are based upon various financial and statistical information of the previous year. Second period to annual corrections for local control funding formula and other state apportionments (either positive or negative) are accrued at the end of the fiscal year.

17. Property Taxes Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1. Unsecured property taxes are payable in one installment on or before August 31.

-23-




B. BASIS OF ACCOUNTING: (continued)

17. Property Taxes (continued) Real and personal property tax revenues are reported in the same manner in which the County auditor records and reports actual property tax receipts to the California Department of Education. This is generally on a cash basis. A receivable has not been recognized in the General Fund for property taxes due to the fact that any receivable is offset by a payable to the state for local control funding formula purposes. Property taxes for debt service purposes are not material and have therefore not been accrued in the Government-wide financial statements.

18. On-Behalf Payments GAAP requires that direct on-behalf payments for fringe benefits and salaries made by one entity to a third party recipient for the employees of another, legally separate entity be recognized as revenue and expenditures by the employer government. The State of California makes direct on-behalf payments for retirement benefits to the State Teachers’ Retirement System on behalf of all school districts in California. The amount of on-behalf payments made for the District for STRS has been recorded in the fund financial statements.

19. Contributed Services

Generally accepted accounting principles require that contributions of donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are to be recorded at fair value in the period received. Although the District receives numerous hours of volunteer time, it is not deemed necessary to record these hours on the books of the District based on the above guidelines. In addition, the District receives donations of immaterial equipment and supplies which are not recorded upon receipt.

-24-





20. Classification of Revenues – Proprietary Funds Proprietary funds distinguish operating revenues from nonoperating revenues. Operating revenues include activities that have the characteristics of exchange transactions, such as self-insurance premiums. Nonoperating revenues include activities that have the characteristics of nonexchange transactions that are defined as nonoperating revenues by GASB.

21. Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

22. Interfund Activities Interfund activity has been eliminated in the Government-wide statements. There were no interfund receivable and payment balances or interfund transfers at June 30, 2015.

D. REPORTING ENTITY: The District is the level of government primarily accountable for activities related to public education. The governing authority consists of elected officials who, together, constitute the Board of Education. The District considered its financial and operational relationships with potential component units under the reporting entity definition of GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB Statement No. 39, Determining Whether Certain Organizations are Component Units and GASB Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34.

-25-




D. REPORTING ENTITY: (continued) The basic, but not the only, criterion for including another organization in the District’s reporting entity for financial reports is the ability of the District’s elected officials to exercise oversight responsibility over such agencies. Oversight responsibility implies that one entity is dependent on another and a financial benefit or burden relationship is present and that the dependent unit should be reported as part of the other. Oversight responsibility is derived from the District’s power and includes, but is not limited to: financial interdependency; selection of governing authority; designation of management; ability to significantly influence operations; and accountability for fiscal matters. Due to the nature and significance of their relationship with the District, including ongoing financial support of the District or its other component units, certain organizations warrant inclusion as part of the financial reporting entity. A legally separate, tax-exempt organization should be reported as a component unit of the District if all of the following criteria are met: 1. The economic resources received or held by the separate organization are

entirely or almost entirely for the direct benefit of the District, its component units, or its constituents.

2. The District, or its component units, is entitled to, or has the ability to

otherwise access, a majority of the economic resources received or held by the separate organization.

3. The economic resources received or held by an individual organization that

the District, or its component units, is entitled to, or has the ability to otherwise access, are significant to the District.

Based upon the application of the criteria listed above, the following potential component units have been excluded in the District’s reporting entity: Various PTA, PTO and Booster Clubs – Each of these types of organizations at each of the school sites within the District were evaluated using the three criterions listed above. Each entity has been excluded as a component unit because the third criterion was not met in all cases; the economic resources received and held by the PTA, PTO and the Booster Club individually are not significant to the District.

-26-



NOTE 2 - BUDGETS:

By state law, the District's Governing Board must approve a budget no later than July 1, using the Single Adoption Budget process. A public hearing must be conducted to receive comments prior to adoption. The District's Governing Board satisfied these requirements. Budgets for all governmental funds were adopted on a basis consistent with GAAP. These budgets are revised by the District's Governing Board during the year to give consideration to unanticipated income and expenditures. The original and final revised budget for the General Fund is presented in a budgetary comparison schedule in the required supplementary section. Formal budgetary integration was employed as a management control device during the year for all budgeted funds. Expenditures cannot legally exceed appropriations by major object account.

NOTE 3 - DEPOSITS AND INVESTMENTS:

A. Deposits

Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. The District does not have a deposit policy for custodial risk. As of June 30, 2015, $1,360,613 of the District’s bank balance of $1,710,743 was exposed to credit risk as uninsured and collateral held by pledging bank’s trust department not in the District’s name. Cash in County In accordance with Education Code Section 41001, the District maintains substantially all of its cash in the Los Angeles County Treasury as part of the common investment pool. These pooled funds are carried at amortized cost which approximates fair value.

-27-



NOTE 3 - DEPOSITS AND INVESTMENTS: (continued)

A. Deposits (continued)

Cash in County (continued) The County is authorized to deposit cash and invest excess funds by California Government Code Section 53648 et. seq. The County is restricted by Government Code Section 53635 pursuant to Section 53601 to invest in time deposits, U.S. government securities, state registered warrants, notes or bonds, State Treasurer’s investment pool, bankers’ acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements. The funds maintained by the County are either secured by federal depository insurance or are collateralized. The County investment pool is not required to be rated. Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool.

-28-



NOTE 4 - FUND BALANCES:

The following amounts were nonspendable, restricted, assigned or unassigned as shown below:


Non-major Governmental

Funds

Total Governmental

Funds

Nonspendable Revolving cash 10,000$ $ 185$ 10,185$ Inventories 58,952 58,952 Prepaid expenditures 134 134

Total Nonspendable 10,000 - 59,271 69,271

RestrictedLegally restricted programs 1,544,903 1,544,903 Food services program 3,292,670 3,292,670 Capital projects 4,222,197 4,295,635 8,517,832 Debt service 2,056,004 2,056,004

Total Restricted 1,544,903 4,222,197 9,644,309 15,411,409

AssignedRetiree benefits reserve 1,381,364 1,381,364 Technology assessment plan reserve 2,100,000 2,100,000 LCFF reserve 4,697,483 4,697,483 Common core curriculum standards reserve 250,000 250,000 Deferred maintenance reserve 1,173,877 1,173,877 Technology reserve 2,000,000 2,000,000 2014-15 AB1200 reserve 1,816,081 1,816,081 District/Site carryover to be restored 1,154,408 1,154,408 Lottery prior year 3,391,543 3,391,543 Lottery current year 1,208,534 1,208,534 Facilities projects 1,701,256 1,701,256 Facilities maintenance reserve 1,962,551 1,962,551 Assignment for SELPA classroom obligations 300,190 300,190 Special reserve fund for other than capital outlay 10,967 10,967

Total Assigned 19,184,257 - 3,963,997 23,148,254

Unassigned Economic uncertainties 1,838,459 1,838,459

Total Unassigned 1,838,459 - - 1,838,459

Total fund balances 22,577,619$ 4,222,197$ 13,667,577$ 40,467,393$

-29-



NOTE 5 – CAPITAL LEASES:

The District made final payment on leases of equipment whose title passed on to the District upon expiration of the lease period, which occurred and for which payment was made, in the 2014-15 fiscal year. The District did not receive any sublease rental revenues nor paid any contingent rentals for the equipment.

NOTE 6 – GENERAL OBLIGATION BONDS:

In March 2000, more than two-thirds of the voters approved Measure G which authorized the issuance of bonds, not to exceed $40 million, for the purpose of raising money to finance the acquisition, construction and modernization of school facilities, technology infrastructure, and paying related costs. In June 2000, the District issued Series A, in the amount of $10,000,000. In June 2001, the District issued Series B, in the amount of $10,000,000. In June 2002, the District issued 2002 General Obligation Refunding bonds, Series A in the amount of $20,410,000. The proceeds of the bonds were placed in escrow to fully refund the previously issued Series A and B bonds, and to pay related costs of issuance. The refunding bonds consisted of current interest bonds of $13,300,000 and term bonds of $7,110,000. At June 30, 2015, the outstanding balance on the Series A refunding bonds was $12,855,000. In June 2002 and in April 2004, the District issued Series C and Series D bonds, respectively, in the amount of $10,000,000 each. In March 2012, the District issued $14,535,000 of general obligation refunding bonds. The net proceeds of $15,294,986 (after issuance costs of $320,600 and original issue premium of $1,080,585) were used to refund a portion of the District’s outstanding General Obligation Bonds, Election of 2000, Series C and Series D.

-30-



NOTE 6 – GENERAL OBLIGATION BONDS: (continued) The net proceeds were used to purchase U.S. government securities. Those securities were deposited into an irrevocable trust with an escrow agent to provide for future debt service payments on the refunded bonds. As a result, the refunded bonds are considered defeased, and the related liability for the bonds has been removed from the District’s liabilities. Amounts paid to the refunded bond escrow agent in excess of the outstanding debt at the time of payment are recorded as deferred amounts on refunding on the statement of net position and are amortized to interest expense over the life of the liability. Deferred amounts on refunding of $368,158 remains to be amortized. As of June 30, 2015, the principal balance outstanding on the refunding bonds was $14,275,000. The outstanding general obligation bonded debt of West Covina Unified School District at June 30, 2015 is:

Date of Issue Interest Rate % Maturity DateAmount of

Original IssueOutstanding July 1, 2014

Issued Current Year

Principal Payment

Current YearOutstanding

June 30, 2015

2002 Ser A Refunding 5/16/2002 2.35-5.80 8/1/02-8/1/30 20,410,000$ 13,520,000$ $ 665,000$ 12,855,000$ 2012 Refunding 2/23/2012 2.00-5.00 8/1/12-8/1/28 14,535,000 14,420,000 145,000 14,275,000

34,945,000$ 27,940,000$ -$ 810,000$ 27,130,000$

The annual requirements to amortize all bonds payable, outstanding as of June 30, 2015, are as follows:

Fiscal Year Ended June 30, Principal Interest Payment Total

2016 1,515,000$ 1,269,728$ 2,784,728$

2017 1,570,000 1,210,608 2,780,608

2018 1,645,000 1,139,594 2,784,594

2019 1,715,000 1,064,297 2,779,297

2020 1,800,000 984,694 2,784,694

2021-2025 10,550,000 3,419,220 13,969,220

2026-2030 8,285,000 890,307 9,175,307 2031 50,000 1,442 51,442

Totals 27,130,000$ 9,979,890$ 37,109,890$

-31-



NOTE 7 – LONG-TERM DEBT – SCHEDULE OF CHANGES:

A schedule of changes in long-term debt for the year ended June 30, 2015 is shown below.

AmountBalance Balance Due in

July 1, 2014* Additions Deductions June 30, 2015 One Year

General obligation bonds 27,940,000$ $ 810,000$ 27,130,000$ 1,515,000$ Premium on bond issuance 945,511 55,618 889,893 Capital Leases 11,093 11,093 - Compensated absences 320,462 39,727 360,189 360,189 Net pension liability 76,779,088 15,868,167 60,910,921

Totals 105,996,154$ 39,727$ 16,744,878$ 89,291,003$ 1,875,189$

* The beginning balance reflects the net pension liability balance resulting from the restatement to beginning net position from the

implementation of GASB Statements No. 68 and No. 71 as identified in Note 12 to the financial statement.

Liabilities are liquidated by the General Fund for governmental activities, including capital leases, and pension liabilities. Compensated absences will be paid for by the fund for which the employee worked. General obligation bond liabilities are liquidated through property tax collections as administered by the County Controller’s office through the Bond Interest and Redemption Fund.

NOTE 8 – CAPITAL ASSETS AND DEPRECIATION – SCHEDULE OF CHANGES:

Capital asset activity for the year ended June 30, 2015 is shown below.

Balance Balance July 1, 2014 Additions Retirements June 30, 2015

Capital assets not depreciated:Land 1,544,642$ $ $ 1,544,642$ Construction in progress 2,874,963 3,040,502 (722,948) 5,192,517

Total capital assets not depreciated 4,419,605 3,040,502 (722,948) 6,737,159

Capital assets depreciated:Building and improvements 113,390,831 722,948 114,113,779 Equipment 5,549,577 186,816 (163,001) 5,573,392

Total of capital assets depreciated 118,940,408 909,764 (163,001) 119,687,171

Less accumulated deprerciation for:Buildings and improvements (34,177,203) (2,385,404) (36,562,607) Equipment (4,304,919) (101,178) 163,001 (4,243,096)

Total accumulated depreciation (38,482,122) (2,486,582) 163,001 (40,805,703)

Governmental activities capital assets, net 84,877,891$ 1,463,684$ (722,948)$ 85,618,627$

-32-



NOTE 9 - EMPLOYEE RETIREMENT PLANS:

Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Academic employees are members of the California State Teachers’ Retirement System (CalSTRS) and classified employees are members of the California Public Employees’ Retirement System (CalPERS). As of June 30, 2015, the District implemented GASB Statements No. 68 and No. 71, and as a result, reported its proportionate share of the net pension liabilities, pension expense, deferred inflows of resources and deferred outflows of resources for each retirement plan as follows:

Pension Plan

Proportionate Share of Net

Pension Liability

Deferred Outflows of Resources

Proportionate Share of Deferred Inflows

of Resources

Proportionate Share of Pension

Expense

CalSTRS (STRP) 48,502,710$ 3,628,576$ 11,943,700$ 4,187,350$ CalPERS (Schools Pool Plan) 12,408,211 1,586,632 4,711,573 948,364

Totals 60,910,921$ 5,215,208$ 16,655,273$ 5,135,714$

The details of each plan are as follows: California State Teachers’ Retirement System (CalSTRS)

Plan Description

The District contributes to the State Teachers’ Retirement Plan (STRP) administered by the California State Teachers’ Retirement System (CalSTRS). STRP is a cost-sharing multiple-employer public employee retirement system defined benefit pension plan. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers’ Retirement Law.

-33-



NOTE 9 - EMPLOYEE RETIREMENT PLANS: (continued) Benefits Provided The STRP provides retirement, disability and survivor benefits to beneficiaries. Benefits are based on members’ final compensation, age and years of service credit. Members hired on or before December 31, 2012, with five years of credited service are eligible for the normal retirement benefit at age 60. Members hired on or after January 1, 2013, with five years of credited service are eligible for the normal retirement benefit at age 62. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service. The STRP is comprised of four programs: Defined Benefit Program, Defined Benefit Supplement Program, Cash Balance Benefit Program and Replacement Benefits Program. The STRP holds assets for the exclusive purpose of providing benefits to members and beneficiaries of these programs. CalSTRS also uses plan assets to defray reasonable expenses of administering the STRP. Although CalSTRS is the administrator of the STRP, the state is the sponsor of the STRP and obligor of the trust. In addition, the state is both an employer and nonemployer contributing entity to the STRP. The District contributes to the STRP Defined Benefit Program and the Defined Benefit Supplement Program, thus disclosures are not included for the other plans. The STRP provisions and benefits in effect at June 30, 2015, are summarized as follows:

Contributions

Required member, District and State of California contribution rates are set by the California Legislature and Governor and detailed in Teachers’ Retirement Law. The contribution rates are expressed as a level percentage of payroll using the entry age normal actuarial method. The contribution rates for each plan for the year ended June 30, 2015 are presented above and the total District contributions were $3,628,576.

Hire dateBenefit formulaBenefit vesting scheduleBenefit paymentsRetirement ageMonthly benefits as a percentage of eligible compensationRequired employee contribution rateRequired employer contriubtion rateRequired state contribution rate

Monthly for life

STRP Defined Benefit Program and Supplement ProgramOn or before December 31, 2012 On or after January 1, 2013

2% at 605 years of service

2% at 625 years of serviceMonthly for life

622.0% - 2.4%

602.0% - 2.4%

8.15% 8.15%8.88%5.95%

8.88%5.95%

-34-



NOTE 9 - EMPLOYEE RETIREMENT PLANS: (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2015, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related state support and the total portion of the net pension liability that was associated with the District were as follows:

The net pension liability was measured as of June 30, 2014. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts and the State, actuarially determined. At June 30, 2014, the District’s proportion was 0.0830%.

For the year ended June 30, 2015, the District recognized pension expense of $4,187,350 and revenue of $2,528,528 for support provided by the State. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

District proportionate share of net pension liabilityState's proportionate share of the net pension liability

associated with the District

Total 77,791,034$

48,502,710$

29,288,324

Pension contributions subsequent to measurement dateNet differences between projected and actual earnings

on plan investments

Total 3,628,576$

$

11,943,700

11,943,700$


Deferred Inflowsof Resources

3,628,576$

-35-



NOTE 9 - EMPLOYEE RETIREMENT PLANS: (continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) The deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. The deferred inflows of resources are amortized over a closed 5-year period. The remaining amount will be recognized to pension expense as follows:

Year EndedJune 30 Amortization

2016 2,985,925$

2017 2,985,925

2018 2,985,925 2019 2,985,925

11,943,700$

Actuarial Methods and Assumptions The financial reporting actuarial valuation as of June 30, 2013 used the following methods and assumptions, applied to all prior periods included in the measurement: Valuation date June 30, 2013 Measurement date June 30, 2014 Experience study July 1, 2006 through June 30, 2010 Actuarial cost method Entry age normal Discount rate 7.60% Investment rate of return 7.60% Consumer price inflation 3.00% Wage growth 3.75%

CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are based on RP2000 series tables adjusted to fit CalSTRS experience.

-36-




Actuarial Methods and Assumptions (continued) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. The best estimate ranges were developed using capital market assumptions from CalSTRS general investment consultant. Based on the model for CalSTRS consulting actuary’s investment practice, a best estimate range was determined by assuming the portfolio is re-balanced annually and that the annual returns are normally distributed and independent from year to year to develop expected percentiles for the long-term distribution of annualized returns. The assumed asset allocation is based on board policy for target asset allocation in effect on February 2, 2012, the date the current experience study was approved by the board. Best estimates of 10-year geometric real rates of return and the assumed asset allocation for each major asset class used as input to develop the actuarial investment rate of return are summarized in the following table:

Discount Rate The discount rate used to measure the total pension liability was 7.60%. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.60%) and assuming that contributions, benefit payments and administrative expense occurred midyear. Based on these assumptions, the STRP’s fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability.

Asset ClassAssumed Asset

Allocation

Long-term Expected Real Rate of Return

Global equity 47% 4.50%Private equity 12% 6.20%Real estate 15% 4.35%Inflation sensitive 5% 3.20%Fixed income 20% 0.20%Cash/liquidity 1% 0.00%

-37-




Discount Rate (continued) The following presents the District’s proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate:

1% increase (8.60%) 25,905,960

Net Pension LiabilityDiscount Rate

1% decrease (6.60%)Current discount rate (7.60%) 48,502,710

75,603,040$

Plan Fiduciary Net Position Detailed information about the STRP’S plan fiduciary net position is available in a separate comprehensive annual financial report for CalSTRS. Copies of the CalSTRS annual financial report may be obtained from CalSTRS, 7667 Folsom Boulevard, Sacramento, CA 95826.

California Public Employees Retirement System (CalPERS)

Plan Description

Qualified employees are eligible to participate in the Schools Pool Plan under the California Public Employees’ Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees’ Retirement Law.

-38-




Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of service credit, a benefit factor and the member’s final compensation. Members hired on or before December 31, 2012, with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. Members hired on or after January 1, 2013, with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The Basic Death Benefit is paid to any member’s beneficiary if the member dies while actively employed. An employee’s eligible survivor may receive the 1957 Survivor Benefit if the member dies while actively employed, is at least age 50 (or 52 for members hired on or after January 1, 2013), and has at least 5 years of credited service. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The CalPERS provisions and benefits in effect at June 30, 2015, are summarized as follows:

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Total plan contributions are determined through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The contributions rates are expressed as percentage of annual payroll. The contribution rates for each plan for the year ended June 30, 2015 are presented above and the total District contributions were $1,586,632.

Hire dateBenefit formulaBenefit vesting scheduleBenefit paymentsRetirement ageMonthly benefits as a percentage of eligible compensationRequired employee contribution rateRequired employer contriubtion rate

6.974% 6.000%11.771% 11.771%

Monthly for life Monthly for life55 62

1.1% - 2.5% 1.0% - 2.5%

School Employer Pool (CalPERS)On or before December 31, 2012 On or after January 1, 2013

2% at 55 2% at 625 years of service 5 years of service

-39-




Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

As of June 30, 2015, the District reported net pension liabilities for its proportionate share of the CalPERS net pension liability totaling $12,408,211. The net pension liability was measured as of June 30, 2014. The District’s proportion of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts, actuarially determined. At June 30, 2014, the District’s proportion was 0.1093%.

For the year ended June 30, 2015, the District recognized pension expense of $948,364. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Pension contributions subsequent to measurement dateChanges in proportionNet differences between projected and actual earnings

on plan investments

Total

447,973


Deferred Inflowsof Resources

1,586,632$ $

4,263,600

1,586,632$ 4,711,573$ The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. The deferred inflows of resources will be amortized over closed periods ranging from 3.9 to 5 years and will be recognized in pension expense as follows:

Year Ended June 30 Amortization

2016 1,220,373$ 2017 1,220,373 2018 1,204,927 2019 1,065,900

4,711,573$

-40-




Actuarial Methods and Assumptions The total pension liability for CalPERS was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013 and rolling forward the total pension liability to June 30, 2014. The financial reporting actuarial valuation as of June 30, 2013 used the following methods and assumptions, applied to all prior periods included in the measurement: Valuation date June 30, 2013 Measurement date June 30, 2014 Experience study July 1, 1997 through June 30, 2011 Actuarial cost method Entry age normal Discount rate 7.50% Investment rate of return 7.50% Consumer price inflation 2.75% Wage growth 3.00%

Mortality assumptions are based on mortality rates resulting from the most recent CalPERS experience study adopted by the CalPERS Board. For purposes of the post-retirement mortality rates, those revised rates include five years of projected ongoing mortality improvement using Scale AA published by the Society of Actuaries. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the table on the following page.

-41-




Actuarial Methods and Assumptions (continued)

Long-term Assumed Asset Expected Real

Asset Class Allocation Rate of ReturnGlobal equity 47% 5.25%Global fixed income 19% 0.99%

Private equity 12% 6.83%

Real estate 11% 4.50%Inflation sensitive 6% 0.45%

Infrastructure and Forestland 3% 4.50%

Liquidity 2% -0.55% Discount Rate The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Based on these assumptions, the School Employer Pool fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability. The following presents the District’s proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate:

Net PensionDiscount rate Liability

1% decrease (6.50%) 21,766,835$

Current discount rate (7.50%) 12,408,211

1% increase (8.50%) 4,588,138

-42-




Plan Fiduciary Net Position Detailed information about CalPERS School Employer plan fiduciary net position is available in a separate comprehensive annual financial report. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95814.

NOTE 10 – POSTEMPLOYMENT HEALTHCARE BENEFITS:

Plan Description and Eligibility The District administers a single-employer defined benefit healthcare plan (the Retiree Health Plan). The plan provides health, dental, vision and life insurance benefits to District employees and retirees. Medical insurance is provided through CalPERS and the District offers the following six plans: Blue Shield Access+, Blue Shield Net Value, Kaiser Permanente, PERSCare, PERS Choice and PERS Select. Dental insurance is provided through Delta Dental of California; vision insurance is provided through VSP; and group term life insurance is provided through Hartford. Retirees with at least 10 years of service may retire at age 55 and receive a District contribution equal to $2,100 per year ($175/month). District paid benefits end at age 65. Part-time Classified employees who work at least 30 hours per week prior to retirement receive full benefits as described above. Classified unit members who work at least 20 hours per week, and all part-time Certificated members, receive a pro-rata share of the District contribution. Benefit provisions are established through negotiations between the District and the bargaining unions representing employees and are renegotiated each three-year bargaining period. The Retiree Health Plan does not issue a separate financial report. Funding Policy The District currently finances benefits on a pay-as-you-go basis, with additional amounts to prefund benefits as determined annually by the governing board. The District contributes up to the maximum of $2,100 per year to eligible retirees as applicable. For fiscal year ended 2015, the District contributed $194,928 to the plan consisting entirely of premiums.

-43-



NOTE 10 – POSTEMPLOYMENT HEALTHCARE BENEFITS: (continued)

Annual OPEB Cost and Net OPEB Obligation The District’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed, and changes in the OPEB obligation:

Annual required contribution (ARC) 176,262$

Interest on net OPEB obligation (67,131)

Adjustment to annual required contribution 81,283

Annual OPEB cost (expense) 190,414

Contributions made (194,928) Change in net OPEB asset (4,514)

Net OPEB (asset) - Beginning of Year (1,118,853)

Net OPEB (asset) - End of Year (1,123,367)$

-44-




Annual OPEB Cost and Net OPEB Obligation (continued) The District’s annual OBEB cost for the year, the percentage of annual OPEB cost contributed, and the net OPEB asset for fiscal year ended 2015 was as follows:

Percentage ofYear Ended Annual Annual OPEB Net OPEB

June 30, OPEB Cost Cost Contributed Asset

2013 266,957$ 61.3% 1,135,295$ 2014 190,622 91.3% 1,118,853 2015 190,414 102.4% 1,123,367

Funding Status and Funding Progress As of July 1, 2013, the most recent actuarial valuation date, the plan was 29% funded. The actuarial accrued liability for benefits was $2,237,483 and the unfunded actuarial accrued liability (UAAL) was $1,588,270. The covered payroll (annual payroll of active employees covered by the plan) was $47,195,111, and the ratio of the UAAL to the covered payroll was 3.3%. The District has established an irrevocable trust administered by SISC. At June 30, 2015, the trust’s fair market value is $759,674. Actuarial valuations of an ongoing benefit plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of postemployment healthcare benefits funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets, if any, is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

-45-




Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, if any, consistent with the long-term perspective of the calculations. In the July 1, 2013 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 6.0 percent investment rate of return (net of administrative expenses) which is a blended rate of the expected long-term investment returns on plan assets and on the employers own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 8 percent initially, reduced by decrements to an ultimate rate of 5 percent after 4 years. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level dollar of projected payroll on an open basis.

NOTE 11 - JOINT POWERS AGREEMENTS:

The West Covina Unified School District participates in two joint powers agreement (JPA) entities: the West San Gabriel Workers Compensation (WSGWC) and the West San Gabriel Liability and Property (WSGLP) JPAs. WSGWC and WSGLP arrange for and provide workers compensation insurance and property and liability insurance for their member districts, respectively. The West Covina Unified School District pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to its participation in the JPAs. Each JPA is governed by a board consisting of a representative from each member district. Each governing board controls the operations of its JPA independent of any influence by the West Covina Unified School District beyond the District's representation on the governing boards.

-46-



NOTE 11 - JOINT POWERS AGREEMENTS: (continued)

Condensed financial information for the most recent period available, is as follows:

WSGWC

(Audited)

June 30, 2014

WSGLP

(Audited)

June 30, 2014

Total Assets 18,286,292$ 18,094,892$ Total Liabilities 517,836 2,016,318

Fund Balance 17,768,456$ 16,078,574$

Total Revenues 4,372,771$ 5,644,140$ Total Expenditures 5,263,316 4,390,462

Net Increase (Decrease) in Fund Balance (890,545)$ 1,253,678$

NOTE 12 – CUMULATIVE EFFECT OF ACCOUNTING CHANGES TO BEGINNING NET POSITION AND NEGATIVE UNRESTRICTED NET POSITION:

The beginning net position of the government-wide financial statements has been decreased by $72,409,233 to recognize the beginning balance of the net pension liability and deferred outflow of resources resulting from the implementation of GASB Statements No. 68 and No. 71. Beginning net position was not restated for the effect of deferred inflows of resources as the amount was not practical to determine. The effect of this implementation has resulted in a negative unrestricted net position at June 30, 2015. The retirement plan administrators for CalSTRS and CalPERS will require increases in contribution amounts to reduce the net pension liability in future years. The District has budgeted for increased contributions in the 2016 year.

NOTE 13 - COMMITMENTS AND CONTINGENCIES:

A. Litigation

The District is involved in claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the District's financial statements.

-47-



NOTE 13 - COMMITMENTS AND CONTINGENCIES: (continued)

B. State and Federal Allowances, Awards, and Grants

The District has received state and federal funds for specific purposes, including reimbursement of mandated costs, which are subject to review and audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, it is believed that any required reimbursement will not be material.

C. Purchase Commitments

As of June 30, 2015, the District was committed under various capital expenditure purchase agreements for construction and modernization projects totaling approximately $5,193,000. Projects will be funded through Bond Proceeds, State Deferred Maintenance Allocations, Capital Facilities Funds and General Funds.

NOTE 14 - GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS ISSUED, NOT YET EFFECTIVE:

The Governmental Accounting Standards Board (GASB) has issued pronouncements prior to June 30, 2015, that have effective dates that may impact future financial presentations; however, the impact of the implementation of each of the statements below to the District’s financial statements has not been assessed at this time. Statement No. 72 - Fair Value Measurement and Application This statement was issued in February 2015 and provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements by establishing a hierarchy of inputs to valuation techniques used to measure fair value. The statement is effective for the fiscal year 2015-16.

-48-



NOTE 14 - GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS ISSUED, NOT YET EFFECTIVE: (continued)

Statement No. 73 - Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68 This statement was issued in June 2015 and extends the approach to accounting and financial reporting established in Statement No. 68 to all pensions, with modifications as necessary to reflect that for accounting and financial reporting purposes, any assets accumulated for pensions that are provided through pension plans that are not administered through trusts that meet the criteria specified in Statement No. 68 should not be considered pension plan assets. The object is to provide information about financial support provided by certain non-employer entities for pensions that are provided to the employees of other entities and that are not within the scope of Statement No. 68 and to provide information about the effects of pension-related transactions and other events on the elements of the basic financial statements of state and local governmental employers. The statement is effective for the fiscal year 2015-16 except those provisions that address employers and governmental non-employer contributing entities for pensions that are not within the scope of Statement No. 68, which are effective for the fiscal year 2016-17. Statement No. 74 - Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans This statement was issued in June 2015 and establishes standards of financial reporting for defined benefit OPEB plans and defined contribution OPEB plans. This statement is closely related in some areas to Statement No. 75. The statement is effective for the fiscal year 2016-17. Statement No. 75 - Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions This statement was issued in June 2015 and establishes standards for governmental employer recognition, measurement, and presentation of information about OPEB. The statement also establishes requirements for reporting information about financial support provided by certain non-employer entities for OPEB that is provided to the employees of other entities. This statement is closely related in some areas to Statement No. 74. The statement is effective for the fiscal year 2017-18.

-49-



NOTE 14 - GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS ISSUED, NOT YET EFFECTIVE: (continued)

GASB Statement No. 76 - The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments This statement was issued in June 2015 and reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The statement is effective for the fiscal year 2015-16.

NOTE 15 - SUBSEQUENT EVENTS:

A. Qualified Zone Academy Bonds

The District issued Qualified Zone Academy Bonds (QZABs) totaling $2,550,000 on August 18, 2015. The bonds mature August 18, 2027 and were issued with a credit rate of 4.69%. Payments are due annually on August 18 starting with the 2016-17 fiscal year. The bonds were sold to finance the implementation of any and all energy conservation measures and improvements to school facilities within buildings or land owned by the District (known collectively as the Energy Conservation Facility).

B. Collective Bargaining Agreements

The Board approved the agreements with the Teachers Association of West Covina and California School Employees Association, Chapter #91 on August 25, 2015 for salaries retroactive to July 1, 2014. The Board also approved the compensation increases for Management and Confidential employees retroactive to July 1, 2014 on August 25, 2015, and therefore, agreement costs were not part of these financial statements. The cost for 2014-15 fiscal year was $1,790,295 for all employee groups in General Fund. This amount was paid on October 5, 2015 to all employees. An account was assigned in the ending fund balance as of June 30, 2015 to cover the cost of the agreements. This is described in Note 4.

REQUIRED SUPPLEMENTARY INFORMATION

-50-

Actual Amounts(a) Fund Basis to

GAAP Actual Amounts

Original Final General Fund GAAP Basis

Revenues

Local control funding formula sources:

State apportionments 64,063,148$ 64,743,239$ 63,951,026$ 298,156$ 64,249,182$

Local sources 4,469,998 5,272,867 6,449,396 721,805 7,171,201

Total local control funding formula sources 68,533,146 70,016,106 70,400,422 1,019,961 71,420,383

Federal sources 4,320,619 5,270,753 4,416,987 4,416,987

Other state sources 3,696,755 6,745,986 7,059,461 89,082 7,148,543

Other local sources 11,993,740 13,230,107 13,256,207 21,740 13,277,947

Total Revenues 88,544,260 95,262,952 95,133,077 1,130,783 96,263,860

Expenditures

Certified Salaries 42,788,586 41,902,447 41,482,100 41,482,100 Classified Salaries 13,821,191 14,219,291 14,214,114 14,214,114 Employee benefits 15,217,283 17,346,314 16,909,610 16,909,610 Books and supplies 5,450,707 6,620,408 4,791,749 4,791,749

Services and other operating expenditures 10,794,971 12,947,345 10,878,333 621,776 11,500,109

Capital Outlay 84,724 78,514 78,514 Other outgo 1,370,257 1,450,692 1,540,904 508,933 2,049,837 Direct support - indirect cost (322,282) (322,282) (255,841) (255,841)

Total Expenditures 89,120,713 94,248,939 89,639,483 1,130,709 90,770,192

Excess of revenues over expenditures (576,453)$ 1,014,013$ 5,493,594 74 5,493,668

Fund Balance - Beginning of Year 17,073,058 10,893 17,083,951

Fund Balance - End of Year 22,566,652$ 10,967$ 22,577,619$

(a) Amounts presented are the result of the District including activity of the Special Reserve Fund for Other than Capital Outlay and Charter School Fund. (See Note 1)


SCHEDULE OF BUDGETARY COMPARISON FOR THE GENERAL FUNDFor the Fiscal Year Ended June 30, 2015

Budgeted Amounts - General Fund

See the accompanying notes to the required supplementary information.

-51-

See the accompanying notes to the required supplementary information

Actuarial Value Actuarial Accruedof Liability Unfunded Actuarial UAAL as a

Actuarial Assets (Projected Unit Credit ) Accrued Liability Funding Covered Percentage ofValuation Date (AVA) (AAL) (UAAL) Ratio Payroll Covered Payroll

7/1/2009 429,546$ 3,273,046$ 2,843,500$ 13% 51,814,484$ 5.5%7/1/2011 586,582 2,447,411 1,860,829 24% 52,272,497 3.6%7/1/2013 649,213 2,237,483 1,588,270 29% 47,195,111 3.4%


SCHEDULE OF POSTEMPLOYMENT HEALTHCARE BENEFITS FUNDING PROGRESSFor the Fiscal Year Ended June 30, 2015

-52-


2015

District's proportion of the net pension liability (assets) 0.0830%

District's proportionate share of the net pension liability (asset) 48,502,710$

State's proportionate share of the net pension liability (asset) associated with the District 29,288,324

Total 77,791,034$

District's covered-employee payroll $38.0 Million

District's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 127.74%

Plan fiduciary net position as a percentage of the total pension liability 77.00%

Amounts for covered payroll are reported as of the previous fiscal year to align with the measurement date of the net pension liability.


SCHEDULE OF DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITYSTATE TEACHERS' RETIREMENT PLAN


Note: Accounting standards require presentation of 10 years of information. However, the information in this schedule is not required to be presented retroactively. Years will be added to this schedule as future data becomes available.

-53-


2015

District's proportion of the net pension liability (assets) 0.1093%

District's proportionate share of the net pension liability (asset) 12,408,211$


District's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 117.39%

Plan fiduciary net position as a percentage of the total pension liability 83.37%

Amounts for covered payroll are reported as of the previous fiscal year to align with the measurement date of the net pension liability.


SCHEDULE OF DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITYCALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM - SCHOOLS POOL PLAN



-54-


2015

Contractually required contribution 3,628,576$

Contributions in relation to the contractuallyrequired contribution 3,628,576 Contribution deficiency (excess) -$


Contributions as a percentage of covered-employee payroll 8.88%


SCHEDULE OF DISTRICT CONTRIBUTIONSSTATE TEACHERS' RETIREMENT PLAN



-55-


2015

Contractually required contribution 1,586,632$

Contributions in relation to the contractuallyrequired contribution 1,586,632 Contribution deficiency (excess) -$


Contributions as a percentage of covered-employee payroll 11.771%


SCHEDULE OF DISTRICT CONTRIBUTIONSCALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM - SCHOOLS POOL PLAN



-56-


NOTES TO REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2015

NOTE 1 - PURPOSE OF SCHEDULES:

A. Schedule of Budgetary Comparison For The General Fund

A budgetary comparison is presented for the general fund. This schedule presents the budget as originally adopted, the revised budget as of the fiscal year end, actual amounts at fiscal yearend and any adjustments needed to present the amounts in accordance with generally accepted accounting principles (GAAP).

B. Schedule of Postemployment Healthcare Benefits Funding Progress

The schedule is intended to show trends about the funding progress of the District’s actuarially determined liability for postemployment benefits other than pensions.

C. Schedules of District’s Proportionate Share of the Net Pension Liability –

STRP and PERS The schedule presents information on the District’s proportionate share of the net pension liability, the plans’ fiduciary net position and, when applicable, the State’s proportionate share of the net pension liability associated with the District. In the future, as data becomes available, 10 years of information will be presented.

D. Schedules of District Contributions – STRP and PERS

The schedule presents information on the District’s required contribution, the amounts actually contributed and any excess or deficiency related to the required contribution. In the future, as data becomes available, 10 years of information will be presented.

NOTE 2 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS:

Excess of expenditures over appropriations occurred in the other outgo major object account in the General Fund in the amount of $90,212.

SUPPLEMENTARY INFORMATION

-57-


HISTORY AND ORGANIZATION June 30, 2015

The West Covina Unified School District was established in 1960. The District boundaries encompass the city of West Covina, as well as other unincorporated areas of Los Angeles County. There were no changes in the boundaries of the District during the current year. The District is currently operating eight elementary schools, three middle schools, two traditional high schools, one continuation school, and one K-12 Special Education school. The Board of Education and the District Administrators for the fiscal year ended June 30, 2015 were as follows:

BOARD OF EDUCATION Member Office Term Expires Ms. Jessica C. Shewmaker President November 2017 Ms. Camie Poulos Vice President November 2015 Ms. Eileen Miranda Jimenez Clerk November 2017 Mr. Michael Flowers Member November 2015 Mr. Daniel C. Monarrez Member November 2015

DISTRICT ADMINISTRATORS Dr. Charles D. Hinman Superintendent Dr. Robert R. Coghlan Assistant Superintendent, Business Services Ms. Colleen Hawkins Assistant Superintendent, Educational Services Mr. Michael F. Seaman Assistant Superintendent, Human Resources

-58-

ADA statistics reported to the State for the fiscal year ended June 30, 2015 are as follows:

RevisedSecond Period Annual

Grades Transitional Kindergarten through thirdRegular ADA 2,336 2,334 Extended year special education 5 5 Special education - nonpublic, nonsectarian schools 1 1

Total grades transitional kindergarten through third ADA 2,342 2,340

Grades four through sixRegular ADA 1,822 1,822 Extended year special education 4 4 Extended year special education - nonpublic, nonsectarian schools 1

Total grades four through six ADA 1,826 1,827

Grades seven and eightRegular ADA 1,367 1,369 Extended year special education 3 3 Special education - nonpublic, nonsectarian schools 1 1

Total grades seven and eight ADA 1,371 1,373

Grades nine through twelveRegular ADA 3,332 3,312 Extended year special education 5 5 Special education - nonpublic, nonsectarian schools 5 5 Extended year special education - nonpublic, nonsectarian schools 1 1 Community day school 6 5

Total grades nine through twelve ADA 3,349 3,328

Total ADA 8,888 8,868


SCHEDULE OF AVERAGE DAILY ATTENDANCE (ADA)For the Fiscal Year Ended June 30, 2015

The requirements governing ADA, admission of pupils, types of schools, recording and reporting of pupil attendance, and similar matters are controlled by provisions of the Education Code and by regulations of the California Department of Education.

See the accompanying notes to supplementary information.

-59-


Number of DaysNormal Reduced Actual Traditional

Grade Level Requirement Requirement Minutes Calendar Status

Kindergarten 36,000 35,000 52,432 184 In Compliance

Grade 1 50,400 49,000 54,980 184 In Compliance












2014-15 Minutes


SCHEDULE OF INSTRUCTIONAL TIMEFor the Fiscal Year Ended June 30, 2015

-60-

Pass-ThroughFederal EntityCatalog Idenifying Total Program

Program Name Number Number Expenditures

United States Department of AgriculturePass-Through Program From California Department of Education:

Child Nutrition Cluster:Child Nutrition Program-Lunch 10.555 13523 2,638,147$ Child Nutrition Program-Especially Needy Breakfast 10.553 13526 884,637 USDA Donated Food 10.555 (1) 337,474

Subtotal: Child Nutrition Cluster 3,860,258

Total: United States Department of Agriculture 3,860,258

United States Department of EducationPass-Through Program From California Department of Education

Special Education ClusterGrants to States (IDEA, Part B) 84.027 13379 2,006,959 Grants to States (IDEA, Part B) - Preschool Grants 84.173 13430 32,257 Preschool Local Entitlement 84.027A 13682 45,184 Preschool Staff Development 84.173A 13431 325 Mental Health Services, Part B 84.027A 14468 39,362

Subtotal: Special Education Cluster 2,124,087

No Child Left Behind:Title I, Part A - Low Income and Neglected 84.010 14329 1,456,348 Title II, Part A - Improving Teacher Quality 84.367 14341 261,404 Title III - Immigrant Education Program 84.365 15146 19,753 Title III - Limited English Proficiency 84.365 14346 95,683

Career and Technical Education - Basic Grants to States 84.048 14894 63,967

Total: United States Department of Education 4,021,242

United States Department of Health & Human ServicesPass-Through Program From California Department of Education:

Medicaid Cluster:Medi-Cal Billing Option 93.778 10013 428,910

Total: United States Department of Health & Human Services 428,910

Total Federal Programs 8,310,410$

Reconciliation of Federal Revenue Total Federal Program Expenditures 8,310,410$ Revenues in excess (deficiency) of expenditures related to Federal Entitlements:

Air Force Junior Reserve Officer Training Corps 12.000 (1) 37,341 Title I, Part G Advanced Placement (AP) Test Fee Reimbursement 84.303B 14831 24,282 Medi-Cal Billing Option 93.778 10013 (94,788)

Total Federal Program Revenue 8,277,245$

(1) Pass-Through Entity Identifying Number not readily available or not applicable

The District is the recipient of a federal program that does not result in cash receipts or disbursements. The District was granted $337,474 of commodities


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor the Fiscal Year Ended June 30, 2015


-61-

Amount % Amount % Amount % Amount %

General FundRevenueLocal control funding formula 80,561,252$ 82.0 70,400,422$ 78.5 61,027,444$ 76.3 47,575,627$ 61.8 Federal sources 4,735,540 4.8 4,416,987 4.9 3,859,980 4.8 3,875,169 5.0 Other State sources 11,701,248 11.9 7,059,461 7.9 6,746,803 8.4 13,705,933 17.8 Other local sources 12,424,335 12.6 13,256,207 14.8 8,539,751 10.7 8,352,261 10.9

Total Revenue 109,422,375 111.3 95,133,077 106.1 80,173,978 100.2 73,508,990 95.5

ExpendituresCertificated salaries 44,161,048 44.9 41,482,100 46.3 38,428,865 48.0 37,146,136 48.3 Classified salaries 15,011,563 15.3 14,214,114 15.9 12,088,432 15.1 11,631,585 15.1 Employee benefits 19,252,443 19.6 16,909,610 18.9 13,108,698 16.4 13,110,218 17.0 Books and supplies 6,012,983 6.1 4,791,749 5.3 4,148,064 5.2 3,536,808 4.6 Contracted Services 12,735,504 13.0 10,878,333 12.1 10,784,859 13.5 10,016,479 13.0 Capital outlay - 78,514 0.1 61,054 0.1 50,635 0.1 Other Outgo 1,364,271 1.4 1,540,904 1.7 17,472 0.0 17,472 0.0 Direct support/indirect costs (279,653) (0.3) (255,841) (0.3) 1,341,492 1.7 1,431,572 1.9

Total Expenditures 98,258,159 100.0 89,639,483 100.0 79,978,936 100.0 76,940,905 100.0

Change in fund balance 11,164,216$ 11.4 5,493,594$ 6.1 195,042$ 0.2 (3,431,915)$ (4.5)

Ending fund balance 33,730,868$ 34.3 22,566,652$ 25.2 17,073,058$ 21.3 16,878,016$ 21.9

Available reserve* 2,876,075$ 2.9 2,612,878$ 2.9 2,399,368$ 3.0 2,308,227$ 3.0

Recommended reserve percentage 3.0 3.0 3.0 3.0

Average daily attendance(Second Period) 8,739 8,888 8,964 8,914

Total Long-Term Debt 87,712,439$ 89,291,003$ 29,217,066$ 30,221,488$


SCHEDULE OF FINANCIAL TRENDS AND ANALYSISFor the Fiscal Year Ended June 30,

(Budget) 2016 2015 2014 2013

IMPORTANT NOTES: Amounts above are those reported as General Fund in the State accounting software and do not include the Special Reserve Fund for Other than Capital Outlay and Charter School Fund reported in the General Fund of the governmental funds’ financial statements. 2015 and 2016 Budget other state revenues and employee benefits include on-behalf payments. 2013 and 2014 amounts have not been revised to include these amounts. *Available reserves are those amounts reserved for economic uncertainty and any other remaining unassigned fund balances from the General Fund. See Note 1C15 for additional information. All percentages are of total expenditures. Average Daily Attendance excludes Adult Education and ROP. 2016 budget is the original budget adopted on June 9, 2015. Note: In 2013/14, the state changed its primary funding method from the revenue limit formula to the local control funding formula which combined the previous revenue limit funding and other state funding sources (Title III categoricals, class size reduction, transportation and Economic Impact Aid) into the local control funding formula sources.


-62-


SCHEDULE OF CHARTER SCHOOLS For the Fiscal Year Ended June 30, 2015

Included in District Charter School Audit Report San Jose Charter Academy No California Virtual Academy at Los Angeles No


-63-


RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FINANCIAL STATEMENTS


General

Fund

June 30, 2015 Annual Financial and Budget Report

Fund Balance 23,352,038$

Adjustments and Reclassifications:

Accounts Payable (774,419)

Decreasing the Fund Balance: (774,419)

June 30, 2015 Audited Financial Statement

Fund Balance 22,577,619$


-64-


NOTES TO SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2015

NOTE 1 - PURPOSE OF SCHEDULES:

A. Schedule of Average Daily Attendance (ADA)

Average daily attendance is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to school districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs.

B. Schedule of Instructional Time

The District met or exceeded its target funding and has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. This schedule presents information on the amount of instructional time offered by the District and whether the District complied with the provisions of Education Code Sections 46200 through 46206.

C. Schedule of Expenditures of Federal Awards

OMB Circular A-133 requires a disclosure of the financial activities of all federally funded programs and is presented on the modified accrual basis of accounting.

D. Schedule of Financial Trends and Analysis

The 2014-15 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting requires that this schedule be prepared showing financial trends of the general fund over the past three fiscal years as well as the current year budget. This report is intended to identify if the District faces potential fiscal problems and if they have met the recommended available reserve percentages.

E. Schedule of Charter Schools

The 2014-2015 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting requires that this schedule list all charter schools chartered by the District and inform the users whether or not the charter school information is included in the District’s financial statements.

-65-


NOTES TO SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2015

NOTE 1 - PURPOSE OF SCHEDULES: (continued)

F. Reconciliation of Annual Financial and Budget Report with Audited Financial Statements

This schedule provides the information necessary to reconcile the fund balances of all funds as reported on the annual Financial and Budget Report form to the audited financial statements.

OTHER INDEPENDENT AUDITOR’S REPORTS

-66-

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE

AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE

WITH GOVERNMENT AUDITING STANDARDS Board of Education West Covina Unified School District 1717 West Merced Avenue West Covina, CA 91790 We have audited, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of West Covina Unified School District (the District), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated December 1, 2015. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency or a combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a 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.

Osweii0 C Asomcsr D Waao P TacGt

VGD

Our considersection and weaknesses exist that wen internal cnternal cont

01, that we c

Compliance

As part of obstatements arof laws, regumaterial effecompliance wsuch an opinrequired to b

District’s Re

West Covinaaccompanyinauditing procon it.

Purpose of t

The purposeand the resucontrol or oGovernment this commun


INDEPEOV

OF FIN

ration of intwas not d

or significanere not identicontrol that trol, describeconsider to b

e and Other

btaining reare free of mulations, conect on the dwith those p

nion. The resbe reported u

esponse to F

a Unified Scng schedule cedures appl

this Report

of this repoults of that teon complian

Auditing Stnication is no


ENDENT AVER FINAN

AND OTNANCIAL S

WITH G

ternal controesigned to nt deficienciified. Given we consider

ed in the acce a significa

Matters

asonable assumaterial misst

ntracts and gdeterminationprovisions wsults of our tunder Govern

Findings

chool Districof findings

lied in the au

ort is solely esting, and

nce. This retandards in ot suitable fo

TUTZMAN

AUDITOR’SNCIAL REP

HER MATSTATEMENGOVERNME

ol was for thidentify all

ies and therethese limita

r to be matecompanying ant deficienc

urance aboutatement, wegrant agreemn of financi

was not an otests disclosenment Auditi

ct’s responsand question

udit of the fi

to describe tnot to provi

eport is an considering

or any other

N LLP

-67-

S REPORT PORTING A

TERS BASNTS PERFOENT AUDIT

he limited p deficiencieefore, materations, duringerial weaknschedule of y.

ut whether We performedments, noncoal statement

objective of ed no instaning Standard

se to the findned costs. Tnancial state

the scope ofide an opiniintegral parthe entity's purpose.

ON INTERAND ON COSED ON ANORMED INTING STAN

purpose desces in internrial weaknesg our audit w

nesses. We df findings and

West Covinad tests of its ompliance wt amounts. Hour audit an

nces of non-cds.

ding identifiThe District’ements and,

f our testingion on the ert of an auinternal con

RNAL CONOMPLIANC

N AUDIT N ACCORDNDARDS

cribed in thenal control tsses or signiwe did not idid identify d questioned

Unified Schcompliance

with which cHowever, pnd, accordincompliance o

fied in our as response waccordingly

g of internal effectivenessudit performntrol and co

NTROL CE

DANCE

e first paragthat might ificant deficdentify any a certain d

d costs as Fin

hool Distric with certaincould have aroviding an

ngly, we do or other mat

audit is descwas not subjy, we express

control and s of the enti

med in accorompliance. A

graph of thisbe materialiencies maydeficiencies

deficiency innding 2015-

t’s financialn provisionsa direct andopinion onnot express

tters that are

cribed in thejected to thes no opinion

complianceity's internalrdance with

Accordingly,

s l y s n -

l s d n s e

e e n

e l h

-68-

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; AND REPORT ON

INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

Board of Education West Covina Unified School District 1717 West Merced Avenue West Covina, CA 91790 Report on Compliance for Each Major Federal Program We have audited West Covina Unified School District’s (the District) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District’s major federal programs for the year ended June 30, 2015. The District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the District's compliance.

-69-

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; AND REPORT ON

INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

Opinion on Each Major Federal Program In our opinion, the District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. Report on Internal Control Over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance, for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance such that there is a reasonable possibility, that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

P ToC

VGD

Purpose of t

The purpose of internal cCircular A-1


INDFOR E

INT

this Report

of this repocontrol over33. Accordi


DEPENDENEACH MAJTERNAL C

ort on internar compliancengly, this rep

TUTZMAN

NT AUDITOJOR FEDEONTROL O

BY OMB

al control ove and the report is not su

N LLP

-70-

OR’S REPORAL PROGOVER COM

B CIRCULA

ver complianesults of thauitable for an

ORT ON COGRAM; ANMPLIANCEAR A-133

nce is solely at testing bany other pur

OMPLIANCND REPORTE REQUIRE

to describe ased on the rpose.

CE T ON ED

the scope orequiremen

f our testingnts of OMB

g

-71-

INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE Board of Education West Covina Unified School District 1717 West Merced Avenue West Covina, CA 91790 We have audited the West Covina Unified School District’s (the District’s) compliance with the types of compliance requirements described in the 2014-15 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, published by the Education Audit Appeals Panel for the year ended June 30, 2015. The District’s State compliance requirements are identified in the table below. Management’s Responsibility Management is responsible for compliance with the state laws and regulations as identified below. Auditor’s Responsibility Our responsibility is to express an opinion on the District’s compliance based on our audit of the types of compliance requirements referred to below. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the 2014-15 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, published by the Education Audit Appeals Panel. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the specific areas listed below has occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on state compliance. However, our audit does not provide a legal determination of the District’s compliance.

-72-

INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE Compliance Requirements Tested In connection with the audit referred to above, we selected and tested transactions and records to determine the District's compliance with the laws and regulations applicable to the following items:

Procedures Description Performed Attendance reporting Yes Teacher certification and misassignments Yes Kindergarten continuance Yes Independent study No1

Continuation education Yes Instructional time Yes Instructional materials Yes Ratio of administrative employees to teachers Yes Classroom teacher salaries Yes Early retirement incentive Not applicable GANN limit calculation Yes School Accountability Report Card Yes Juvenile Court Schools Not applicable Middle or early college high schools Not applicable K-3 grade span adjustment Yes Transportation maintenance of effort Yes Regional Occupational Centers or Programs maintenance of effort Not applicable Adult Education maintenance of effort Not applicable California Clean Energy Jobs Act Yes After School Education and Safety Program Yes Proper expenditure of Education Protection Account Funds Yes Common Core Implementation Funds Yes Unduplicated Local Control Funding Formula Pupil Counts Yes Local Control and Accountability Plan Yes Charter Schools:

Attendance No2

Mode of instruction No2

Nonclassroom-based instruction/independent study No2

Determination of funding for nonclassroom-based instruction No2

Annual instructional minutes – classroom based No2

Charter School Facility Grant Program No2

_______________________________________ 1We did not perform testing for independent study because the independent study ADA was under the level which requires testing.

2Testing for Charter Schools was done by each school’s respective auditor.

O Ip P TrCs

VGD

Opinion on

In our opinioprograms ref

Purpose of t

The purposerequirementsCompliance suitable for a


INDEPE

State Comp

on, the West ferred to abo

this Report

e of this reps of the 20Reporting,

any other pur


ENDENT A

pliance

Covina Uniove in all ma

port on state014-15 Guid

published brpose.

TUTZMAN

AUDITOR’S

ified School aterial respec

e compliancede for Annuy the Educa

N LLP

-73-

S REPORT

District comcts for the ye

e is solely tual Audits oation Audit

T ON STATE

mplied with tear ended Jun

to describe of K-12 LocAppeals Pan

E COMPLI

the laws andne 30, 2015.

the results cal Educationel. Accord

IANCE

d regulations.

of testing bon Agencies

dingly, this r

s of the state

based on thes and Statereport is not

e

e e t

FINDINGS AND RECOMMENDATIONS

-74-


SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY OF AUDITOR RESULTS

June 30, 2015 Financial Statements Type of auditor’s report issued: Unmodified Internal control over financial reporting:

Material weakness(es) identified? Yes X No Significant deficiency(ies) identified not considered

to be material weaknesses? X Yes None reported

Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs:

Material weakness(es) identified? Yes X No Significant deficiency(ies) identified not considered

to be material weaknesses? Yes X None reported Type of auditor’s report issued on compliance for

major programs: Unmodified

Any audit findings disclosed that are required to be Reported in accordance with Circular A-133, Section .510(a) Yes X No

Identification of major programs

CFDA Number(s) Name of Federal Program or Cluster 84.027, 84.027A, 84.173, 84.173A Special Education Cluster 84.367 Title II, Part A: Improving Teacher Quality

Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000

Auditee qualified as low-risk auditee? X Yes No

-75-


SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS

June 30, 2015 All audit findings must be identified as one or more of the following twelve categories:

Five Digit Code Finding Types

10000 Attendance 20000 Inventory of Equipment 30000 Internal Control 40000 State Compliance 42000 Charter School Facilities Programs 50000 Federal Compliance 60000 Miscellaneous 61000 Classroom Teacher Salaries 62000 Local Control Accountability Plan 70000 Instructional Materials 71000 Teacher Misassignments 72000 School Accountability Report Card

Note: Each of the findings and recommendations below include details about the criteria or specific requirements, the condition, the effect and the cause. Questioned costs, if applicable are listed separately. The district response that follows the finding is the District’s corrective action plan. FINDING 2015-001 INVENTORY OF FIXED ASSETS 20000

Finding: Inventory of district assets should be performed regularly. The results of the inventory should then be reconciled and adjustments made to District assets, if necessary. Based on review of inventory processes and discussion with District personnel, it was determined that a physical inventory of non-federally funded District assets has not been performed since 2012. In addition, asset listing information should be reviewed as part of the inventory performed to determine that the information is updated. Questioned Costs: Not applicable. Recommendation: Perform an inventory of District assets at least every two years. The results of the inventory performed should be reconciled to District asset listings and adjustments made accordingly. District Response: The District will work on a plan to inventory the assets on a scheduled basis.

-76-


SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS

June 30, 2015 There were no findings and questioned costs related to federal awards for the fiscal year ended June 30, 2015.

-77-


SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO STATE AWARDS

June 30, 2015 There were no findings and questioned costs related to state awards for the fiscal year ended June 30, 2015.

-78-


STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

June 30, 2015 Original Finding No.

Finding

Code

Recommendation

Current Status

2014-1 MEALS CLAIMED FOR CHILD

NUTRITION During the period of September 23, 2013 through October 7, 2013, the computer system that stores the information for the number of meals served crashed. The District was not able to retrieve the lost information due to the failure of the backup systems. As a result, the District reported the total number of meals served during the affected period as paid. The result was a loss in revenue as the District was unable to be reimbursed for serving free and reduced priced meals during the aforementioned period.

50000 The District should regularly test the servers and backup systems in order to test the integrity of data recovery in the case of catastrophic failure of the system.

Implemented.

2014-2 UNDUPLICATD PUPIL COUNTS

During our testing of the free and reduced price meal applications and the CALPADS reporting, we noted that one student that was reported as qualifying for free or reduced priced meals did not have any income reported on their application on file for the 2013-14 fiscal year.

40000 We recommend that the District work with the Child Nutrition Services department to verify that all necessary information on the applications are accurate and complete.

Implemented.

west covina unified school district los angeles …

Documents