Financial Audit Presentation Year E nded June 30, 2013

1. Greene, Finney & Horton, CPAs Financial Audit Presentation Year Ended June 30, 2013 The School District of Newberry County

2. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs • OPINION • District’sresponsibility: • Effective internal controls • Financial statements • GF&H responsibility: • Opinion – reasonable assurance that financial statements are materially correct • Issued unmodified opinion • BEST OPINION THE DISTRICT CAN RECEIVE

3. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs • General Fund • Total fund balance increased $1.05 million to $11.9 million • Unassigned fund balance is $11.2 million, which is 26% of 2013 actual expenditures and 25% of 2014 budgeted expenditures • GFOA recommends a minimum of 16.7% (two months)

4. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs • Major Reasons To Maintain An Adequate Fund Balance: • Cash flow through second half of calendar year; property taxes are cyclical • Significant emergencies and unanticipated expenditures • Flexibility for discretionary funding needs • Potential for better interest rates on debt issues (can save the District money) • To cover potential shortfalls from the state (a) due to budget cuts or (b) as a result of the change in legislation • Extremely important given the continuing uncertainties in our economy

5. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs General Fund Revenues: • General Fund revenues of $42.8 million increased $2.2 million (5%) compared to the prior year. Major causes were: • Increase in state revenues of $ 1.9 million • Increase in local taxes of $0.4 million • Decrease in all other revenues of $ 0.1 million • $1.4 (3%) million higher than budget • Local taxes were $0.7 million higher • State revenues were $0.7 million higher GENERAL FUND REVENUES

6. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs • General Fund expenditures increased approximately $2.2 million (5%) to $43.3 million • Increase in Expenditures were due to: • $1.1 million increase in instruction • $1.0 million increase in support • $0.1 million increase in all other expenditures • Increases in salaries and benefits was the primary driver • $0.3 million (1%) less than budget due primarily to lower than anticipated expenditures for purchased services, energy and supplies and materials General Fund Expenditures: GENERAL FUND EXPENDITURES

7. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Funds • Special Revenue Funds: • Federal and state grants and programs – total of $11.0 million expended in FY2013 for approximately 70 programs • The District is constrained by federal and state requirements for most of these programs to use the funds only as allowed by the applicable grants • No fund balance for most of these programs as any unspent funds must be returned to the State or carried over to the next year. • Food Service Fund: • Increase in fund balance of $174k to $2.1 million

8. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Funds • Capital Project Funds: • Decrease in fund balance by$3.4 million leaving $8.9 million in fund balance • $4.2 million expended on capital projects and $1.8 million transferred from NICE Capital Projects to the NICE Debt Service Fund for the NICE principal payment • Major projects in2013: upgrades and improvements at Newberry High School and construction on the new District Office • Debt Service Funds: • Decrease in fund balance by$0.5 million leaving $8.0 million in fund balance • Total debt service payments of $13.4 million, including payments of $6.2 million on short-term bonds

9. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Other Items of Note: • Total outstanding debt was $78.5 million at June 30, 2013 • Decrease of $3.2 million from June 30, 2012 • $3.7 million (principal) and $3.9 (interest) is due in FY2014 • The District issued is Series 2013B General Obligation Bonds in the amount of $6.0 million in October 2013 • Bonds will be used to partially fund the required NICE debt service for FY2014 and to provide additional proceeds for capital outlay • Bonds mature in March 2014, plus interest at 0.6%

10. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs • District-Wide (GASB 34) • Assets - $156.4 million • $115.9 million is capital assets • $35.7 million is cash and investments • Liabilities - $86.9 million • $78.5 million is outstanding principal -debt • Net Position - $69.6 million • $49.6 million Net Investment in Capital Assets • $7.4 million Restricted • $12.6 million Unrestricted • Revenues - $65.7 million • 62% is state/federal - restricted • Expenses - $64.4 million • - $3.5 million is non-cash depreciation

11. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs ACCOUNTING UPDATE: • Future Significant Changes in Accounting Principles: • GASB #67/68: Accounting and Financial Reporting for Pension Plans and Pensions. • Effective in FY2015 for cost-sharing multiple-employer plans (SCRS and PORS). • The District will be required to record its pro-rata portion of the net pension liability associated with these plans in its Statement of Net Position • This will significantly decrease the District’s unrestricted net assets/position.

12. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Compliance • No findings, significant deficiencies, or material weaknesses were noted • Single Audit was required for 2013: • Major programs audited were Title I, IDEA and School Improvement - ARRA Management Letter • Required communications to management and those charged with governance: • Pupil Activities

13. NCSD2013 FINANCIAL AUDIT____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Greene, Finney & Horton, CPAs Summary • Unmodified opinion on the Financial Statements from GF&H • Good financial condition as of June 30, 2013