2015 Vanderbilt Annual Financial Report

VANDERBILT AREA SCHOOL
ANNUAL FINANCIAL REPORT

YEAR ENDED JUNE 30, 2015
TABLE OF CONTENTS
Page
Independent Auditor's Report
Management's Discussion and Analysis
BASIC FINANCIAL STATEMENTS

District-wide Financial Statements
Statement of Net Position
Statement of Activities
13
14
Fund Financial Statements

Governmental Funds
Balance Sheet
Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position
Statement of Revenues, Expenditures, and Changes in Fund Balance
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances with
15
16
17
18
Fiduciary Funds
Statement of Fiduciary Net Position
19
Notes to the Financial Statements
21
REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund
Schedule of Proportionate Share of Net Pension Liability
Schedule of Contributions
50
51
52
OTHER SUPPLEMENTARY INFORMATION

Nonmajor Governmental Funds
Combining Balance Sheet
Combining Statement of Revenues, Expenditures and Changes in Fund Balance
54
55
Fiduciary Funds
Combining Statement of Changes in Assets and Liabilities
56
INDEPENDENT AUDITORS REPORT

To the Board of Education
Vanderbilt Area School
Vanderbilt, Michigan
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 Vanderbilt Area School,
Vanderbilt, Michigan (the School District), as of and for the year ended June 30, 2015, and the
related notes to the financial statements, which collectively comprise the School Districts basic
financial statements as listed in the table of contents.
Managements 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.
Auditors 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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
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 entitys 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 entitys 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.
-1-
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above 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 School District, as of June 30, 2015, and the
respective changes in financial position, for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Changes in Accounting Principles
As discussed in Note 15 to the financial statements, the School District implemented GASB
Statement No. 68, Accounting and Financial Reporting for Pensions, during the year. As a
result, the financial statements now recognize the School Districts unfunded defined pension
benefit obligation as a liability for the first time and more comprehensively and comparably
measures the annual costs of pension benefits. The statement also enhances accountability and
transparency through revised note disclosures and required supplemental information (RSI). Our
opinions are not modified with respect to this matter.
Also as discussed in Note 15 to the financial statements, the School District implemented GASB
Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement
Date - An Amendment of GASB Statement No. 68, during the year. As a result, the School
District recognized a beginning deferred outflow of resources for its pension contributions made
subsequent to the measurement date of the beginning net pension liability. Our opinions are 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
managements discussion and analysis, budgetary comparison schedules, and schedules of
proportionate share of net pension liability and contributions, as listed in the table of contents 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 managements 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.
-2-
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the School Districts basic financial statements. The combining and
individual fund financial statements, as listed in the table of contents, are presented for purposes
of additional analysis and are not a required part of the basic financial statements.
The combining and individual fund financial statements are the responsibility of management
and were derived from and relate directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the combining and
individual fund financial statements are fairly stated in all material respects in relation to the
basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 30, 2015, on our consideration of the School Districts internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the School Districts internal control over financial reporting
and compliance.
Gabridge & Company, PLC

Grand Rapids, MI
October 30, 2015
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Managements Discussion and Analysis
June 30, 2015
This section of Vanderbilt Area Schools (the School District) annual financial report presents
our discussion and analysis of the School Districts financial performance during the year ended
June 30, 2015. It is to be read in conjunction with the School Districts financial statements,
which immediately follow. This is a requirement of the Governmental Accounting Standards
Board Statement No. 34 (GASB 34) Basic Financial Statements - and Managements Discussion
and Analysis - for State and Local Governments and is intended to provide the financial results
for the fiscal year ending June 30, 2015.
Financial Highlights
For fiscal year ended 2015, the Board of Education adopted a final general fund budget
with a projected increase in fund balance of $68,966. The actual results of operation in
the general fund showed that actual expenditures were approximately $3,827 less than the
final general fund budget and that actual revenues were approximately $2,871 more than
the final general fund budget, resulting in an actual increase in fund balance of $75,664.
At June 30, 2015 the governmental activities total net position was $(74,361) of which
$(1,659,475) was unrestricted, $1,541,667 was the net investment in capital assets, and
$43,447 was restricted for specific purposes.
The governmental activities total net position increased $175,354 from $(249,715) as of
June 30, 2014 to $(74,361) as of June 30, 2015. Refer to the government-wide financial
statements change in net position for fiscal year ended June 30, 2015 and June 30, 2014
for explanations regarding the net position increase.
At June 30, 2015, the total fund balance for the general fund was $(119,550).
Overview of the Financial Statements

This annual report consists of three parts: management's discussion and analysis (this section),
the basic financial statements and supplemental information. The basic financial statements
include two kinds of statements that present different views of the School District:
The first two statements, the statement of net position and the statement of activities, are
district-wide financial statements that provide both short-term and long-term information
about the School Districts overall financial status.
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June 30, 2015
The remaining statements are fund financial statements that focus on individual parts of
the School District, reporting the School Districts operations in more detail than the
district-wide statements.
o Governmental funds statements tell how basic services such as regular and special
education were financed in the short term as well as what remains for future
spending.
o Fiduciary funds statements provide information about the financial relationships
in which the School District acts solely as a trustee or agent for the benefit of
others.
The basic financial statements also include the notes to the financial statements that explain the
information in the basic financial statements and provide more detailed data. Supplementary
information follows and includes combining and individual fund statements, a budgetary
comparison schedule for the general fund, and pension schedules.
District-wide Financial Statements
The district-wide financial statements report information about the School District as a whole
using accounting methods similar to those used by private-sector companies. The statement of
net position includes all of the School Districts assets, deferred inflows / outflows, 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 School Districts net position, and how they have
changed. Net position the difference between the School Districts assets, deferred inflows /
outflows, and liabilities - is one way to measure the School Districts financial health or position.
Over time, increases or decreases in the School Districts net position are an indicator of whether
its financial position is improving or deteriorating, respectively.
To assess the School Districts overall health, one should consider additional non-financial
factors such as changes in the School Districts property tax-base and the condition of school
buildings and other facilities.
In the district-wide financial statements, the School Districts activities are presented as
governmental activities. Governmental activities include the School Districts basic services,
such as regular and special education, instructional support, transportation, administration,
community services, food service and athletics. State aid and property taxes finance most of
these activities.
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June 30, 2015
Financial Analysis of the School District as a Whole
The following is a comparative highlight of the current and prior year financial activities from
the district-wide financial statements:
Governmental
Activities
2015
2014
ASSETS
Current Assets
Cash & Cash Equivalents
Receivables
Due from State
Inventory
Prepaid Items
Total Current Assets
Noncurrent Assets
Capital Assets, net
Total Assets
DEFERRED OUTFLOWS OF
RESOURCES
Pension
LIABILIITES
Current Liabilities
Accounts Payable
Salaries Payable
Accrued Employee Benefits
Interest Payable
Current Portion of Long-term Debt
State Aid Note Payable
Total Current Liabilities
Noncurrent Liabilities
Long-term Debt
Compensated Absences
Net Pension Liability
Total Liabilities
DEFERRED INFLOWS OF
RESOURCES
Pension
NET POSITION
Net Investment in Capital Assets
Restricted
Unrestricted
Total Net Position
-6-
181,047
56,304
19,776
4,369
261,496
140,709
31,795
22,753
196
4,436
199,889
2,909,777
3,171,273
2,961,843
3,161,732
162,380
162,380
5,116
51,810
36,950
10,427
279,022
250,000
633,325
16,502
62,578
41,233
11,700
199,799
200,000
531,812
1,089,088
19,541
1,494,199
3,236,153
1,371,551
20,084
1,478,519
3,401,966
171,861
171,861
1,541,667
43,447
(1,659,475)
(74,361)
1,390,493
67,917
(1,708,125)
(249,715)

June 30, 2015
Restricted net position decreased from $67,917 as of June 30, 2014 to $43,447 as of June 30,
2015. The most significant reason for this decrease was the School District using $33,254 of
restricted funds for debt service payments.
The School Districts net investment in capital assets increased from $1,390,493 as of June 30,
2014 to $1,541,667 as of June 30, 2015. This is the result of the School District paying down
$199,799 of the long-term debt that was used to finance the underlying capital assets, plus
$73,147 of current year capital asset additions, and bond amortization of $3,441, less current
year depreciation expense of $125,213.
The results of the fiscal years operations for the School District as a whole are presented in the
statement of activities, which shows the change in total net position for the year.
The statement of activities presents the following changes in net position from operating results:
Governmental
Activities
2015
2014
Revenues
Program Revenues
Charges for Services
Operating Grants & Contributions
Total Program Revenues
General Revenues
Local Sources
Unrestricted State Sources
Total General Revenues
Total Revenues
Expenses
Instruction
Supporting Services
Food Services
Athletics
Interest on Long-term Debt
Unallocated Depreciation
Total Expenses
Change in Net Position
Net Position at Beginning of Period
Net Position at End of Period
-7-
3,547
336,283
339,830
3,044
361,838
364,882
1,362,161
39,810
1,401,971
1,741,801
1,383,068
37,844
1,420,912
1,785,794
863,949
436,801
71,110
8,063
61,311
125,213
1,566,447
175,354
(249,715)
(74,361)
861,965
448,478
94,111
16,543
71,558
118,842
1,611,497
174,297
(424,012)
(249,715)

June 30, 2015
Revenues decreased from $1,785,794 for the year ended June 30, 2014 to $1,741,801 for the year
ended June 30, 2015, a decline of $43,993. Some of the significant changes were total operating
grants and contributions decreased by $25,555, and total local sources of revenue decreased by
$20,907 in comparison to the prior year. Total expenditures also decreased from $1,611,497 in
2014 to $1,566,447 in 2015, a decline of $45,050, which closely matches the decline in revenue.
Some of the significant decreases were expenditures related to food service decreased by
$23,001 and interest on long-term debt decreased by $10,247 in comparison to the prior year.
Fund Financial Statements
The fund financial statements provide more detailed information about the School Districts
funds, focusing on its most significant or "major" funds - not the School District as a whole.
Funds are accounting devices the School District uses to keep track of specific sources of
funding and spending on particular programs.
The School District utilizes two kinds of funds:
Governmental funds: Most of the School Districts 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 School Districts
programs. Since the district-wide financial statements and the fund financial statements
use different methods of accounting to report the School Districts financial condition, a
reconciliation is included in the financial statements showing the differences between the
two types of statements.
Fiduciary funds: The School District is the trustee, or fiduciary, for assets that belong to
others, such as scholarship funds and student activities funds. The School 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. The School District excludes
these activities from the district-wide financial statements because it cannot use these
assets to finance its operations.
Financial Analysis of the School Districts Funds

The School District uses funds to record and analyze financial information. The School District
has two major funds, its general and 2007 debt funds.
The general fund is the School Districts primary operating fund. The general fund had
revenues of $1,381,893 and expenditures of $1,306,229. The School District ended the year with
a $75,664 increase in fund balance for a total fund balance of $(119,550) as of June 30, 2015, up
from $(195,214) as of June 30, 2014. This increase in fund balance is related to the actual
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June 30, 2015
revenues and expenditures closely matching the budgeted amounts and both budgeted and actual
revenues exceeding expenses for year.
The 2007 debt fund is used to accumulate resources for the payment of debt service expenditures
related to the 2007 bond refunding. The 2007 debt fund had a decrease in fund balance during
the year of $33,254, bringing its ending fund balance to $34,617. Given that the debt service
millage is intended to service the debt without any surplus, the ending fund balance of the 2007
debt fund will eventually decrease to zero over the life of the bonds.
The nonmajor governmental funds had a decrease in fund balance for the year of $4,366 for total
nonmajor governmental fund balances of $(4,124) as of June 30, 2015, down from $242 as of
June 30, 2014. This is a result of increased costs for the provision of food services, which had to
be subsidized during the year from the general fund.
General Fund Budgetary Highlights
During the year the School District revised its budget to attempt to match changes in the school
funding environment and current needs of students and faculty. State law requires that budgets
be amended during the year so actual expenditures do not exceed appropriations. The initial
budget for the year ended June 30, 2015, was adopted by the Board of Education on June 26,
2014, with the final amendments made on June 29, 2015.
Original budget compared to final budget. The changes between the original and final budgets
were largely related to the difference between the original estimated expenditures compared to
the actual expenditures based on the needs of students and faculty.
Final budget compared to actual results. The School District had no significant expenditures in
excess of the amounts appropriated in the general fund during the year.
Capital Asset and Debt Administration
Capital Assets
At June 30, 2015, the School District had $2,909,777 invested in capital assets. This included a
net decrease during the past fiscal year of $52,066 consisting of depreciation charges of
$125,213 and capital asset additions of $73,147.
The School Districts current year additions totaled $73,147, principally in three areas:
$61,411 for various building improvements

$11,736 for various pieces of furniture and equipment
-9-

June 30, 2015
The following table represents the School Districts investment in capital assets:

Capital Assets as of June 30, 2015
Governmental
Activities
$
11,500
Land
Buildings & Land Improvements

Vehicles & Buses
Furniture & Equipment
Subtotal
Accumulated Depreciation
Net Capital Assets
4,652,002
349,984
785,421
5,798,907
2,889,130
2,909,777
More detailed information about the School Districts capital assets can be found in the notes to
the financial statements section of this document.
Long-term Debt
At year end, the School District had total long-term liabilities of $2,881,850 of which the largest
portion is $1,245,000 in bonds payable and $1,494,199 in net pension liabilities.
The School District continued to pay down its debt, retiring $199,799 of outstanding
bonds and leases during the year.
The School District issued no new debt during the current year.
The School Districts other long-term obligation is for accumulated sick/vacation leave in
the amount of $19,541.
The State limits the amount of general obligation debt that schools can issue based on the
assessed value of all taxable property within a districts boundaries. The School District is well
under the State limit as of June 30, 2015.
More detailed information about the School Districts long-term debt can be found in the notes to
the financial statements section of this document.
Economic Factors and Next Years Budget and Rates
The projected general appropriations budget for the 2015-2016 fiscal year includes $1,329,497 in
total revenues, and $1,339,000 in total expenses, resulting in a projected $9,503 decrease in fund
- 10 -

June 30, 2015
balance. This projected budget is very similar to the current years actual total revenues of
$1,381,893 and actual total expenses of $1,306,299 in the general fund, and shows the continued
effort of the School District to match revenues with expenditures and eliminate the deficit fund
balance in the general fund.
Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers and investors and
creditors with a general overview of the School Districts finances and to demonstrate the School
Districts accountability for the money it receives. If you have questions about this report or
need additional information, contact:
Michelle Kihn, Superintendent
947 Donovan Street
Vanderbilt, MI 49795
Ph | 989.983.4121
- 11 -
BASIC FINANCIAL STATEMENTS

June 30, 2015
Governmental
Activities
ASSETS
Current Assets
Taxes Receivable
Other Receivables
Due from State
Prepaid Items
Total Current Assets
Noncurrent Assets
Capital Assets not Being Depreciated
Capital Assets Being Depreciated
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Pension
Total Deferred Outflows of Resources
LIABILITIES
Current Liabilities
Accounts Payable
Salaries Payable
Accrued Interest
Current Portion of Long-term Debt
Total Current Liabilities
Noncurrent Liabilities
Long-term Debt
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Pension
Total Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets
Restricted for:
Food Service
Debt Service
Unrestricted
Total Net Position
181,047
6,677
49,627
19,776
4,369
261,496
11,500
2,898,277
3,171,273
162,380
162,380
5,116
51,810
36,950
10,427
279,022
250,000
633,325
1,089,088
19,541
1,494,199
3,236,153
171,861
171,861
1,541,667
8,830
34,617
(1,659,475)
(74,361)
The Notes to the Financial Statements are an integral part of these Financial Statements
- 13 -

For the Year Ended June 30, 2015
Net (Expense)
Revenue
Program Revenues
Functions/Programs
Primary Government
Governmental Activities:
Instruction
Supporting Services
Food Services
Athletic Events
Interest on Long-term Debt
Unallocated Depreciation
Total Primary Government
Charges for
Services
Expenses
863,949
436,801
71,110
8,063
61,311
125,213
1,566,447
Operating
Grants and
Contributions
--508
3,039
--3,547
194,298
62,752
79,233
---336,283
Capital Grants
and
Contributions
--------
General Purpose Revenues and Transfers:

Revenues
State Sources
Local Sources
Transfers
Total General Revenues and Transfers
Change in Net Position
Net Position at Beginning of Period (Restated - See Note 17)
Net Position at End of Period
- 14 -
Governmental
Activities
(669,651)
(374,049)
8,631
(5,024)
(61,311)
(125,213)
(1,226,617)
39,810
1,362,161
-1,401,971
175,354
(249,715)
(74,361)

Balance Sheet
Governmental Funds
June 30, 2015
Debt Service
General
ASSETS
Taxes Receivable
Other Receivables
Due from State
Prepaid Items
Due from Other Funds
Total Assets
LIABILITIES
Accounts Payable
Salaries Payable
Due to Other Funds
Total Liabilities
FUND BALANCE
Nonspendable
Restricted
Unassigned
Total Fund Balance
Total Liabilities and Fund Balance
$
$
2007 Debt
118,676
6,677
49,627
19,072
4,369
32,582
231,003
11,793
51,810
36,950
250,000
-350,533
4,369
-(123,919)
(119,550)
231,003
Other
Governmental
Funds
49,388
-----49,388
----14,771
14,771
-34,617
-34,617
49,388
Total
Governmental
Funds
12,983
--704
--13,687
----17,811
17,811
-8,830
(12,954)
(4,124)
13,687
- 15 -
181,047
6,677
49,627
19,776
4,369
32,582
294,078
11,793
51,810
36,950
250,000
32,582
383,135
4,369
43,447
(136,873)
(89,057)
294,078

Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position
June 30, 2015
Total Fund Balance - Governmental Funds
Capital assets used in governmental activities are not financial resources, and therefore are
not reported in governmental funds. This is the sum of capital assets not being depreciated
of $11,500 and net capital assets being depreciated of $2,898,277.
(89,057)
2,909,777
Certain liabilities, such as bonds payable, are not due and payable in the current period and
therefore are not reported in the funds. This is the sum of bonds and installment notes
payable of $1,344,022, premium on bonds payable, net, of $24,088, accrued interest on longterm debt of $10,427, and compensated absences of $19,541.
(1,398,078)
Certain liabilities are not due and payable in the current period and, therefore, are not
reported in the funds. This represents the sum of the net pension liability and its related
deferred inflows and deferred outflows.
(1,497,003)
Total Net Position - Governmental Funds
- 16 -
(74,361)

Statement of Revenues, Expenditures, and Changes in Fund Balance
Governmental Funds
Debt Service
General
Revenues
Local Sources
State Sources
Federal Sources
Athletic Activities
Other Revenue
Total Revenues
Expenditures
Instruction
Supporting Services
Athletic Events
Food Services
Capital Outlay
Debt Service - Principal
Debt Service - Interest
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
Net Change in Fund Balance
Fund Balance at Beginning of Period
Fund Balance at End of Period
1,165,078
121,352
92,424
3,039
-1,381,893
Other
Governmental
Funds
2007 Debt
$
208,109
----208,109
72,058
3,870
75,363
-508
151,799
Total
Governmental
Funds
$
1,445,245
125,222
167,787
3,039
508
1,741,801
848,812
424,893
8,063
--19,799
4,662
1,306,229
-----180,000
61,363
241,363
-11,908
-71,110
73,147
--156,165
848,812
436,801
8,063
71,110
73,147
199,799
66,025
1,703,757
75,664
75,664
(195,214)
(119,550)
(33,254)
(33,254)
67,871
34,617
(4,366)
(4,366)
242
(4,124)
38,044
38,044
(127,101)
(89,057)
- 17 -

Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and
Changes in Fund Balance with Statement of Activities
Total Net Change in Fund Balances - Governmental Funds
38,044
Governmental funds report capital outlays as expenditures. However, in the statement of

activities, the cost of those assets is allocated over their estimated useful lives and reported
as depreciation expense. This amount represents current year depreciation expense of
$125,213 less capital outlay of $73,147.
(52,066)
Bond proceeds provide current financial resources to governmental funds in the period
issued, but issuing bonds increases long-term liabilities in the statement of net position.
Repayment of bond principal is an expenditure in the governmental funds, but is recorded as
a reduction in long-term debt on the statement of net position. This amount represents
current year principal payments of $199,799 and amortization of bond premiums of $3,441.
203,240
Some expenses reported in the statement of activities do not require the use of current
financial resources and therefore are not reported as expenditures in the funds. This amount
represents the decrease in accrued interest of $1,273 and the decrease in compensated
absences of $543.
1,816
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in the funds. This
amount represents the change in net pension liability, and the related deferred inflows and
outflows, during the year.
Changes in Net Position - Governmental Funds
(15,680)
$
- 18 -
175,354

Fiduciary Funds
June 30, 2015
Agency
ASSETS
Total Assets
LIABILITIES
Due to Student Groups
Total Liabilities
NET POSITION
Held in Trust
3,606
3,606
3,606
3,606
--
- 19 -
NOTES TO THE FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies
The accounting policies of the Vanderbilt Area School (the School District or government)
conform to generally accepted accounting principles as applicable to school districts. The
Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles. The School Districts
significant accounting policies are described below.
Reporting Entity
The school district is governed by an elected seven-member Board of Education. The
accompanying financial statements have been prepared in accordance with criteria established by
the Governmental Accounting Standards Board for determining the various governmental
organizations to be included in the reporting entity. These criteria include significant operational
financial relationships that determine which of the governmental organizations are a part of the
School Districts reporting entity, and which organizations are legally separate, component units
of the School District. Based on the application of the criteria, the School District does not
contain any component units.
District-wide and Fund Financial Statements
The district-wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the nonfiduciary activities of the primary government. For
the most part, the effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental revenues,
are reported separately from business-type activities, which rely to a significant extent on fees
and charges for support. All of the School Districts activities are considered governmental
activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
Separate financial statements are provided for governmental funds and fiduciary funds, even
though the latter are excluded from the district-wide financial statements.
Major individual funds are reported as separate columns in the fund financial statements.
- 21 -

Measurement Focus, Basis of Accounting and Financial Statement Presentation
District-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting. Agency funds also use the accrual basis of accounting, but
do not have a measurement focus. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenues in the year for which they are levied. Grants and similar items
are recognized as revenue as soon as all eligibility requirements imposed by the grantor or
provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the government considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period, or one year for reimbursementbased grants. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, as well as expenditures related to compensated
absences and claims and judgments, are recorded only when payment is due.
Revenues susceptible to accrual are property taxes, state aid, federal and inter-district revenues
and interest income and, accordingly, have been recognized as revenues of the current fiscal
year. Other revenues are recognized when received.
The School District reports the following major funds:
The general fund is the general operating fund of the School District. It is used to account
for all financial resources, except those required to be accounted for in another fund.
Included are all transactions related to the current operating budget.
The 2007 debt fund is used to record tax, interest, and other revenue for the payment of
general long-term debt principal, interest, and related costs.
Additionally, the School District reports the following fund types:
Special revenue funds are used to account for the proceeds of specific revenue sources that
are restricted to expenditures for specified purposes.
Debt service funds are used to account for the accumulation of resources for, and the
payment of, long-term debt (bonds, notes, loans, and leases) principal, interest, and related
costs.
Capital projects funds account for the accumulation and disbursement of resources for the
construction of governmental fund capital projects.
Fiduciary funds account for resources held for student activities.
- 22 -

Budgets and Budgetary Accounting
Budgets are adopted for general and special revenue funds as required by state law and are
adopted on a basis consistent with generally accepted accounting principles (GAAP). The legal
level of budgetary control adopted by the Board of Education (i.e., the level at which
expenditures may not legally exceed appropriations) is the function level. The School District
follows these procedures in establishing the budgetary data reflected in the financial statements:
Starting in the spring, School District administrative personnel and department heads
work with the Superintendent and Business Manager to establish proposed operating
budgets for the fiscal year commencing the following July 1.
In June, preliminary operating budgets are submitted to the Board of Education. These
budgets include proposed expenditures and the means of financing them.
Prior to June 30, a public hearing is held to obtain taxpayer comments on the proposed
budgets.
After the budgets are finalized, the Board of Education adopts an appropriations
resolution setting forth the amount of the proposed expenditures and the sources of
revenue to finance them.
The original general and special revenue funds budgets were amended during the year in
compliance with State of Michigan Public Act 621 (the Uniform Budgetary and
Accounting Act).
Budgets for the general and special revenue funds were adopted on the modified accrual
basis of accounting, which is consistent with accounting principles generally accepted in
the United States of America.
Appropriations lapse at year-end and amounts may be reappropriated for expenditures to be

incurred in the following fiscal year.
Property Taxes
Property taxes are recognized as revenue in the general, capital project, and debt service funds on
a levy year basis. The 2014 levy amounts are recognized as current property tax revenue to the
extent that they are collected during the year or within 60 days after year-end. Collections of
delinquent taxes in subsequent years are recognized as property tax revenues. Property taxes are
levied July 1 on the assessed valuation of property located within the School District as of the
preceding December 31, the lien date. These taxes are due on September 15 with the final
collection date of February 28 the following year at which time they are added to the County
delinquent tax rolls. The County operates a delinquent tax revolving fund and normally pays to
the School District all current-year taxes annually prior to June 30. Assessed values are
- 23 -

established annually by the various governmental units within the School District and are
equalized by the State of Michigan.
Assets, Liabilities, and Fund Equity
The School District considers all highly liquid investments with an original maturity of three
months or less to be cash and cash equivalents.
The State of Michigan, as well as the School Districts investment policy, allows a political
subdivision to authorize its Treasurer or other chief fiscal officer to invest surplus funds
belonging to and under the control of the entity as follows:
Bonds, bills, and other direct obligations of the United States or its agencies.
Certificates of deposit and other savings instruments issued by a federally insured bank,
savings and loan or credit union maintaining an office in Michigan.
Commercial paper rated prime at the time of purchase and maturing not more than 270
days after the date of purchase.
Mutual Funds comprised of investments which are legal for direct investment by local
units of government in Michigan.
U.S. Government or federal agency obligation repurchase agreements.
The Board of Education is authorized to designate depositories for District funds, and the funds
are invested in accordance with State of Michigan statutory authority.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at
the end of the fiscal year and all other outstanding balances between funds are referred to as due
to/from other funds (i.e., the current portion of interfund loans).
All receivables are shown net of an allowance for uncollectibles, as applicable. All amounts
deemed to be uncollectible are charged against the allowance for doubtful accounts in the period
that determination is made. No amounts have been deemed uncollectable during the current
year.
- 24 -

Inventories and Prepaids
Inventories are valued at cost using the first-in/first-out (FIFO) method and consist of food
commodities and related supplies.
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both the government-wide and fund financial statements. The cost
of prepaid items is recorded as expenditures/expenses when consumed rather than when
purchased.
Capital Assets
Capital assets, which include land, land improvements, buildings, vehicles, and furniture and
equipment, are reported in the district-wide financial statements. Assets having a useful life in
excess of two years and whose costs exceed $1,000 are capitalized. Capital assets are stated at
historical cost or estimated historical cost where actual cost information is not available. Donated
capital assets are stated at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of an asset or materially
extend an assets useful life are not capitalized. Improvements are capitalized and depreciated
over the remaining useful life of the related assets.
Land improvements, buildings and additions, furniture and equipment and vehicles are
depreciated using the straight-line method over the following estimated useful lives:
Description
Buildings, Building Additions, & Land Improvements
Vehicles & Buses
Useful Life
10 - 50 Years
7 - 15 Years
2 - 15 Years

The net pension liability is deemed to be a noncurrent liability and is recognized on district-wide
financial statements as the School Districts proportionate share of the Michigan Public School
Employees Retirement Systems (MPSERS) total pension liability, less the pension plans
fiduciary net position.
Deferred Outflows / Inflows of Resources
In addition to assets and liabilities, the statement of financial position or balance sheet will, when
applicable, report separate sections for deferred outflows of resources and deferred inflows of
resources. Deferred outflows of resources, a separate financial statement element, represents a
consumption of net position or fund balance, respectively, that applies to a future period and so
will not be recognized as an outflow of resources (expense/expenditure) until that time. Deferred
- 25 -

inflows of resources, a separate financial statement element, represents an acquisition of net
position or fund balance, respectively, that applies to a future period and so will not be
recognized as an inflow of resources (revenue) until that time.
The School District has several items that qualify for reporting in these categories and are
reported in the district-wide financial statement of net position. These items relate to the School
Districts net pension liability. The net pension liability amounts are related to differences
between expected and actual experience, changes in assumptions, differences between projected
and actual pension plan investment earnings, and contributions made subsequent to the
measurement date. These amounts are deferred and recognized as an outflow or inflow of
resources in the period to which they apply.
Salaries Payable and Accrued Employee Benefits
A liability is recorded at June 30 for those amounts owed to teachers and other employees of the
School District who do not work during the summer when school is not in session but have
elected to have their salaries paid over an entire year. This has the effect of properly charging
their salaries to expenditures in the fiscal year in which their services are received, even though
they are not paid until July and August of the following fiscal year.
The liability for accrued retirement and the employer share of FICA related to the salaries
payable has been recorded as has the liability for the employee health insurance premiums for
the months of July and August. The School District pays these insurances for this period as part
of the compensation for services rendered in the preceding school year.
School District employees are granted vacation and sick leave in varying amounts based on
length of service. Unused vacation time and sick leave accumulate from year to year at varying
rates, depending on the employees applicable rate of pay and/or employment category. The
liability for compensated absences includes salary-related payments.
In the fund financial statements, only the matured liability for compensated absences is reported.
The total liability is reported in the district-wide financial statements.
Short-term Obligations
Short-term debt is recognized as a liability of a governmental fund and is included on the balance
sheet of the applicable fund. During the current year, the School District borrowed funds to meet
short-term cash flow borrowing needs. The final payment is due November 2015, and
anticipated state aid is expected to be sufficient to cover this commitment.
- 26 -

Long-term Obligations
In the district-wide financial statements, long-term debt and other long-term obligations are
reported as liabilities on the statement of net position. Bond premiums and discounts are deferred
and amortized over the life of the bonds. Bond issuance costs are recorded as a period expense.
Bonds payable are reported at the total amount of bonds issued.
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 issuance are reported as
other financing sources while discounts on debt issuance are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as
expenditures.
Net Position Flow Assumption
Sometimes the School District will fund outlays for a particular purpose from both restricted
(e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the
amounts to report as restricted net position and unrestricted net position in the governmentwide and proprietary fund financial statements, a flow assumption must be made about the order
in which the resources are considered to be applied.
It is the School Districts policy to consider restricted net position to have been depleted before
unrestricted net position is applied.
Fund Balance Flow Assumptions
Sometimes the School District will fund outlays for a particular purpose from both restricted and
unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order
to calculate the amounts to report as restricted, committed, assigned, and unassigned fund
balance in the governmental fund financial statements a flow assumption must be made about the
order in which the resources are considered to be applied. It is the School Districts policy to
consider restricted fund balance to have been depleted before using any of the components of
unrestricted fund balance. Further, when the components of unrestricted fund balance can be
used for the same purpose, committed fund balance is depleted first, followed by assigned fund
balance. Unassigned fund balance is applied last.
Fund Balance Policies
Fund balance of governmental funds is reported in various categories based on the nature of any
limitations requiring the use of resources for specific purposes. Governmental funds report
nonspendable fund balance for amounts that cannot be spent because they are either (a) not in
spendable form or (b) legally or contractually required to be maintained intact. Restricted fund
balance is reported when externally imposed constraints are placed on the use of resources by
- 27 -

grantors, contributors, or laws or regulations of other governments. The School District itself can
establish limitations on the use of resources through either a commitment (committed fund
balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for the
specific purposes determined by a formal action of the School Districts highest level of
decision-making authority. The Board of Education is the highest level of decision-making
authority for the government that can, by adoption of a resolution or motion prior to the end of
the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution or
motion remains in place until a similar action is taken (the adoption of another resolution or
motion) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the School
District for specific purposes but do not meet the criteria to be classified as committed. The
Board of Education can assign fund balance as it does when appropriating fund balance to cover
a gap between estimated revenue and appropriations in the subsequent years appropriated
budget. Unlike commitments, assignments generally only exist temporarily. In other words, an
additional action does not normally have to be taken for the removal of an assignment.
Conversely, as discussed above, an additional action is essential to either remove or revise a
commitment.
Unassigned fund balance is the residual classification for the School Districts general fund and
includes all spendable amounts not contained in the other classifications and is therefore
available to be spent as determined by the Board of Education.
Interfund Activity
Outstanding balances between funds are reported as due from/to other funds at year-end.
Use of Estimates
The preparation of financial statements requires estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual results could differ
from those estimates.
Note 2 - Stewardship, Compliance and Accountability
Excess of expenditures over appropriations in budgeted funds - During the year ended June 30,
2015, the School District had no significant expenditures in excess of appropriations.
The general fund and governmental activities had a deficit fund equity balances of $119,550 and
$1,659,475, respectively, as of June 30, 2015. A deficit elimination plan has been submitted to
the Michigan Department of Education.
- 28 -

Note 3 - Cash and Cash Equivalents
At year-end, the School Districts deposits and investments were reported in the basic financial
statements in the following categories.
Governmental
Activities
Cash and Cash Equivalents
Cash and Cash Equivalents
Total Deposits
Deposits and Investments
Checking and Savings Accounts
Petty Cash
Total
181,047
3,606
184,653
$
$
184,453
200
184,653
Custodial Credit Risk - Deposits

Custodial credit risk is the risk that, in the event of a bank failure, the School Districts deposits
might not be returned. State law does not require and the School District does not have a policy
for deposit custodial credit risk. As of year-end, none of the School Districts bank balance of
$220,756 was exposed to custodial credit risk because it was uninsured and uncollateralized.
Interest Rate Risk
Interest rate risk is the risk that the market rate of securities in the portfolio will fall due to
changes in market interest rates. State law limits the allowable investments and the maturities of
some of the allowable investments as identified in the summary of significant accounting
policies. The School Districts investment policy does not have specific limits in excess of state
law on investment maturities as a means of managing its exposure to fair value losses arising
from increasing interest rates.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the School Districts
investment in a single issuer. State law limits allowable investments but does not limit
concentration of credit risk as identified in the list of authorized investments in the summary of
significant accounting policies. The School Districts investment policy does not limit
investments in a single financial institution of a single security type (with the exception of U.S.
- 29 -

treasuries and agencies and authorized pools) to a % of the total investment portfolio. The School
District had no investments held at year-end.
Note 4 - Interfund Receivables, Payables, and Transfers
Interfund balances at June 30, 2015, consisted of fund receivables and payables listed below:
Receivable Fund
General Fund
General Fund
Payable Fund
Debt Service
Sinking Fund
$
$
Amount
14,771
17,811
32,582
Interfund balances resulted primarily from the time lag between the dates that 1) interfund goods
and services are provided or reimbursable expenditures occur, 2) transactions are recorded in the
accounting system, and 3) payments between funds are made.
There were no interfund transfers during the year.
Note 5 - State of Michigan School Aid
The School District reports State of Michigan school aid in the fiscal year in which the School
District is entitled to the revenue as provided by State of Michigan School aid appropriation acts.
State funding provided approximately 6 percent of the total revenues to the School District
during the 2015 fiscal year.
- 30 -

Note 6 - Capital Assets
Capital asset activity for the year ended June 30, 2015 was as follows:
Governmental Activities
June 30, 2014
Capital Assets Being Depreciated:

Land
11,500
Additions
Reductions
June 30, 2015
11,500
Capital Assets Being Depreciated:

Vehicles & Buses
Total Capital Assets Being Depreciated
4,590,591
349,984
773,685
5,714,260
61,411
11,736
73,147
4,652,002
349,984
785,421
5,787,407
Less Accumulated Depreciation:

Vehicles & Buses
Total Accumulated Depreciation
1,900,491
229,055
634,371
2,763,917
77,553
20,132
27,528
125,213
1,978,044
249,187
661,899
2,889,130
Net Capital Assets Being Depreciated
2,950,343
(52,066)
2,898,277
$ 2,909,777
Net Capital Assets
$ 2,961,843
(52,066)
Depreciation expense for the fiscal year ended June 30, 2015 amounted to $125,213. The School
District determined that is was impractical to allocate depreciation expense to the various
government activities as the capital assets serve multiple functions.
Of the amounts reported above, $157,866 was acquired through a capital lease. Accumulated
depreciation on these assets at June 30, 2015 was $59,200.
Note 7 - Long-term Debt
Bonds Payable
2007 Refunding General Obligation Bonds
Original issue - $2,500,000 - 2007 Refunding Bonds due in annual installments as scheduled
below. Interest rates vary from 4.0% to 5.0% throughout the life of the bond issue. The final
payment is due May 1, 2022.
- 31 -

Capital Lease
2013 Lease Purchase Agreement
During the 2012/13 school year the district financed two school buses with an installment debt
obligation. The original loan amount was $157,866, and the agreement called for twelve
quarterly payments of $5,780 and a balloon payment August 1, 2015. The interest rate is 2.98%
per annum.
The following is a summary of the changes in long-term debt (including current portion) of the
School District for the year ended June 30, 2015:
June 30, 2014

Bonds Payable
2007 Refunding Bonds
Premium on 2007 Bonds
Total Bonds Payable
Capital Lease Payable
2013 Lease Purchase Agreement
Total Long-term Liabilities
$ 1,425,000
27,529
1,452,529
Additions
$
Reductions
$
Due Within
One Year
June 30, 2015
(180,000)
(3,441)
(183,441)
$ 1,245,000
24,088
1,269,088
180,000
180,000
118,821
(19,799)
99,022
99,022
20,084
(543)
19,541
(203,783)
$ 1,387,651
$ 1,591,434
279,022
Annual debt service requirements, exclusive of compensated absences and bond premiums, for
long-term debt outstanding as of June 30, 2015 follows:
Year Ending
June 30,
2016
2017
2018
2019
2020
2021 - 2022
Totals:
Governmental Activities
Principal
Interest
Total
$
279,022
$
53,662
$
332,684
185,000
44,662
229,662
180,000
35,412
215,412
180,000
28,212
208,212
175,000
21,012
196,012
345,000
21,024
366,024
$ 1,344,022
$
203,984
$ 1,548,006
$34,617 is available in the 2007 debt retirement fund to service the general obligation bonds.
The lease purchase agreement will be paid from the general fund.
Accumulated unpaid compensation for termination leave pay at June 30, 2015 has been
computed and recorded in the financial statements as a long-term liability as the liability is
- 32 -

expected to be liquidated from future financial resources. At present, eligible School District
employees are entitled to a termination leave payment based on their unused absence days at
current pay rate and eligible teachers and certain administrators are entitled to supplemental
retirement stipends according to guidelines set forth by the School District. At June 30, 2015,
the accumulated liability (expected to be financed by general fund resources) amounted to
$19,541.
Note 8 - Short-term Debt
Short-term Debt Activity
The School District issues state aid anticipation notes in advance of State of Michigan state aid
payments, depositing the proceeds in its general fund. These notes are necessary because the
School Districts cash flow obligation to operating expense precede the collection of state aid.
Summary information for the state aid notes payable are below:
Tax Anticipation Note
Interest
Rate
1.29%
Maturity
November 2, 2015
June 30,
2014
$ 200,000
Additions
$ 250,000
Reductions
$ (200,000)
June 30,
2015
$ 250,000
Note 9 - Employee's Retirement System Defined Benefit Plan

Organization
The Michigan Public School Employees' Retirement System (MPSERS) is a cost-sharing,
multiple employer, statewide, defined benefit public employee retirement plan governed by the
State of Michigan (State) originally created under Public Act 136 of 1945, recodified and
currently operating under the provisions of Public Act 300 of 1980, as amended. Section 25 of
this act establishes the board's authority to promulgate or amend the provisions of the System.
The board consists of twelve members eleven appointed by the Governor and the State
Superintendent of Instruction, who serves as an ex-officio member. The Governor appointed
board members consist of:
Two active classroom teachers or other certified school personnel.

One active member or retirant from a noncertified support position.
One active school system superintendent.
One active finance or operations (non-superintendent) member.
One retirant from a classroom teaching position.
One retirant from a finance or operations management position.
One administrator or trustee of a community college that is a reporting unit of the
System.
Two from the general public, one with health insurance or actuarial science experience
and one with institutional investment experience.
One elected member of a reporting units board of control.
- 33 -

The Systems pension plan was established by the State to provide retirement, survivor and
disability benefits to public school employees. In addition, the Systems health plan provides all
retirees with the option of receiving health, dental and vision coverage under the Michigan
Public School Employees Retirement Act. There are 685 participating employers. A list of
employers is provided in the Statistical Section. The System is a qualified pension trust fund
under section 401(a) of the Internal Revenue Code. By statute, employees of K12 public school
districts, public school academies, district libraries, tax-supported community colleges and seven
universities may be members. The seven universities are: Eastern Michigan, Central Michigan,
Northern Michigan, Western Michigan, Ferris State, Michigan Technological and Lake Superior
State. Employees, who first become employed by one of the seven universities on or after
January 1, 1996, become members of an alternative plan.
The Systems financial statements are included as a pension and other employee benefit trust
fund in the State of Michigan Comprehensive Annual Financial Report.
The System is administered by the Office of Retirement Services within the Michigan
Department of Technology, Management & Budget. The Department Director appoints the
Office Director, with whom the general oversight of the System resides. The State Treasurer
serves as the investment officer and custodian for the System.
Membership
At September 30, 2014, the System's membership consisted of the following:
Inactive plan members or their beneficiaries currently receiving benefits:
Regular benefits
Survivor benefits
Disability benefits
Total
Inactive plan members entitled to but not yet receiving benefits:
Active plan members:
Vested
Non-vested
Total
181,489
16,855
6,168
204,512
16,979
108,934
101,843
210,777
Total plan members
432,268
Benefits Provided
Benefit provisions of the defined benefit pension plan are established by State statute, which may
be amended. Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions
for the defined benefit (DB) pension plan. Retirement benefits for DB plan members are
determined by final average compensation and years of service. DB members are eligible to
- 34 -

receive a monthly benefit when they meet certain age and service requirements. The System also
provides disability and survivor benefits to DB plan members.
A DB member or Pension Plus plan member who leaves Michigan public school employment
may request a refund of his or her member contributions to the retirement system account. A
refund cancels a former member's rights to future benefits. However, returning members who
previously received a refund of their contributions may reinstate their service through repayment
of the refund upon satisfaction of certain requirements.
Member Contributions
Mandatory member contributions were phased out between 1974 and 1977, with the plan
remaining noncontributory until January 1, 1987, when the Member Investment Plan (MIP) was
enacted. MIP members enrolled prior to January 1, 1990, contribute at a permanently fixed rate
of 3.9% of gross wages. The MIP contribution rate was 4.0% from January 1, 1987, the effective
date of the MIP, until January 1, 1990, when it was reduced to 3.9%. Members first hired
between January 1, 1990 and June 30, 2008, and returning members who did not work between
January 1, 1987, through December 31, 1989, contribute at the following graduated permanently
fixed contribution rates: 3% of the first $5,000; 3.6% of $5,001 through $15,000; 4.3% of all
wages over $15,000. Members first hired July 1, 2008, or later including Pension Plus Plan
members, contribute at the following graduated permanently fixed contribution rates: 3% of the
first $5,000; 3.6% of $5,001 through $15,000; 6.4% of all wages over $15,000.
Basic Plan members make no contributions. For a limited period ending December 31, 1992, an
active Basic Plan member could enroll in the MIP by paying the contributions that would have
been made had enrollment occurred initially on January 1, 1987, or on the date of hire, plus
interest. MIP contributions at the rate of 3.9% of gross wages begin at enrollment. Actuarial rate
of interest is posted to member accounts on July 1st on all MIP monies on deposit for 12 months.
If a member leaves public school service and no pension is payable, the members accumulated
contributions plus interest, if any, are refundable.
Under Public Act 300 of 2012, eligible members voluntarily chose between increasing,
maintaining, or stopping their contributions to the pension fund as of the transition date. Their
options are described in detail under Pension Reform 2012 beginning on page 23. Members who
elected to increase their level of contribution contribute 4% (Basic Plan) or 7% (MIP); by doing
so they maintain a 1.5% pension factor in their pension formula. Members who elected to
maintain their level of contribution will receive a 1.25% pension factor in their pension formula
for their years of service as of their transition date. Their contribution rates are described above.
Members who elected to stop their contributions became participants in the Defined Contribution
plan as of their transition date.
- 35 -

Employer Contributions
Each school district or reporting entity is required to contribute the full actuarial funding
contribution amount to fund pension benefits.
Summary of Significant Accounting Policies
Basis of Accounting and Presentation
GASB Statement No. 67, which was adopted during the year ended September 30, 2014,
addresses accounting and financial reporting requirements for pension plans. The requirements
for GASB Statement No. 67 require changes in presentation of the financial statements, notes to
the financial statements, and required supplementary information.
Significant changes include an actuarial calculation of total and net pension liability. It also
includes comprehensive footnote disclosure regarding the pension liability, the sensitivity of the
net pension liability to the discount rate, and increased investment activity disclosures. The
implementation of GASB Statement No. 67 did not significantly impact the accounting for
accounts receivable and investment balances.
Reserves
Reserve for Employee Contributions - This reserve represents active member contributions and
interest less amounts transferred to the Reserve for Retired Benefit Payments for regular and
disability retirement, amounts refunded to terminated members, and amounts transferred to the
Reserve for Employer Contributions representing unclaimed funds.
Members no longer contribute to this reserve except to purchase eligible service credit or repay
previously refunded contributions. At September 30, 2014, the balance in this reserve was $1.5
billion.
Reserve for Pension Plus Employee Contributions - This reserve represents active member
contributions and interest less amounts transferred to the Reserve for Pension Plus Retired
Benefit Payments for regular retirement, amounts refunded to terminated members, and amounts
transferred to the Reserve for Pension Plus Employer Contributions representing unclaimed
funds. This reserve was established under the provisions of Public Act 75 of 2010. At September
30, 2014, the balance in this reserve was $59.5 million.
Reserve for Member Investment Plan - This reserve represents MIP contributions and interest
less refunds and transfers to the Reserve for Retired Benefit Payments. At September 30, 2014,
the balance in this reserve was $4.7 billion.
Reserve for Employer Contributions - This reserve represents all reporting unit contributions,
except payments for health benefits. Interest from the Reserve for Undistributed Investment
- 36 -

Income reserve is credited annually. Amounts are transferred annually to the Reserve for Retired
Benefit Payments to bring the balance of that reserve into balance with the actuarial present
value of retirement allowances. At September 30, 2014, the balance in this reserve was ($25.8)
billion.
Reserve for Pension Plus Employer Contributions - This reserve represents all reporting unit
contributions for Pension Plus members, except payments for health benefits. Interest from the
Reserve for Undistributed Investment Income reserve is credited annually at a rate of 7%.
Amounts are transferred annually to the Reserve for Retired Pension Plus Benefit Payments to
bring the balance of that reserve into balance with the actuarial present value of retirement
allowances. This reserve was established under the provisions of Public Act 75 of 2010. At
September 30, 2014, the balance in this reserve was $55.5 million.
Reserve for Retired Benefit Payments - This reserve represents payments of future retirement
benefits to current retirees. At retirement, a members accumulated contributions plus interest are
transferred into this reserve. Monthly benefits, which are paid to the retiree, reduce this reserve.
At the end of each fiscal year, an amount, determined by an annual actuarial valuation, is
transferred from the Reserve for Employer Contributions to bring the balance of this reserve into
balance with the actuarial present value of retirement allowances. At September 30, 2014, the
balance in this reserve was $44.6 billion.
Reserve for Retired Pension Plus Benefit Payments - This reserve represents payments of future
retirement benefits to current Pension Plus retirees. At retirement, a members accumulated
contributions plus interest are transferred into this reserve. Monthly benefits, which are paid to
the retiree, reduce this reserve. At the end of each fiscal year, an amount, determined by an
annual actuarial valuation, is transferred from the Reserve for Pension Plus Employer
Contributions to bring the balance of this reserve into balance with the actuarial present value of
retirement allowances. This reserve was established under the provisions of Public Act 75 of
2010. Currently, there are no participants qualified to retire under this program. At September
30, 2014, the balance in this reserve was $0.
Reserve for Undistributed Investment Income - This reserve represents all investment earnings.
Interest is transferred annually to the other reserves. Administrative expenses of the System are
paid from the Reserve for Administrative Expenses, which is credited with amounts from the
Reserve for Undistributed Investment Income to cover the expenses. For ease of reporting and
understanding, the two reserves are presented as one reserve in the supporting schedules. Public
Act 143 of 1997 established a stabilization subaccount within the Reserve for Undistributed
Investment Income to which any over funding is credited. As of September 30, 2014, the balance
in the subaccount was zero. At September 30, 2014, the balance in this reserve was $18.6 billion.
Reserve for Health (OPEB) Related Benefits - This reserve is credited with employee and
employer contributions for retirees health, dental, and vision benefits. Starting in fiscal year
2013, the employer contribution is based on a prefunded basis and represents a level of funding
that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any
- 37 -

unfunded actuarial liability (or funding excess) over a period not to exceed thirty years. In
addition, in fiscal year 2014, federal funding for Medicare Part D and Employer Group Waiver
Plan (EGWP) was paid directly to a third party vendor. The third party vendor uses the EGWP
funding for any claims submitted and bills the system for any remaining claims outstanding.
Premiums for health, dental and vision benefits are paid from this reserve. At September 30,
2014, the balance in this reserve was $3.5 billion.
Reporting Entity
The System is a pension and other employee benefit trust fund of the State. As such, the System
is considered part of the State and is included in the States Comprehensive Annual Financial
Report as a pension and other employee benefit trust fund. The System and its Board are not
financially accountable for any other entities or other organizations.
Benefit Protection
Public Act 100 of 2002 was passed by the Michigan Legislature to protect pension benefits of
public employees from alienation (being transferred). Alienation is attachment, garnishment,
levy, execution, bankruptcy or other legal process except for divorce orders or eligible domestic
relation orders. The statutes governing the System contained an antialienation clause to
provide for this protection; however, many smaller public pension systems did not have the
benefit of this protection. Therefore, Public Act 100 of 2002 was passed to establish legal
protection of pension assets that encompasses all public employees.
Fair Value of Investments
Plan investments are reported at fair value. Securities traded on a national or international
exchange are valued at the last reported sales price at current exchange rates. Corporate bonds
not traded on a national or international exchange are based on equivalent values of comparable
securities with similar yield and risk. The fair value of private investments is based on the net
asset value reported in the financial statements of the respective investment entity. The net asset
value is determined in accordance with governing documents of the investment entity, and is
subject to an independent annual audit. Securities purchased with cash collateral under securities
lending activities are recorded at estimated fair value. Other investments not having an
established market are recorded at estimated fair value.
Investment Income
Dividend and interest income is recognized on the accrual basis. Fair value changes are recorded
as investment income or loss. Purchases and sales of investments are recorded as of the trade
date (the date upon which the transaction is initiated), except for purchase and sale of mortgages,
real estate, and alternative investments which are recorded as of the settlement date (the date
upon which the transaction is ultimately completed). The effect of recording such transactions as
of the settlement date does not materially affect the financial statements.
- 38 -

Costs of Administering the System
Each year a restricted general fund appropriation is requested to fund the ongoing business
operations of the System. These administrative costs are ultimately funded by the System
through the regular transfer of funds from the System to the States general fund based on either
a direct cost or allocation basis depending on the nature of the expense. Costs of administering
the System are financed by undistributed investment income of the System.
Cash
At September 30, 2014, the System had $246.7 million in a common cash investment pool
maintained for various State operating funds. The participating funds in the common cash pool
earn interest at various rates depending upon prevailing short-term interest rates. Earnings from
these activities amounted to ($0.6) thousand for the year ended September 30, 2014.
Contributions and Funding Status
The majority of the members currently participate on a contributory basis, as described above
under "Benefits Provided." Reporting units are required by Public Act 300 of 1980, as amended,
to contribute amounts necessary to finance the coverage of members and retiree Other PostEmployment Benefits (OPEB). Contribution provisions are specified by State statute and may be
amended only by action of the State Legislature.
Employer contributions to the System are determined on an actuarial basis using the entry age
normal actuarial cost method. Under this method, the actuarial present value of the projected
benefits of each individual included in the actuarial valuation is allocated on a level basis over
the service of the individual between entry age and assumed exit age. The portion of this cost
allocated to the current valuation year is called the normal cost. The remainder is called the
actuarial accrued liability. Normal cost is funded on a current basis. For retirement and OPEB
benefits, the unfunded (overfunded) actuarial accrued liability as of the September 30, 2014
valuation will be amortized over a 22 year period for the 2014 fiscal year. The schedule below
summarizes pension contribution rates in effect for fiscal year 2014.
Pension Contribution Rates

Benefit Structure
Member
Basic
0.0 - 4.0 %
Member Investment Plan
3.0 - 7.0
Pension Plus
3.0 - 6.4
Defined Contribution
0.0
Employer
18.34 - 19.61 %
18.34 - 19.61
18.11
15.44 - 16.61
The System may reconcile with actuarial requirements annually. If the system reconciles in a
year, any funding excess or deficiency for pension benefits is smoothed over a maximum of 5
years, with at least one-fifth (20%) of the funding excess or deficiency included in the
- 39 -

subsequent years contribution. This payment is not recognized as a payable or receivable in the
accounting records. If the System does not reconcile in a year, any funding excess or deficiency
for pension benefits is accounted for in subsequent required contributions over the remaining
amortization period. For fiscal year 2014, the System did not reconcile.
In May 1996, the Internal Revenue Service issued a private letter ruling allowing the Systems
members to purchase service credit and repay refunds using tax-deferred (pretax) dollars. The
program was implemented in fiscal year 1998, and payments began in fiscal year 1999.
The program allows members to purchase service credit and repay refunds on a tax-deferred
basis. Members sign an irrevocable agreement that identifies the contract duration, monthly
payment, total contract amount and years of service credit being purchased. The duration of the
contract can range from 1 to 20 years. The amounts are withheld from members paychecks and
are treated as employer pickup contributions pursuant to Internal Revenue Code Section 414(h).
At September 30, 2014, there were 16,503 agreements. The agreements were discounted using
the assumed actuarial rate of return of 8% for September 30, 2014. The average remaining length
of a contract was approximately 6.0 years for 2014. The short-term receivable was $29.7 million
and the discounted long-term receivable was $83.6 million at September 30, 2014.
Measurement of the MPSERS Net Pension Liability
The plans net pension liability is to be measured as the total pension liability, less the amount of
the pension plans fiduciary net position. In actuarial terms, this will be the accrued liability less
the market value of assets (not the smoothed actuarial value of assets that is often encountered in
actuarial valuations performed to determine the employers contribution requirement).
MPSERS (Plan) Net Pension Liability

As of September 30, 2014
Total Pension Liability
Plan Fiduciary Net Position
$ 65,160,887,182
43,134,384,072
$ 22,026,503,110
Plan Fiduciary Net Position as a Percentage of Total Pension Liability

Net Pension Liability as a Percentage of Covered-Employee Payroll
66.20%
250.11%
Year 1 MPSERS GASB 68 implementation recognizes a 0.00% change in the reporting unit's
proportionate share between beginning net pension liability and ending net pension liability.
- 40 -

MPSERS (Plan) Net Pension Liability
As of October 1, 2013
Total Pension Liability
Plan Fiduciary Net Position
$ 62,859,499,994
39,427,686,072
$ 23,431,813,922
Proportionate Share of School Districts Net Pension Liability

At September 30, 2014, the School District reported a liability of $1,494,199 for its proportionate
share of the net pension liability. The net pension liability was measured as of September 30,
2014, and the total pension liability used to calculate the net pension liability was determined by
an actuarial valuation rolled forward from September 30, 2013. The School District's
proportionate share of the net pension liability was based on statutorily required contributions in
relation to all School Districts' statutorily required contributions for the measurement period. At
September 30, 2014, the School District's proportionate share percent was 0.00678% percent.
Long-term Expected Return on Plan Assets
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. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation. Best estimates of arithmetic real rates of return for each major asset
class included in the pension plans target asset allocation as of September 30, 2014, are
summarized in the following table:
Asset Class
Domestic Equity Pools
% Alternative Investment Pools
International Equity
Fixed Income Pools
Real Estate and Infrastructure Pools
Absolute Return Pools
Short-term Investment Pools
Total
Target
Allocation
28.0
%
18.0
16.0
10.5
10.0
15.5
2.0
100.0 %
* Long-term rate of return does not include 2.5% inflation.
- 41 -
Long-term Expected
Real Rate of Return*
4.8
%
8.5
6.1
1.5
5.3
6.3
(0.2)

Rate of Return
For the fiscal year ended September 30, 2014, the annual money-weighted rate of return on
pension plan investment, net of pension plan investment expense, was 12.58%. The money
weighted rate of return expresses investment performance, net of investment expense, adjusted
for the changing amounts actually invested.
Discount Rate
A discount rate of 8.0% was used to measure the total pension liability (7.0% for the Pension
Plus plan, a hybrid plan). This discount rate was based on the long term expected rate of return
on pension plan investments of 8.0% (7.0% for the Pension Plus plan). The projection of cash
flows used to determine this discount rate assumed that plan member contributions will be made
at the current contribution rate and that employer contributions will be made at rates equal to the
difference between actuarially determined contribution rates and the member rate. Based on
these assumptions, the pension plans fiduciary net position was projected to be available to
make all projected future benefit payments of current plan members. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected
benefit payments to determine the total pension liability.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
As required by GASB Statement No. 68, the following presents the School Districts
proportionate share of the net pension liability, calculated using a discount rate of 8.0% (7.0%
for the Pension Plus Plan), as well as what the School Districts proportionate share of the net
pension liability would be if it were calculated using a discount rate that is 1 percentage point
lower or 1 percentage point higher:
Current Single Discount Rate
1% Decrease
Assumption
1% Increase
(Non-Hybrid/Hybrid)
(Non-Hybrid/Hybrid)
(Non-Hybrid/Hybrid)
7.0% / 6.0%
8.0% / 7.0%
9.0% / 8.0%
$
1,969,971
$
1,494,199
$
1,093,354
Timing of the Valuation
An actuarial valuation to determine the total pension liability is required to be performed every
year. If the actuarial valuation is not calculated as of the plans fiscal year end, the total pension
liability is required to be rolled forward from the actuarial valuation date to the pension plans
fiscal year end.
The total pension liability as of September 30, 2014, is based on the results of an actuarial
valuation date of September 30, 2013, and rolled forward using generally accepted actuarial
procedures.
- 42 -

Actuarial Valuations and Assumptions
Actuarial valuations for the pension 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 (ARC)
are subject to continual revision as actual results are compared with past expectations and new
estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and 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, consistent with the long-term perspective of
the calculations.
Additional information as of the latest actuarial valuation follows:
Summary of Actuarial Assumptions
Actuarial Assumptions
Wage Inflation Rate:
Investment Rate of Return
- MIP and Basic Plans (Non-Hybrid):
- Pension Plus Plan (Hybrid):
Projected Salary Increases:
Cost-of-Living Pension Adjustments:
Healthcare Cost Trend Rate:
3.5%
8.0%
7.0%
3.5 - 12.3%, including wage inflation at 3.5%
3% Annual Non-Compounded for MIP Members
8.5% Year 1 graded to 3.5% Year 12
Mortality: RP2000 Male and Female Combined Healthy Life Mortality Tables, adjusted for
mortality improvements to 2025 using projection scale BB. For retirees, 100% of the table rates
were used. For active members, 80% of the table rates were used for males and 70% of the table
rates were used for females.
Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended June 30, 2015, the School District recognized total pension expense of
$121,034.
- 43 -

At June 30, 2015, the School District reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Differences between expected and actual experience

Changes of assumptions
Net difference between projected and actual earnings on
pension plan investments
Changes in proportion and differences between School
District contributions and proportionate share of
contributions
School District contributions subsequent to the
measurement date
Deferred Outflows of
Resources
$
55,133
Deferred Inflows of
Resources
$
-
165,184
107,247
Total
162,380
165,184
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Deferred (Inflows) and Deferred Outflows of Resources by Year (to Be Recognized in
Future Pension Expenses)
Plan Year Ended

September 30
2015
2016
2017
2018
Amount:
(26,960)
(26,960)
(26,960)
(29,171)
Postemployment Benefits
Under the MPSERS act, all retirees participating in the MPSERS pension plan have the option of
continuing health, dental, and vision coverage through MPSERS. Retirees electing this coverage
contribute an amount equivalent to the monthly cost for Part B Medicare and 10 percent, or 20
percent for those not Medicare eligible, of the monthly premium amount for the health, dental,
and vision coverage at the time of receiving the benefits. The MPSERS board of trustees
annually sets the employer contribution rate to fund the benefits on a pay-as-you-go basis.
Participating employers are required to contribute at that rate. The employer contribution rate
ranged from 5.52 percent to 6.45 percent of covered payroll for the period from July 1, 2014
through September 30, 2014, and from 2.20 percent to 2.71 percent of covered payroll for the
period from October 1, 2014 through June 30, 2015, dependent upon the employees date of hire
and plan election as noted above. Members can choose to contribute 3 percent of their covered
- 44 -

payroll to the Retiree Healthcare Fund and keep this premium subsidy benefit, or they can
elected not to pay the 3 percent contribution and instead choose the Personal Healthcare Fund,
which can be used to pay healthcare expenses in retirement. Members electing the Personal
Healthcare Fund will be automatically enrolled in a 2 percent employee contribution into their
457 account as of their transition date and create a 2 percent employer match into the employees
401(k) account.
Note 10 - Risk Management
The School District participates in the MASB-SEG Property and Casualty Pool and Workers
Compensation Pool.
The MASB-SEG Property/Casualty Pool, Inc. was created on May 23, 1985 and organized under
Public Act 138 of 1982 as amended, as a governmental group property and casualty selfinsurance pool. Approximately 375 educational institutions within the State of Michigan
participate in the Pool.
The Pool limits the maximum net loss that may arise from large risks or in concentrated areas of
exposure by reinsuring certain levels of risks with other insurers or reinsurers. The Pool
purchases excess liability coverage from one or more insurers or reinsurers to provide 100
percent coverage at each insured level.
The School District has had no settled claims resulting from these risks that exceeded their
coverage in any of the past three fiscal years.
Note 11 Fund Balances Governmental Funds
The School District reports fund balance in governmental funds based on the provisions of
GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.
GASB 54 establishes fund balance classifications that comprise a hierarchy based primarily on
the extent to which a government is bound to observe constraints imposed upon the use of the
resources reported in governmental funds.
- 45 -

Detailed information on fund balances of governmental funds is as follows:
General Fund
Nonspendable:
Prepaid Items
Total Nonspendable
Restricted for:
Debt Service
Food Service
Total Restricted
Total Fund Balances Governmental Funds
2007 Debt
4,369
4,369
Unassigned
(123,919)
Nonmajor
Funds
$
-
4,369
4,369
34,617
34,617
8,830
-
34,617
8,830
34,617
(12,954)
(136,873)
(119,550)
Total
34,617
(4,124)
(89,057)
Note 12 Operating Lease

The district leases a copier for $279 per month. The lease contract began 8/15/11 and runs for 60
months, with the final payment due 8/15/16. Annual payments total $3,348.
Note 13 - Subsequent Events
Subsequent events were evaluated through October 30, 2015, the date the financial statements
were available to be issued. Management is not aware of any subsequent events that would have
a significant impact on the financial condition of the School District.
Note 14 Sinking Funds
The School Districts sinking fund records capital project activities funded with a sinking fund
millage. For this fund, the School District has complied with the applicable provisions of
Section 1212(1) of the Revised School Code and the State of Michigan Department of Treasury
Letter No. 01-95.
Note 15 Changes in Accounting Principles
GASB Statement No. 68, Accounting and Financial Reporting for Pensions, was implemented
during the year. The statement requires governments providing defined benefit pensions to
recognize their unfunded pension benefit obligation as a liability for the first time, and to more
comprehensively and comparably measure the annual costs of pension benefits. The statement
- 46 -

also enhances accountability and transparency through revised note disclosures and required
supplemental information (RSI).
GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date An Amendment of GASB Statement No. 68, was implemented during the
year as it is required to be applied simultaneously with the provisions of GASB Statement No.
68. The statement addresses an issue regarding the application of the transition provisions of
GASB Statement No. 68 and amends paragraph 137 of GASB Statement No. 68 and requires
that, at transition, a government recognize a beginning deferred outflow of resources for its
pension contributions, if any, made subsequent to the measurement date of the beginning net
pension liability.
Note 16 Upcoming Accounting Pronouncement
In March 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application.
This statement addresses accounting and financial reporting issues related to fair value
measurements. The definition of fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date. This statement provides guidance for determining a fair value measurement
for financial reporting purposes. This statement also provides guidance for applying fair value to
certain investments and disclosures related to all fair value measurement. The School District is
currently evaluating the impact this standard will have on the financial statements when adopted
for the School Districts 2015-2016 fiscal year.
In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for
Pension and Related Assets That Are Not within the Scope of GASB Statement 68, and
Amendments to Certain Provisions of GASB Statements 67 and 68. The statement establishes
requirements for those pensions and pension plans that are not administered through a trust
meeting specified criteria. The School District is currently evaluating the impact this standard
will have on the financial statements when adopted during the School Districts 2016-2017 fiscal
year.
In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions. The statement replaces the requirements of
GASB Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions. The statement requires governments providing
other postemployment benefits (OPEB) to recognize their unfunded OPEB obligation as a
liability for the first time, and to more comprehensibly and comparably measure the annual costs
of OPEB benefits. The statement also enhances accountability and transparency through revised
note disclosures and required supplementary information (RSI). The School District is currently
evaluating the impact this standard will have on the financial statements when adopted during the
School Districts 2017-2018 fiscal year.
- 47 -

In June 2015, the GASB issued Statement No. 76, The Hierarchy of Generally Accepted
Accounting Principles for State and Local Governments. The statement supersedes Statement
No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local
Governments. The statement reduces the GAAP hierarchy to two categories of authoritative
GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the
accounting treatment for a transaction or other event is not specified within a source of
authoritative GAAP. The School District is currently evaluating the impact this standard will
have on the financial statements when adopted during the School Districts 2015-2016 fiscal
year.
In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. The statement
improves financial reporting through the disclosure of information about the nature and
magnitude of tax abatements that are not consistently or comprehensively reported to the public
at present. The School District is currently evaluating the impact this standard will have on the
financial statements when adopted during the School Districts 2016-2017 fiscal year.
Note 17 - Restatement of Beginning Net Position
Beginning net position has been restated for governmental activities due to a change in
accounting principles.
Beginning Net Position
Beginning Deferred Pension Related
Deferred Inflows / Outflows
Restated Beginning Net Position
- 48 -
1,238,285
(1,478,519)
(9,481)
(249,715)
REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund
Budgeted Amounts
Original
Final
Revenues
Local Sources
State Sources
Federal Sources
Total Revenues
Other Financing Sources
Total Revenues and Other
Financing Sources
Expenditures
Insturction
Basic Programs
Added Needs
Total Instruction
Supporting Services
Instruction Staff
General Administration
School Administration
Business
Operations / Maintenance
Transportation
Total Supporting Services
Athletics
Total Expenditures
Other Financing Uses
Total Expenditures and Other
Financing Uses
Excess (Deficiency) of Revenues and
Other Sources Over Expenditures
and Other Uses
1,162,000
135,000
138,000
1,435,000
1,053,889
192,710
132,423
1,379,022
Variance
Positive
(Negative)
Final to Actual
Actual
$
1,168,051
121,352
92,490
1,381,893
114,162
(71,358)
(39,933)
2,871
1,435,000
1,379,022
1,381,893
2,871
620,000
245,000
865,000
642,283
207,633
849,916
641,769
207,043
848,812
514
590
1,104
35,000
112,000
72,000
3,500
135,000
78,500
436,000
13,000
1,314,000
19,012
112,032
89,500
4,033
142,000
85,500
452,077
8,063
1,310,056
19,420
112,073
89,467
4,033
142,749
81,612
449,354
8,063
1,306,229
(408)
(41)
33
-(749)
3,888
2,723
-3,827
1,314,000
1,310,056
1,306,229
3,827
121,000
121,000
(195,214)
(74,214)
68,966
68,966
(195,214)
(126,248)
75,664
75,664
(195,214)
(119,550)
6,698
6,698
-6,698
- 50 -

Schedule of Proportionate Share of Net Pension Liability
Michigan Public School Employee Retirement Plan
Last Fiscal Year (ultimately ten fiscal years will be displayed)
(Amounts were determined as of 9/30 of each fiscal year)
2014
School District's Portion of Net Pension Liability (%)
0.00678%
School District's Proportionate Share of Net Pension Liability
1,494,199
School District's Covered Employee Payroll
420,716
Districts Proportionate Share of Net Pension Liability as a Percentage of its Covered Employee Payroll
Plan Fiduciary Net Position as a Percentage of Total Pension Liability
- 51 -
355.16%
66.20%

Schedule of Contributions
Michigan Public School Employee Retirement Plan
Last Fiscal Year (ultimately ten fiscal years will be displayed)
(Amounts were determined as of 6/30 of each fiscal year)
Statutorily Required Contributions
Contributions in Relation to Statutorily Required Contributions
105,354
Contribution Deficiency (Excess)
School District's Covered Employee Payroll
Contributions as a Percentage of Covered Employee Payroll
2015
105,354
420,716
25.04%
- 52 -
OTHER SUPPLEMENTARY INFORMATION

Combining Balance Sheet
June 30, 2015
Special Revenue
Capital Projects
Food Service
ASSETS
Due from State
Total Assets
LIABILITIES
Due to Other Funds
Total Liabilities
FUND BALANCE
Restricted
Unassigned
Total Fund Balance
Total Liabilities and Fund Balance
$
$
$
Sinking
8,126
704
8,830
---
8,830
-8,830
8,830
- 54 -
Total Nonmajor
Governmental
Funds
4,857
-4,857
17,811
17,811
-(12,954)
(12,954)
4,857
12,983
704
13,687
17,811
17,811
8,830
(12,954)
(4,124)
13,687

Combining Statement of Revenues, Expenditures, and Changes in Fund Balance
Special Revenue
Capital Projects
Food Service
Revenues
Local Sources
State Sources
Federal Sources
Other Revenue
Total Revenues
Expenditures
Supporting Services
Food Services
Capital Outlay
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
3
3,870
75,363
508
79,744
- 55 -
Sinking
$
72,055
---72,055
Total Nonmajor
Governmental
Funds
$
72,058
3,870
75,363
508
151,799
-71,110
-71,110
11,908
-73,147
85,055
11,908
71,110
73,147
156,165
8,634
8,634
196
8,830
(13,000)
(13,000)
46
(12,954)
(4,366)
(4,366)
242
(4,124)

Combining Statement of Changes in Assets & Liabilities
Fiduciary Funds
June 30, 2015
Additions
July 1, 2014
ASSETS
Total Assets
LIABILITIES
Due to Student Groups
Total Liabilites
4,345
4,345
4,345
4,345
- 56 -
9,731
9,731
9,731
9,731
Deductions
$
10,470
10,470
10,470
10,470
June 30, 2015

$
3,606
3,606
3,606
3,606
Independent Auditors 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
We have audited, in accordance with the 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 the Vanderbilt Area School (the School District), as of and for the year ended
June 30, 2015, and the related notes to the financial statements, which collectively comprise the
School Districts basic financial statements, and have issued our report thereon dated October 30,
2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School
Districts 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 School Districts internal control. Accordingly, we do not express an opinion on the
effectiveness of the School Districts 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 entitys 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.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
-1-
Compliance and Other Matters

As part of obtaining reasonable assurance about whether the School Districts financial
statements are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entitys internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entitys
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.

Grand Rapids, MI
October 30, 2015
-2-
October 30, 2015

We have audited the financial statements of the governmental activities, each major fund, and the
aggregate remaining fund information of the Vanderbilt Area School (the School District) for
the year ended June 30, 2015. Professional standards require that we provide you with
information about our responsibilities under generally accepted auditing standards and
Government Auditing Standards, as well as certain information related to the planned scope and
timing of our audit. We have communicated such information in our letter to you dated August
11, 2015. Professional standards also require that we communicate to you the following
information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the School District are described in Note 1 to the
financial statements.
As described in Note 15 to the financial statements, the School District changed accounting
policies related to unfunded pension obligations by adopting Statement of Governmental
Accounting Standards (GASB Statement) No. 68, Accounting and Financial Reporting for
Pensions, in 2015. Accordingly, the cumulative effect of the accounting change as of the
beginning of the year is reported in the Statement of Activities and Statement of Net Position.
We noted no transactions entered into by the School District during the year for which there is a
lack of authoritative guidance or consensus. All significant transactions have been recognized in
the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management
and are based on managements knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected.
-1-
The most sensitive estimates affecting the School Districts financial statements were:
Managements estimate of the useful lives of depreciable capital assets is based on the
length of time it is believed that those assets will provide some economic benefit in the
future.
Managements estimate of the accrued compensated absences is based on current hourly

rates and policies regarding payment of sick and vacation banks.
The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are clearly trivial, and communicate them to the
appropriate level of management. Management has corrected all such misstatements. In addition,
none of the misstatements detected as a result of audit procedures and corrected by management
were material, either individually or in the aggregate, to each opinion units financial statements
taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting,
or auditing matter, whether or not resolved to our satisfaction, that could be significant to the
financial statements or the auditors report. We are pleased to report that no such disagreements
arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated October 30, 2015.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a second opinion on certain situations. If a
consultation involves application of an accounting principle to the School Districts financial
statements or a determination of the type of auditors opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
-2-
Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the School Districts
auditors. However, these discussions occurred in the normal course of our professional
relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the managements discussion and analysis, budgetary
comparison schedules, and the schedule of proportionate share of net pension liability and
contributions, which are required supplementary information (RSI) that supplements the basic
financial statements. Our procedures consisted of inquiries of management regarding the
methods of preparing the information and comparing the information for consistency with
managements responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We did not audit the RSI and do not
express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual financial statements and the
schedule of expenditures of federal awards, which accompany the financial statements but are
not RSI. With respect to this supplementary information, we made certain inquiries of
management and evaluated the form, content, and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the
United States of America, the method of preparing it has not changed from the prior period, and
the information is appropriate and complete in relation to our audit of the financial statements.
We compared and reconciled the supplementary information to the underlying accounting
records used to prepare the financial statements or to the financial statements themselves.
Comments & Recommendations
2014/15 Budget / Fund Balance Deficit
The State Aid Statutes and Public Act 621, (The Accounting and Budgeting Act) prohibit a
district from budgeting for a fund balance deficit.
The general fund and governmental activities had a deficit fund equity balances of $119,550 and
$1,659,475, respectively, as of June 30, 2015. A deficit elimination plan has been filed by the
District, and was accepted by the Michigan Department of Education.
Property Tax Revenue / State Aid
The present system for assuring that each school district gets its entire foundation allowance
(which is a combination of property taxes and State Aid) is, at times, flawed. There are few
controls in place to make certain all taxable value adjustments are timely and correctly
processed. The responsibility primarily rests with each County Treasurer whose tax revenue (the
County revenue) is not dependent on the accuracy of this system. With all of the Tax Tribunal
adjustments, Board of Review adjustments and homestead/non-homestead adjustments it is very
-3-
important that each district reconcile taxable values, as reported on the Michigan Department of
Education website, monthly.
Changes that occur on the web site are postings made by the county treasurers. These changes
are then posted to your State Aid Status Report which directly affects the State Aid funds
received each month. Reconciling those changes monthly is important.
The best approach is to print the MDE taxable value data each month and then agree any changes
in these reports to page two of your monthly status report.
Tax Revenue Distribution
All tax revenue is deposited directly to the general fund bank account including debt retirement
and sinking fund taxes. While the entry recording the taxes properly credits a due to account in
the general fund, the corresponding entry is not recorded into either the debt retirement fund or
the sinking fund. In addition, the cash is not timely transferred. The cash transfers should occur
each time taxes are received and due to/due from accounts should be -0- at year end.
Written Procedures
As a precondition to receive federal funds recipients must have effective administrative and
financial internal controls. School districts are required to have written procedures to document
these administrative and financial controls. The School District has not yet complied with this
requirement.
Segregation of Duties
There is not adequate segregation of duties in the accounting area. One individual posts all
journals, the general ledger and also prepares checks and reconciles the bank accounts. The same
individual also initiates and posts all journal entries. The lack of segregation of duties is inherent
because of staff limitations. The Board must recognize that all internal controls must be
evaluated for cost effectiveness. The controls that could be added would have to be compared
with the costs required to obtain those controls.
Restriction on Use
This information is intended solely for the use of the Board of Education and management of the
School District and is not intended to be, and should not be, used by anyone other than these
specified parties.
Very truly yours,

Grand Rapids, MI
-4-

2015 Vanderbilt Annual Financial Report

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2015 Vanderbilt Annual Financial Report

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VANDERBILT AREA SCHOOL

ANNUAL FINANCIAL REPORT

Management's Discussion and Analysis

BASIC FINANCIAL STATEMENTS

Fund Financial Statements

Notes to the Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

OTHER SUPPLEMENTARY INFORMATION

INDEPENDENT AUDITORS REPORT

Gabridge & Company, PLC

Vanderbilt Area School

Overview of the Financial Statements

Vanderbilt Area School

Vanderbilt Area School

Vanderbilt Area School

Vanderbilt Area School

Financial Analysis of the School Districts Funds

Vanderbilt Area School

$61,411 for various building improvements

Vanderbilt Area School

Vanderbilt Area School

Buildings & Land Improvements

Vanderbilt Area School

BASIC FINANCIAL STATEMENTS

Vanderbilt Area School

Vanderbilt Area School

General Purpose Revenues and Transfers:

Vanderbilt Area School

Vanderbilt Area School

Total Fund Balance - Governmental Funds

Total Net Position - Governmental Funds

Vanderbilt Area School

Vanderbilt Area School

Total Net Change in Fund Balances - Governmental Funds

Governmental funds report capital outlays as expenditures. However, in the statement of

Vanderbilt Area School

NOTES TO THE FINANCIAL STATEMENTS

Vanderbilt Area School

Vanderbilt Area School

Vanderbilt Area School

Appropriations lapse at year-end and amounts may be reappropriated for expenditures to be

Vanderbilt Area School

U.S. Government or federal agency obligation repurchase agreements.

Vanderbilt Area School

Net Pension Liability

Vanderbilt Area School

Vanderbilt Area School

Vanderbilt Area School

Vanderbilt Area School

Custodial Credit Risk - Deposits

Vanderbilt Area School

Vanderbilt Area School

June 30, 2014

Capital Assets Being Depreciated:

June 30, 2015

Capital Assets Being Depreciated:

Less Accumulated Depreciation:

Net Capital Assets Being Depreciated

Net Capital Assets

Vanderbilt Area School

June 30, 2014

June 30, 2015

Vanderbilt Area School

Tax Anticipation Note