Worth Township Trustees of Schools
Financial Report
June 30, 2009
Contents
Financial Section
Independent Auditor's Report
Required Supplementary Information
Management’s Discussion And Analysis (MD&A)
1
2–7
Basic Financial Statements
Government-Wide Financial Statements (GWFS)
Statement of Net Assets – Modified Cash Basis
Statement of Activities – Modified Cash Basis
Fund Financial Statements (FFS)
Governmental Fund:
Balance Sheet – Modified Cash Basis
Statement of Revenues, Expenditures and Changes in Fund Balance Modified Cash Basis – Budget and Actual
Fiduciary Fund:
Statement of Fiduciary Net Assets – Modified Cash Basis
Notes to Financial Statements
Required Supplementary Information
Schedule of Funding Progress – Illinois Municipal Retirement Fund
8
9
10
11
12
13 –20
21
Independent Auditor's Report
To the Worth Township Trustees of Schools
Oak Lawn, Illinois
We have audited the accompanying financial statements of the governmental activities, the major fund and the
aggregate remaining fund information of Worth Township Trustees of Schools, Illinois as of and for the year ended
June 30, 2009, which collectively comprise the Trustees’ basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the Trustee’s management. 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.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
As discussed in Note 1 to the financial statements, the Trustees prepare the financial statements on a modified cash
basis, which is a comprehensive basis of accounting other than accounting principles generally accepted in the
United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position – modified cash basis of the governmental activities, the major fund and the aggregate remaining
fund information of Worth Township Trustees of Schools, Illinois as of June 30, 2009, and the respective change in
financial position – modified cash basis thereof and the respective budgetary comparison for the general fund for the
year then ended in conformity with the basis of accounting described in Note 1.
The Management’s Discussion and Analysis (pages 2 – 7) and the other required supplementary pension related
information (page 21) are not required parts of the basic financial statements but are supplementary information
required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and express no opinion on it.
Chicago, Illinois
January 21, 2010
McGladrey & Pullen, LLP is a member firm of RSM International –
an affiliation of separate and independent legal entities.
1
Required Supplementary Information
Management’s Discussion
And Analysis (MD&A)
Worth Township Trustees of Schools
Management’s Discussion and Analysis
This section of Worth Township Trustees of Schools’ annual financial report presents its discussion and analysis of
the Trustees’ financial performance during the fiscal year ended June 30, 2009. Please read it in conjunction with the
Trustees’ financial statements.
Financial Highlights
•
Revenues in the amount of $1,331,273 were collected from school districts and joint agreements.
•
Expenses in the amount of $1,358,745 were paid for operating costs of the Treasurer’s office.
•
The Township Trustees of Schools collected $7,178,910 in investment interest income, realized an increase
in the fair value of its investments of $1,165,947, and made interest distributions to school districts and joint
agreements of $7,000,000.
Overview of the Financial Statements
This annual report consists of three parts: management’s discussion and analysis (this section), the basic financial
statements, and required supplementary information. The basic financial statements include two kinds of statements
that present different views of the Trustees:
•
•
•
•
The first two statements are government-wide financial statements that provide both short-term and longterm information about the Trustees’ overall financial status.
The remaining statements are fund financial statements that focus on individual parts of the Trustees,
reporting the Trustees’ operations in more detail than the government-wide statements.
The governmental funds statements tell how basic services were financed in the short term as well as what
remains for future spending.
Fiduciary funds statements provide information about the financial relationships in which the Trustees act
solely as an agent for the benefit of others.
2
Worth Township Trustees of Schools
Management’s Discussion and Analysis
The financial statements also include notes that explain some of the information in the statements and provide more
detailed data. The statements are followed by a section of required supplementary information that further explains
and supports the financial statements.
Figure A-1 shows how the various parts of this annual report are arranged and relate to one another.
Figure A-1
Organization of Worth Township Trustees of Schools Annual Financial Report
Management’s
Discussion
And Analysis
Governmentwide
Financial
Statements
Required
Supplementary
Information
Basic
Financial
Statements
Fund
Financial
Statements
Notes to the
Financial
Statements
Summary
Detail
3
Worth Township Trustees of Schools
Management’s Discussion and Analysis
Figure A-2 summarizes the major features of the Trustees’ financial statements, including the portion of the Trustees’
activities they cover and the types of information they contain. The remainder of this overview section of
management’s discussion and analysis highlights the structure and contents of each of the statements.
Figure A-2
Major Features of the Government-wide and Fund Financial Statements
Government-wide
Fund Financial Statements
Statements
Governmental Funds
Fiduciary Funds
Scope
Entire Worth Township
The activities of the
Instances in which the
Trustees of Schools
Trustees that are not
Trustees administers
(except fiduciary funds)
fiduciary.
resources on behalf of
someone else, such as the
Elementary School
Districts.
Required financial
• Statement of net
• Balance sheet
• Statement of fiduciary
statements
assets
net assets
• Statement of
• Statement of activities
revenues,
expenditures, and
changes in fund
balance.
Accounting Basis and
Modified cash basis
Modified cash basis
Modified cash basis
measurement focus
accounting and current
accounting and current
accounting and economic
financial resources focus.
financial focus.
resources focus.
Type of asset/liability
All assets and liabilities,
Generally, assets expected All assets and liabilities,
information
both financial and capital, if to be used up and liabilities both short-term and longany.
that come due during the
term, if any.
year or soon thereafter; no
capital assets or long-term
liabilities included.
Type of inflow/outflow
All revenues and expenses Revenues for which cash
All additions and
information
during year, recorded
is received during the year; deductions during the year,
when cash is received or
expenditures when goods
regardless of when cash is
paid.
or services have been
received or paid.
received and the related
liability is paid.
4
Worth Township Trustees of Schools
Management’s Discussion and Analysis
Government-Wide Financial Statements
The government-wide financial statements report information about the Trustees as a whole using accounting
methods similar to those used by private-sector companies. The statement of net assets includes all of the Trustees’
assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities.
The two government-wide financial statements report the Trustees’ net assets and how they have changed. Net
assets – the difference between the Trustees’ assets and liabilities – is one way to measure the Trustees’ financial
health or position.
•
•
Over time, increases or decreases in the Trustees’ net assets are an indicator of whether its financial position
is improving or deteriorating, respectively.
To assess the Trustees’ overall health, you need to consider additional non-financial factors such as changes
in member districts and market interest rates and market values.
In the government-wide financial statements, the Trustees’ activities are all categorized as governmental activities.
All of the Trustees’ basic services are included here. Charges to the school districts and joint agreements finance all
of these activities.
Fund Financial Statements
Worth Township Trustees of Schools’ fund financial statements provide more detailed information about the Trustees’
funds. Funds are accounting devices the Trustees use to keep track of specific sources of funding and spending.
•
•
A General fund is required by state law.
The Trustees establish other funds to control and manage money for particular purposes such as trust and
agency.
The Trustees have two categories of funds:
•
Governmental funds: All of the Trustees’ 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 fund
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 Trustees’ programs. Because this
information does not encompass the additional long-term focus of the government-wide statements,
additional information after each of the governmental funds statements explains the relationship (or
differences) between them.
•
Fiduciary funds: The Trustees are the trustee, or fiduciary, for assets that belong to others, such as the
school districts and joint agreements. The Trustees are 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
Trustees exclude these activities from the Government-wide financial statements because they cannot use
these assets to finance their operation.
5
Worth Township Trustees of Schools
Management’s Discussion and Analysis
Financial Analysis of the Trustees as a Whole
Fiscal Year 2009
Net assets: The Trustees’ combined net assets, on a modified cash basis, on June 30, 2009 totaled $3,530,393.
There were no liabilities.
Changes in net assets: During fiscal year 2009, net assets increased by $1,317,385. The primary reason for the
increase in net assets was the increase in fair value of investments of $1,165,947.
The Trustees’ total revenues were $9,676,130 as of June 30, 2009. Charges to the school districts and joint
agreements were $1,331,273 or 14% of the Trustees’ total revenue. Investment interest income of $7,178,970 along
with the net increase in fair value of investments of $1,165,947 comprised the other 86%. Total revenues were
$10,410,315 as of June 30, 2009. Revenues decreased by $734,185 from the prior year, which was due to the
decrease in interest income.
Operating costs of $1,358,745 along with interest distributions to districts of $7,000,000 comprise the Trustees’ total
expenses of $8,358,745 as of June 30, 2009. Total revenues exceeded expenses at June 30, 2009 by $1,317,385 or
16%, primarily because of the increase in fair value of investments.
Fiscal Year 2008
Net assets: The Trustees’ combined net assets, on a modified cash basis, on June 30, 2008 totaled $2,213,008.
There were no liabilities.
Changes in net assets: During fiscal year 2008, net assets increased by $829,469. The primary reason for the
increase in net assets was the increase in fair value of investments of $1,181,707. In order to keep the interest paid
to the districts somewhat consistent year to year, the Trustees’ will also pay the difference of interest received to the
amount paid out to the districts, which amounted to $281,626 of additional expense.
The Trustees’ total revenues were $10,410,315. Charges to the School Districts and joint agreements were
$1,260,234 or 12% of the Trustees’ total revenue. Investment interest income of $7,968,374 along with the net
increase in fair value of investments of $1,181,707 comprised the other 88%.
Operating costs of $1,330,846 along with interest distributions to Districts of $8,250,000 comprise the Trustees’ total
expenses of $9,580,846. Total revenues exceeded expenses by $829,469 or 8.6%, primarily because of the
increase in fair value of investments.
6
Worth Township Trustees of Schools
Management’s Discussion and Analysis
General Fund Budgetary Highlights
While the Trustees’ budget for the General Fund anticipated that expenditures would exceed revenues by
$1,286,324, the actual result was $1,317,385 surplus. The Trustees does not budget for investment income, charges
to the school districts and joint agreements and interest distributed to the school districts and joint agreements. The
surplus can be attributed to expenses related to salaries, benefits, telephone, printing and supplies, transportation
costs, dues and subscriptions, telecommunications and other operating expenses coming in below budgeted
amounts.
Contacting the Trustees’ Financial Management
This financial report is designed to provide the Worth Township Trustees of Schools member districts, those districts’
taxpayers and creditors with a general overview of the Trustees’ finances and to demonstrate the Trustees’
accountability for the money it receives. If you have questions about this report or need additional financial
information, contact the Township Treasurer, 10720 South Kenton, Oak Lawn, Illinois 60453.
7
Basic Financial Statements
Government-Wide
Financial Statements (GWFS)
Worth Township Trustees of Schools
Statement of Net Assets - Modified Cash Basis
June 30, 2009
Governmental
Activities
Assets
Cash and investments
$
3,530,393
Liabilities and Net Assets
Liabilities
$
Net Assets,
unrestricted
-
3,530,393
Total liabilities and net assets
$
See Notes to Financial Statements.
8
3,530,393
Worth Township Trustees of Schools
Statement of Activities - Modified Cash Basis
Year Ended June 30, 2009
Functions/Programs
Program Revenues
Net (Expense),
Revenue and
Changes in
Net Assets
Charges for
Services
Governmental
Activities
Expenses
Governmental activities:
Supporting services
$
1,358,745
$
1,331,273
$
General - revenue/(expense):
Interest distributions
Interest income
(27,472)
(7,000,000)
7,178,910
Change in net assets before net
increase in fair value of investments
151,438
Net increase in fair value of investments
1,165,947
Change in net assets
1,317,385
Net assets:
July 1, 2008
2,213,008
June 30, 2009
$
See Notes to Financial Statements.
9
3,530,393
Fund Financial Statements (FFS)
Worth Township Trustees of Schools
Balance Sheet - Modified Cash Basis
Governmental Fund
June 30, 2009
General Fund
Assets
Cash and investments
$
3,530,393
Liabilities and Fund Balance
Liabilities
$
Fund balance,
unreserved
-
3,530,393
Total liabilities and fund balance
$
See Notes to Financial Statements.
10
3,530,393
Worth Township Trustees of Schools
Statement of Revenues, Expenditures and Changes in Fund Balance - Modified Cash Basis - Budget and Actual
Governmental Fund
Year Ended June 30, 2009
Original
and
General
Final Budget
Fund
Revenues:
Investment income:
Interest
Net increase in fair value of investments
Charges to Worth Township school districts and joint agreements
Fees and charges to other school districts and joint agreements
Total revenues
$
Expenditures:
Current:
Supporting services:
Interest distributed to school districts and joint agreements
Salaries
Retirement and social security contributions
Other employee benefits
Telephone
Insurance
Printing and supplies
Equipment leasing and maintenance
Software and programming
Auditing
Legal
Rent
Postage
Treasurer's costs
Transportation costs
Dues and subscriptions
Outside services
Sundry and other operating costs
Telecommunications
Total expenditures
Change in fund balances
$
139,000
139,000
$
7,178,910
1,165,947
1,227,500
103,773
9,676,130
574,923
318,307
143,734
65,000
5,500
46,000
21,500
69,000
76,000
5,000
61,360
1,500
4,000
6,000
7,500
3,000
5,000
12,000
1,425,324
7,000,000
563,509
310,952
153,820
47,960
3,982
31,890
13,004
78,141
79,209
140
59,857
201
1,665
3,095
4,364
6,808
148
8,358,745
(1,286,324)
1,317,385
Fund balances:
July 1, 2008
2,213,008
June 30, 2009
$
See Notes to Financial Statements.
11
3,530,393
Worth Township Trustees of Schools
Statement of Fiduciary Net Assets - Modified Cash Basis
Agency Fund
June 30, 2009
Fiduciary
Fund
Type
Agency
Assets
Cash and investments
$ 208,139,481
Liabilities,
Due to districts and joint agreements
208,139,481
Total net assets
$
See Notes to Financial Statements.
12
-
Worth Township Trustees of Schools
Notes to Financial Statements
Note 1.
Nature of Operations, Financial Reporting Entity, Measurement Focus, Basis of Accounting and
Basis of Presentation and Significant Accounting Policies
Nature of Activities
The Worth Township Trustees of Schools (Trustees) oversee and account for the duties of an appointed Township
Treasurer. The Treasurer is responsible for the receipts, disbursements and investments for all public school districts
and joint agreements in Worth Township. Cash and investments of the school districts and joint agreements are
pooled and interest earned is distributed.
The accounting policies of the Trustees conform to the modified cash basis, which is a comprehensive basis of
accounting other than accounting principles generally accepted in the United States of America, as applicable to
governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles. The following is a summary of the more
significant accounting policies:
Financial Reporting Entity
As defined by generally accepted accounting principles established by the Governmental Accounting Standards
Board (GASB), the financial reporting entity consists of the primary government, as well as component units, which
are legally separate organizations for which elected officials of the primary government are financially accountable.
Financial accountability is defined as:
(1)
Appointment of a voting majority of the component unit’s board, and either a) the ability to impose will
by the primary government, or b) the possibility that the component unit will provide a financial benefit
to or impose a financial burden on the primary government; or
(2)
Fiscal dependency on the primary government.
Based upon the application criteria, no component units have been included within the reporting entity.
Government-Wide and Fund Financial Statements
Government-Wide Financial Statements (GWFS): The Government-Wide Statement of Net Assets and Statement
of Activities display information about the reporting government as a whole.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function, segment or
program are offset by program revenues. Direct revenues are those that are clearly identifiable with a specific
function or segment. Indirect expenses not allocated to functions are reported separately. Interest distributions to
districts are considered such an indirect expense. Program revenues include charges to Worth Township School
Districts and joint agreements and fees and charges to other school districts and joint agreements. Other items not
properly included among program revenues are reported instead as general revenues.
Fiduciary funds are excluded from the government-wide financial statements.
13
Worth Township Trustees of Schools
Notes to Financial Statements
Note 1.
Nature of Operations, Financial Reporting Entity, Measurement Focus, Basis of Accounting and
Basis of Presentation and Significant Accounting Policies (Continued)
Government-Wide and Fund Financial Statements (Continued)
Fund Financial Statements (FFS): The FFS of the reporting entity are generally organized into funds, each of which
is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of
self-balancing accounts that represent the fund’s assets, fund equity, revenues and expenditures. The following fund
types are used by the Trustees:
Governmental fund types are used to account for the Trustees’ general government activities, including the
collection and disbursement of specific or legally restricted monies, the acquisition or construction of any general
fixed assets and the servicing of any general long-term debt.
The General Fund is the Trustees’ primary operating fund. It accounts for all financial resources of the Trustees.
It is reported as a major fund as required by GASB Statement No. 34.
Fiduciary fund types are used to account for assets held in a trustee capacity or as an agency on behalf of others.
The Agency Fund is custodial in nature and does not present results of operations or have a measurement focus.
The agency fund is used to account for assets held by the Trustees for the public school districts and joint
agreements in the Worth Township in an agency capacity.
Measurement Focus and Basis of Accounting
Measurement focus and basis of accounting: Measurement focus is a term used to describe “how” transactions
are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded
regardless of the measurement focus applied.
Measurement focus: In the government-wide Statement of Net Assets and Statement of Activities, governmental
activities are presented using the economic resources measurement focus, within the limitations of the modified cash
basis of accounting, as defined below.
In the fund financial statements, the “current financial resources” measurement focus or the “economic resource”
measurement focus, as applied on the modified cash basis of accounting, is used as appropriate.
The governmental fund utilizes a “current financial resources” measurement focus. Only current financial assets and
liabilities are generally included on the balance sheet. The operating statement presents sources and uses of
available spendable financial resources during a given period. This fund uses fund balance as its measure of
available spendable financial resources at the end of the period.
14
Worth Township Trustees of Schools
Notes to Financial Statements
Note 1.
Nature of Operations, Financial Reporting Entity, Measurement Focus, Basis of Accounting and
Basis of Presentation and Significant Accounting Policies (Continued)
Basis of accounting: In the government-wide Statement of Net Assets and Statement of Activities and the fund
financial statements, governmental and fiduciary activities are presented using a modified cash basis of accounting.
This basis recognizes cash, cash equivalents and investments, amounts due to/from other governments, interfund
debt, net assets/fund equity, revenues, and expenditures/expenses when they result from cash transactions, with
certain modifications. The Trustees report investments at fair value rather than at cost and recognize changes in the
fair value of investments held in the statement of activities and statement of revenues, expenditures and changes in
fund balance as those changes occur. Additionally, under this basis of accounting, the Trustees report activity related
to the acquisition, depreciation and year-end balances of capital assets, as well as year-end balances and related
changes in long-term debt in its GWFS. At June 30, 2009, the Trustees have no capital assets or long-term debt.
This basis is a comprehensive basis of accounting other than accounting principles generally accepted in the United
States of America.
As a result of the use of this modified cash basis of accounting, certain assets, revenues, liabilities, and expenses,
such as receivables, payables, accruals, and other liabilities, are not recorded in these financial statements.
If the Trustees utilized the basis of accounting recognized as generally accepted, the fund financial statements for the
governmental fund would use the modified accrual basis of accounting. All government-wide financials would be
presented on the accrual basis of accounting.
The significant accounting policies followed by the Trustees include the following:
Investments
The Worth Township Trustees of Schools account for the cash and investments for the public school districts and the
joint agreement in the Worth Township. The investments are recorded at fair value, which is based on market value
for same or similar investments.
Compensated Absences
Full-time employees earn vacation days which accumulate up to a maximum of 180 days. They can earn from 2
weeks to 5 weeks a year based on seniority.
All full-time employees receive 8 sick days each calendar year and there is a limit of 180 days that can be
accumulated. Upon the termination of employment, sick days will not be reimbursed. If the employee is a member of
the Illinois Municipal Retirement Fund (IMRF), the unused sick days will be used as additional service time.
Restricted Net Assets
In the government-wide Statement of Net Assets, net assets should be reported as restricted when constraints
placed on net asset use are either:
Externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other
governments;
Imposed by law through constitutional provisions or enabling legislation.
When both restricted and unrestricted resources are available for use, it is the Trustees’ policy to use restricted
resources first, then unrestricted resources as they are needed. The Trustees did not have any restricted assets as
of June 30, 2009.
15
Worth Township Trustees of Schools
Notes to Financial Statements
Note 1.
Nature of Operations, Financial Reporting Entity, Measurement Focus, Basis of Accounting and
Basis of Presentation and Significant Accounting Policies (Continued)
Use of Estimates
The preparation of financial statements in conformity with the modified cash basis of accounting requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
Note 2.
Budget and Budgetary Information
An annual budget is adopted for the General Fund. The annual budget is adopted using the modified cash basis of
accounting. All budgets lapse at fiscal year-end.
On or before July 1 of each year, the Treasurer is to submit for review by the Trustees a proposed budget for the
fiscal year commencing on that date. After reviewing the proposed budget, the Trustees hold a public hearing and a
final budget must be prepared and adopted no later than October 1. The Trustees do not budget for interest,
changes in fair market value of investments, charges to the Worth Township school districts and joint agreements
and interest distributed to school districts and joint agreements.
The appropriated budget is prepared by fund and by function. The Trustees may make transfers between functions
within a fund not exceeding in the aggregate 10 percent of the total of such fund, and may amend the total budget
following the same procedures required to adopt the original budget. No supplemental appropriations were required
during the year ended June 30, 2009.
16
Worth Township Trustees of Schools
Notes to Financial Statements
Note 3.
Cash and Investments
Substantially all of the cash balances are deposits and investments maintained in pooled accounts held in the name
of the Worth Township Trustees.
a) Deposits
State statutes authorize the Trustees to make deposits in interest bearing depository accounts in federally insured
and/or state chartered banks, savings and loan associations, and credit unions. As of June 30, 2009, the Trustees
had deposits with federally insured financial institutions of $74,713,151 with bank balances totaling $88,306,342.
Custodial credit risk – deposits. In the case of deposits, this is the risk that in the event of a bank failure, the
Trustees’ deposits may not be returned to it. The Trustees do not have a deposit policy for custodial credit risk. As
of June 30, 2009, $1,112,192 of the Trustee’s bank balances was uninsured and collateral was held by the pledging
bank’s trust department not in the Trustee’s name.
b) Investments
As of June 30, 2009, the Trustees had the following investments:
Maturities
Investment Type
U.S. Treasury Securities
Federal National Mortgage
Association (FNMA)
Federal Home Loan Bank (FHLB)
FHLMC (Freddie Mac)
Illinois Funds
Commercial Paper (Wachovia)
Illinois School District Liquid
Asset Fund Plus
Fair
Value
1,313,750
Less
Than 1 Year
$
-
2,251,334
25,471,509
49,557,517
115,473
21,586,676
126,150
5,976,602
2,404,850
115,473
21,586,676
36,660,464
36,660,464
$ 136,956,723
$ 66,870,215
$
1-5 Years
$
1,663,028
5,451,728
18,243,597
$ 25,358,353
6-10 Years
$
462,156
1,267,975
9,793,854
-
Greater
Than 10 Years
$ 1,313,750
12,775,204
19,115,216
-
$ 11,523,985
$ 33,204,170
The Illinois Funds and Illinois School District Liquid Asset Fund are shown as maturing in less than one year because
the weighted average maturity of the funds is less than one year.
Interest rate risk. The Trustees’ investment policy does not limit the Trustees’ investment portfolio to specific
maturities; however, the Trustees’ predominant investment strategy is to operate as a buy and hold to maturity
investor, which does limit interest rate risk.
Illinois School District Liquid Asset Fund Plus (ISDLAF) is a not-for-profit investment trust formed pursuant to the
Illinois Municipal Code and managed by a Board of Trustees elected from the participating members. ISDLAF is not
registered with the SEC as an investment company. Investments in ISDLAF are valued at the fund’s share price,
which is the price the investment could be sold for.
Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows
governments within the State to pool their funds for investment purposes. Illinois Funds is not registered with the
SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company
Act of 1940. Investments in Illinois Funds are valued at Illinois Fund's share price, which is the price the investment
could be sold for.
17
Worth Township Trustees of Schools
Notes to Financial Statements
Note 3.
Cash and Investments (continued)
Credit risk. State statutes authorize the Trustees to invest in direct obligations of, or obligations guaranteed by, the
United States Treasury or agencies of the United States, and short-term obligations of corporations organized in the
United States with assets exceeding $500,000,000. The Trustees are also authorized to invest in the Illinois School
District Liquid Asset Fund Plus and the Illinois Funds. The Trustees restricted its investments to only those
investments described above.
The Illinois School District Liquid Asset Fund Plus and the Illinois Funds are rated AAA by Standard & Poor’s. FHLB
securities are rated AAA by Standard and Poor’s. FNMA and FHLMC are not rated. The commercial paper is rated
F1-D by Fitch.
Concentration of credit risk. The Trustees investment policy does not restrict the amount of investment in any one
issuer. More than 5 percent of the Trustees’ investments are in ISDLAF, FHLB, FHLMC, and commercial paper.
These investments are 26.8 percent, 18.6 percent, 36.2 percent, and 15.7 percent, respectively, of the Trustees’ total
investments.
Custodial credit risk – investments. For an investment, this is the risk that, in the event of the failure of the
counterparty, the Trustees will not be able to recover the value of its investments or collateral securities that are in
the possession of an outside party. The US Treasury securities and US agency securities (FNMA, FHLC and FHLB)
are insured or registered or are held by the Trustees or its agent in the Trustees’ name. The commercial paper, the
Illinois School District Liquid Asset Fund Plus and the Illinois Funds are not subject to custodial credit risk.
The above deposits of $74,713,151 and investments of $136,956,723 totaling $211,669,874 are reported in the
financial statements as cash and investments as follows:
Governmental activities
Fiduciary fund type
$
3,530,393
208,139,481
$ 211,669,874
Note 4.
Lease Obligations
During the year, the Trustees’ signed a lease with the Board of Education of School District 218 to lease a portion of
the Polaris school building. The lease commences July 1, 2008 and expires June 30, 2013. The lease calls for
annual payments of $57,500.
The future minimum lease payments are as follows:
Year Ending June 30:
2010
2011
2012
2013
Rent expense was $59,857 for the year ended June 30, 2009.
18
$
57,500
57,500
57,500
57,500
$
230,000
Worth Township Trustees of Schools
Notes to Financial Statements
Note 5.
Retirement Fund Commitments
Illinois Municipal Retirement
Plan Description. The Trustees’ defined benefit pension plan for regular employees provides retirement and disability
benefits, post retirement increases, and death benefits to plan members and beneficiaries. The Trustees participate
in the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer plan. Benefit provisions are established
by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly
available financial report that includes financial statements and required supplementary information. That report may
be obtained on-line at www.imrf.org.
Funding Policy. As set by statute, the Trustees’ regular plan members are required to contribute 4.50 percent of their
annual covered salary. The statutes required employers to contribute the amount necessary, in addition to member
contributions, to finance the retirement coverage of its own employees. The Trustees’ contribution rate for calendar
year 2008 was 29.89 percent of annual covered payroll. The Trustees also contributes for disability benefits, death
benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for
disability and death benefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate
is set by statute.
Annual Pension Cost. For 2007, the Trustees’ annual pension cost of $184,189 for the regular plan was equal to the
Trustees’ required and actual contributions.
Three-Year Trend Information for the Regular Plan
Calendar Year Ending
12/31/2008
12/31/2007
12/31/2006
Annual
Pension Cost
(APC)
$
184,189
180,985
177,372
Percentage of APC
Contributed
100%
100%
100%
The required contribution for 2008 was determined as part of the December 31, 2006, actuarial valuation using the
entry age normal actuarial cost method. The actuarial assumptions at December 31, 2006, included (a) 7.5 percent
investment rate of return (net of administrative and direct investment expenses), (b) projected salary increases of
4.00 percent a year, attributable to inflation, (c) additional projected salary increases ranging from .4 percent to 11.6
percent per year depending on age and service, attributable to seniority/merit, and (d) post retirement benefit
increases of 3 percent annually. The actuarial value of the Trustees’ regular plan assets was determined using
techniques that spread the effects of short-term volatility in the market value of investments over a five-year period
with a 20 percent corridor between the actuarial and market value of assets. The Trustees’ regular plan’s unfunded
actuarial accrued liability is being amortized as a level percentage of projected payroll. The remaining amortization
period at December 31, 2006, was 24 years.
Funded Status and Funding Progress. As of December 31, 2008, the most recent actuarial valuation date, the
regular plan was 19.75 percent funded. The actuarial accrued liability for benefits was $2,279,731 and the actuarial
value of assets was $450,329, resulting in an unfunded actuarial accrued liability (UAAL) of $1,829,402. The
covered payroll (annual payroll of active employees covered by the plan) was $616,224 and the ratio of the UAAL to
the covered payroll was 297 percent.
19
Worth Township Trustees of Schools
Notes to Financial Statements
Note 5.
Retirement Fund Commitments (continued)
The schedule of funding progress, presented as RSI following the notes to the financial statements, presents
multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liability for benefits.
Note 6.
Risk Management
The Trustees are exposed to various risks of loss related to torts; theft of, damage to, and destruction to assets;
errors and omissions; injuries to employees; and natural disasters. The Trustees carry commercial insurance for
general liability and property, worker’s compensation and employee health coverage. Settled claims have not
exceeded commercial insurance coverage during any of the past three years.
Note 7.
Pronouncements Issued But Not Yet Adopted
The following is a description of other GASB authoritative pronouncements, which have been issued but not yet
adopted by the Trustees.
Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than
Pensions, will be effective for the Trustees of Schools beginning with its year ending June 30, 2010. This statement
establishes standards for the measurement, recognition and display of other postemployment benefits expenses and
related liabilities or assets, note disclosures and, if applicable, required supplementary information in the financial
reports.
Statement No. 51, Accounting and Financial Reporting for Intangible Assets, will be effective for the Trustees of
Schools beginning with its year ending June 30, 2010. This statement provides guidance regarding how to identify,
account for and report intangible assets. The new standard characterizes an intangible asset as an asset that lacks
physical substance, is nonfinancial in nature and has an initial useful life extending beyond a single reporting period.
Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, will be effective for the Trustees of
Schools beginning with its year ending June, 30, 2010. This statement addresses the recognition, measurement, and
disclosure of information regarding derivative instruments entered into by state and local governments.
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, will be effective for the
Trustees of Schools beginning with its year ending June 30, 2011. This statement enhances the usefulness of fund
balance information by providing clearer fund balance classifications that can be more consistently applied and by
clarifying the existing governmental fund type definitions.
Management has not yet determined the impact these Statements will have on the financial position and results of
operations of the Trustees.
20
Required Supplementary Information
Worth Township Trustees of Schools
Illinois Municipal Retirement Fund
Schedule of Funding Progress
Actuarial
Valuation
Date
12/31/08 $
12/31/07
12/31/06
Actuarial
Accrued
Liability
(AAL)
- Entry Age
(b)
Actuarial
Value of
Assets
(a)
450,329
749,790
914,999
$
2,279,731
2,108,185
2,347,958
Unfunded
AAL
(UAAL)
(b-a)
$
1,829,402
1,358,395
1,432,959
21
Funded
Ratio
(a/b)
19.75
35.57
38.97
Covered
Payroll
(c)
% $
616,224
585,714
562,193
UAAL
as a
Percentage
of Covered
Payroll
((b-a)/c)
296.87
231.92
254.89
%