Budget and Salary/Compensation Transparency Reportingp2cdn3static.sharpschool.com/UserFiles/Servers/Server... · 2013-02-05 · Relines and Repairs - Relines and repairs to bridges

INTRODUCTIONSection 18 (2) of the Public Act 94 of 1979, The State School Aid Act, has been amended, which requires each school district and intermediate

school district to post certain information on its website within 30 days after a board adopts it annual operating budget or any subsequent

revision to that budget. The Annual Budget & Transparency Reporting is an opportunity to communicate our community on how we utilize

the resources that are provided to us.

The following information is required to be posted on our website:

1. The annual operating budget and subsequent budget revisions.

2. Using data that has already been collected and submitted to the Michigan Department of Education (MDE), a summary of district or intermediate

district expenditures for the most recent fiscal year for which they are available, expressed in the following two (2) pie charts which were provided

for the general fund of the district or intermediate district by the Center for Educational Performance and Information (CEPI):

(a) A chart of personnel expenditures broken down into the following subcategories:

(1) Salaries and Wages

(2) Employee benefit costs, including, but not limited to, medical, dental, vision, life, disability, and long term care benefits.

(3) Retirement benefits costs

(4) All other personnel costs

(b) A chart of all district expenditures, broken into the following subcategories:

(1) Instruction

(2) Support Services

(3) Business and administration

(4) Operations and Maintenance

3. Links to all of the following:

(a) The current collective bargaining agreement for each bargaining unit

(b) Each health care benefits plan, including, but not limited to, medical, dental, vision, disability, long-term care, or any other type of

benefits that would constitute health care services, offered to any bargaining unit or employee in the district

(c)The audit report of the audit conducted for the most recent fiscal year for which it is available.

4. The total salary and a description and cost of each fringe benefit included in the compensation package for the superintendent of the district or

intermediate district and for each employee of the district whose salary exceeds $100,000

5. The annual amount spent on dues paid to associations

6. The annual amount spent on lobbying services

Links to Audit Report

Mid-Michigan Leadership Academy has not spent any funds on lobbying or lobbying services in 2011-12.

Budget and Salary/Compensation Transparency Reporting

Section 1 - Annual Operating Budget and Subsequent Revisions

Prior Year Board Approved Budget Current Year Board Approved Budget

Section 2a and 2b - Summary of Expenditures - Expressed in Pie Charts

Section 3a, 3b and 3c - Listing of the Collective bargaining Agreements, Health Care Plans and Audit Report

Medical Benefit Bids

Section 4 - Salary and Benefit Description of Superintendent and Employees with Salary Exceeding $100,000

Link to List of Qualifying Employees

Section 5 - Annual Amount Spent on Dues paid to Associations

Current Collective Bargaining Agreements Health Care Benefits Plans

Personnel Expenditures District Expenditures

Dashboard

https://www.mischooldata.org/

Link to List of Qualifying Expenditures

Section 6 - Annual Amount Spent on Lobbying or Lobbying Services

* For charting purposes, Purchased Services is defined as object codes 3xxx-4xxx and 82xx.** For charting purposes, Other Expenditures is defined as object codes 7xxx, 81xx and 83xx-89xx.

Report based on district's 2012 Financial Information Database (FID) submission.

Caution should be used when using these financial data. Sound conclusions can only be drawn when the data elements are used in proper context. As one example; many districts outsource some or all educational functions to other entities. As a result, the district may not incur direct employee salary and benefits for certain functions. The costs instead will appear in the purchased service category. While a district that hires its entire staff as district employees will include all the associated costs under a combination of salary and benefit ccounts.

The personnel expenditure costs reported to the charts above are based on object codes as submitted to the Financial Information Database (FID). Districts are required by law (MCL 380.1281) to follow a common chart of accounts published as the Michigan Public School Accounting Manual when reporting financial data. Definitions for each of the object codes listed in the charts above may be found in the Manual available at: http://www.michigan.gov/documents/appendix_33974_7.pdf.

Additional district financial information can be found on-line at www.michigan.gov/cepi

Personnel Expenditures

Salary (1xxx) $81,596 3.65 %

Employee Insurance Benefits (21xx) $12,108 0.54 %

FICA/Retirement/Unemployment/WC (28xx) $26,249 1.17 %

Other Personnel Expenditures (22x - 24xx, 29xx) $0 0.00 %

Total Personnel Expenditures $119,953 5.36 %

Remaining Expenditures

Professional and Technical Purchased Services (31xx) $1,572,302 70.25 %

Client/Pupil Transportation Purchased Services (33xx) $63,042 2.82 %

Other Purchased Services (32xx, 34xx - 4xxx) $110,114 4.92 %

Supplies and Materials (5xxx) $145,527 6.50 %

Capital Outlay (6xxx) $127,527 5.70 %

Other Expenditures (7xxx) $99,532 4.45 %

Payments to Other Public School Districts(82xx) $0 0.00 %

Fund Modifications (81xx) $0 0.00 %

Other Transactions (83xx - 89xx) $0 0.00 %

Total General Fund Expenditures $2,237,997 100.00 %

Report Date: 10/1/2012 Pages: 1 of 1

2011-2012Mid-Michigan Leadership Academy (33904)

Budget Transparency Report: Personnel ExpendituresSchool District: Fiscal Year:

Fund:General Fund (11)

Operating ExpendituresInstructional Expenditures (1xx,293) $924,155 41.29 %Pupil Support Services (21x) $164,640 7.36 %Instructional Staff Support Services (22x) $188,950 8.44 %General Administration (23x) $118,809 5.31 %School Administration (24x) $105,392 4.71 %Business Services (25x) $97,370 4.35 %Operations and Maintenance (26x) $235,669 10.53 %Transportation (27x) $63,042 2.82 %Central & Other Support Services (28x, 291,292,295,299) $117,666 5.26 %

Total Current Operating Expenditures $2,015,693 90.07 %

Remaining ExpendituresCommunity Services (3xx) $1,398 0.06 %

Facilities Acquisitions (45x), Debt Service (51x) and Capital Outlay $220,905 9.87 %

Other Transactions (41x-44x, 49x) $0 0.00 %

Fund Modification (6xx) $0 0.00 %

Total General Fund Expenditures $2,237,996 100.00 %

*For charting purposes, Remaining Expenditures is defined as function codes 3xx through 6xx.

Report based on district's2012 Financial Information Database (FID) submission.

Caution should be used when using these financial data. Sound conclusions can only be drawn when the data elements are used in proper context. The operational expenditure costs reported to the charts above are based on function codes as submitted to the Financial Information Database (FID). Districts are required by law (MCL 380.1281) to follow a common chart of accounts published as the Michigan Public School Accounting Manual when reporting financial data. Definitions for each of the object codes listed in the charts above may be found in the Manual available at: http://www.michigan.gov/documents/appendix_33974_7.pdf.

Please note that Capital Outlay, an object category, was extracted from functional categories and reported with Facilities Acquisitions and Debt Service.

More district financial information can be found on-line at www.michigan.gov/cepi.

Report Date: 10/1/2012 11:13:47 AM Pages: 1 of 1

2011-2012Mid-Michigan Leadership Academy (33904)

Budget Transparency Report: Operating ExpendituresSchool District: Fiscal Year:

Fund: General Fund (11)

All EmployeesHealth Physicians Health Plan

Dental Delta DentalVision VSPLife Insurance Assurant Employee BenefitsLong Term Disability Assurant Employee Benefits

All employees are contracted employees with the exception of the Superintendent/Prinicpal. However, all employees have the same benefits and no employees belong to a union.

Current Bargaining Agreements and Employer Sponsored Health Care Plans

DeltaPreferred Option standard Summary of Dental Plan Benefits For Group#0007474-0001

MIDWEST MANAGEMENT GROUP This Summary of Dental Plan Benefits should be read in conjunction with your Dental Care Certificate. Your Dental Care Certificate will provide you with additional information about your Delta Dental plan, including information about plan exclusions and limitations. In the event that you seek treatment from a dentist that does not participate in any of Delta Dental`s programs, you may be responsible for more than the percentage indicated below.

Control Plan - Delta Dental Plan of Michigan Benefit Year - April 1 through March 31

Covered Services - Plan Pays You Pay

Class I Benefits

Diagnostic and Preventive Services - Used to diagnose and/or prevent dental abnormalities or disease (includes exams, cleanings and fluoride treatments)

100% 0%

Emergency Palliative Treatment - Used to temporarily relieve pain 100% 0%

Radiographs - X-rays 100% 0%

Class II Benefits

Oral Surgery Services - Extractions and dental surgery, including preoperative and postoperative care

80% 20%

Endodontic Services - Used to treat teeth with diseased or damaged nerves (for example, root canals)

80% 20%

Periodontic Services - Used to treat diseases of the gums and supporting structures of the teeth 80% 20%

Relines and Repairs - Relines and repairs to bridges and dentures 80% 20%

Minor Restorative Services - Used to repair teeth damaged by disease or injury (for example, fillings)

80% 20%

Class III Benefits

Major Restorative Services - Used when teeth can`t be restored with another filling material (for example, crowns)

50% 50%

Prosthodontic Services - Used to replace missing natural teeth (for example, bridges and dentures)

50% 50%

Orthodontics (to age 19) 50% 50%

~ Oral exams, prophylaxes (cleanings), and fluoride treatment (to age 19) are payable twice per calendar year. ~ Bitewing X-rays are payable once per calendar year and full mouth X-rays are payable once in any five-year period. ~ Composite resin (white) restorations and porcelain crowns are not Covered Services on posterior teeth.

Having Delta Dental coverage makes it easy for our enrollees to get dental care almost everywhere in the world! You can now receive expert dental care when you’re outside of the United States through our partnership with International SOS Assistance, Inc. This partnership gives you access to the International SOS (I-SOS) worldwide network of dentists and dental clinics. English-speaking I-SOS operators are available around the clock to answer questions and help you schedule care. For more information, check our Web site or contact your benefits representative to get a copy of our I-SOS information sheet. Maximum Payment - $1,000 per person total per benefit year on Class I, Class II and Class III Benefits. Deductible - $50 deductible per person total per benefit year limited to a maximum deductible of $150 per family per benefit year on Class II and Class III Benefits. The deductible does not apply to Class I Benefits. Waiting Period - Employees who are eligible for dental benefits are covered on the first day of the month following 30 days of employment. Eligible People - All full-time employees of the contractor and all individuals who are eligible for and elect continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 if applicable. Also eligible are your legal spouse, your dependent children to the end of the calendar year in which they turn 19, and your dependent unmarried children who are eligible to be claimed by you as a dependent under the U.S. Internal Revenue code during the current calendar year. Benefits will cease on the last day of the month in which the employee is terminated.

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MID-MICHIGAN LEADERSHIP ACADEMY

REPORT ON FINANCIAL STATEMENTS (with required supplementary information)

YEAR ENDED JUNE 30, 2012

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C O N T E N T S

Page Independent auditors’ report ...................................................................................................... 3 - 4 Management’s Discussion and Analysis ................................................................................... 5 - 10 Basic Financial Statements ............................................................................................................ 11 Government-wide financial statements Statement of net assets ........................................................................................................ 12 Statement of activities ......................................................................................................... 13 Fund financial statements Balance sheet - governmental funds ................................................................................... 14 Statement of revenues, expenditures and changes in fund balances - governmental funds ......................................................................................................... 15 - 16 Reconciliation of the statement of revenues, expenditures and changes in fund balances of governmental funds to the statement of activities .................................... 17 Notes to financial statements ................................................................................................. 18 - 31 Required supplementary information .......................................................................................... 32 Budgetary comparison schedule - general fund ........................................................................ 33 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 ................................................................... 34 - 35

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INDEPENDENT AUDITORS’ REPORT To the Board of Directors Mid-Michigan Leadership Academy

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Mid-Michigan Leadership Academy (the Academy), as of and for the year ended June 30, 2012, which collectively comprise the Academy’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of Mid-Michigan Leadership Academy’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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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.

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 Mid-Michigan Leadership Academy as of June 30, 2012, and the respective changes in financial position, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated

September 5, 2012, on our consideration of Mid-Michigan Leadership Academy’s 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

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Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 5 through 10 and 33, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. September 5, 2012

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Figure A-1 Organization of Mid-Michigan Leadership

Academy’s Financial Report

MANAGEMENT’S DISCUSSION AND ANALYSIS This section of Mid-Michigan Leadership Academy’s (Academy) annual financial report presents our discussion and analysis of the public school Academy’s financial performance during the fiscal year that ended on June 30, 2012. Please read it in conjunction with the Academy’s financial statements, which immediately follow this section. Financial Highlights

The Academy had an increase in the fund balance in the general fund of $129,083 compared to a budgeted increase of $60,151. This gives the Academy a general fund balance of $570,562.

The Academy retired $68,538 in long-term debt during the year.

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 Academy: The first two statements are academy-wide

financial statements that provide both short-term and long-term information about the Academy’s overall financial status.

The remaining statements are fund financial

statements that focus on individual parts of the Academy, reporting the Academy’s operations in more detail than the academy-wide statements.

The governmental funds statements tell how

basic services like regular and special education were financed in the short-term as well as what remains for future spending.

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 with a comparison of the Academy’s budget for the year. Figure A-1 shows how the various parts of the annual report are arranged and related to one another.

Basic Financial

Statements

Required Supplementary

Information

Academy-wide Financial

Statements

Fund Financial

Statements

Notes to Financial Statements

Detail

Management’s Discussion and

Analysis

Summary

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Figure A-2 summarized the major features of the Academy’s financial statements, including the portion of the Academy’s 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 Academy-wide and Fund Financial Statements

Academy-wide statements Governmental fundsScope Entire academy (except fiduciary

funds)All activities of the academy that are not fiduciary

Required financial statements * Statement of net assets * Balance sheet* Statement of activities * Statement of revenues,

expenditures and changes in fund balances

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus

Type of asset/liability information All assets and liabilities, both financial and capital, short-term and long-term

Generally assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets or long-term liabilities included

Type of inflow/outflow information All revenues and expenses during year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year, expenditures when goods or services have been received and the related liability is due and payable

Academy-wide statements The Academy-wide statements report information about the Academy as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the Academy’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two Academy-wide statements report the Academy’s net assets and how they have changed. Net assets - the difference between the Academy’s assets and liabilities, are one way to measure the Academy’s financial health or position.

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

To assess the overall health of the Academy, you need to consider additional non-financial factors

such as changes in the Academy’s enrollment, the condition of school buildings and other facilities, and the Academy’s ability to be competitive with other public school academies and area school districts.

Governmental activities - The Academy’s basic services are included here, such as regular and special education and administration. State foundation aid finances most of these activities.

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Fund financial statements The fund financial statements provide more detailed information about the Academy’s funds, focusing on its more significant or “major” funds - not the Academy as a whole. Funds are accounting devices the Academy uses to keep track of specific sources of funding and spending on particular programs. The Academy has a general fund and special revenue fund.

Some funds are required by State law and by debt agreements. The Academy establishes other funds to control and manage money for particular purposes (like its

food service program). All of the Academy’s basic services are included in governmental funds which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out, and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Academy’s programs. Because this information does not encompass the additional long-term focus of the Academy-wide statements, we provide additional information with the governmental funds statement that explains the relationship (or differences) between them. Financial analysis of the Academy as a whole Net assets (deficit) - the Academy’s combined net assets of $1,055,297 improved by $270,164 during the year. See Figures A-3 and A-4. The total revenues decreased by 0.66% to $2,487,605. This is due to:

A decrease in federal funding due to the elimination of ARRA and EduJobs. The total cost of instruction decreased by 4.99% to $927,372 due to a decrease in paraprofessional aides. Total support service increased by 0.72% to $1,108,858. Support service increases were primarily due to the addition of a curriculum director and decrease in combined sewer overflow project work.

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2012 2011

Current assets 831,889$ 799,193$ Other noncurrent assets 1,582 3,482 Capital assets, net 817,589 756,018

Total assets 1,651,060 1,558,693

Current liabilities 302,340 407,208 Long-term liabilities 293,423 366,352

Total liabilities 595,763 773,560

Net assets:Invested in capital assets, net of related debt 452,819 321,128 Restricted for food service 31,916 17,351 Unrestricted 570,562 446,654

Total net assets 1,055,297$ 785,133$

Figure A-3Mid-Michigan Leadership Academy's Net Assets

2012 2011Revenues:

Program revenues:Federal and state categorical grants 729,424$ 685,753$ Charges for services 150 3,175

General revenues:State aid - unrestricted 1,571,289 1,619,239 Federal sources - unrestricted 3,081 63,169 Incoming transfer from Ingham ISD 149,925 111,972 Other 33,736 20,793

Total revenues 2,487,605 2,504,101

Expenses:Instruction 927,372 976,099 Support services 1,108,858 1,100,978 Community service 1,398 - Food service 107,654 100,824 Interest on long-term debt 24,840 28,845 Unallocated depreciation 47,319 43,607

Total expenses 2,217,441 2,250,353

Change in net assets 270,164$ 253,748$

Figure A-4Changes in Mid-Michigan Leadership Academy's Net Assets

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Financial analysis of the Academy’s funds The Academy’s fund balance in the general fund increased by $129,083 to $570,562. Principal and interest payments on long-term debt of $93,378 were made from the general fund. General fund budgetary highlights Over the course of the year, the Academy revised the general fund annual operating budget when necessary. Changes were made in both revenue and expenditures which reflected anticipated changes in state aid grants and actual salary costs for staff. The Academy’s final budget for the general fund anticipated revenues would exceed expenditures and other financing sources by $60,151, the actual results for the year showed revenues over expenditures and other financing sources of $129,083. Actual revenues were $81,704 less than budgeted, due primarily to the deferral of grant revenues to cover expenses in the subsequent accounting period. Actual expenditures were $150,123 less than budgeted, due primarily to grant expenses occurring in the subsequent accounting period, heating expenditures lower than anticipated due to the mild winter, and a reduction in the bus route due to pupil population’s location. Capital asset and debt administration Capital assets By the end of the year ended June 30, 2012, the Academy had invested $817,589 in capital assets net of accumulated depreciation as summarized in Figure A-5. This amount represents an increase of $61,571 from the beginning of the year. Total depreciation expense for the year was $47,319. More detailed information about capital assets can be found in Note 4 to the financial statements. The Academy’s capital assets are as follows:

2011

CostAccumulated depreciation Net book value Net book value

Land 211,000$ -$ 211,000$ 211,000$ Building and improvements 544,542 160,697 383,845 411,072 Technology and equipment 146,887 100,669 46,218 37,000 Furniture and fixtures 276,371 99,845 176,526 96,946

Total 1,178,800$ 361,211$ 817,589$ 756,018$

Figure A-5Mid-Michigan Leadership Academy's Capital Assets

2012

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Long-term debt The Academy repaid principal on long-term debt of $68,538 during 2012. See Note 6 for more information. Factors bearing on the Academy’s future At the time these financial statements were prepared and audited, the Academy was aware of existing circumstances that could significantly affect its financial health in the future.

The Academy has adopted a balanced general fund budget for 2012/2013. Enrollment was stable in 2011/2012 and is expected to remain stable or increase slightly in

2012/2013. The charter agreement with Central Michigan University expires June 30, 2014. The school state aid budget for 2012/2013 has been approved by the state legislature, providing a

$120 per pupil foundation increase; however state aid funding is still below 2010/2011 levels. Contacting the Academy’s financial management This financial report is designed to provide our students, parents and creditors with a general overview of the Academy’s finances and to demonstrate the Academy’s accountability for the money it receives. If you have questions about this report or need additional information, contact the Academy at 730 W. Maple, Lansing, Michigan, 48906, phone (517) 485-5379.

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BASIC FINANCIAL STATEMENTS

MID-MICHIGAN LEADERSHIP ACADEMY STATEMENT OF NET ASSETS

JUNE 30, 2012

See notes to financial statements. 12

Governmentalactivities

ASSETSCURRENT ASSETS:

Cash and cash equivalents 453,759$ Accounts receivable 1,338 Due from other governmental units 367,596 Prepaid expenses 9,196

TOTAL CURRENT ASSETS 831,889

NONCURRENT ASSETS:Debt issuance costs, net of amortization 1,582 Capital assets 1,178,800 Less accumulated depreciation (361,211)

TOTAL NONCURRENT ASSETS 819,171

TOTAL ASSETS 1,651,060$

LIABILITIES AND NET ASSETSCURRENT LIABILITIES:

Accounts payable 44,692$ Accrued personnel costs and related items 145,570 Deferred revenue 39,149 Current portion of bonds payable 72,929

TOTAL CURRENT LIABILITIES 302,340

NONCURRENT LIABILITIES:Noncurrent portion of bonds payable 293,423

TOTAL LIABILITIES 595,763

NET ASSETS:Invested in capital assets, net of related debt 452,819 Restricted for food service 31,916 Unrestricted 570,562

TOTAL NET ASSETS 1,055,297

TOTAL LIABILITIES AND NET ASSETS 1,651,060$

MID-MICHIGAN LEADERSHIP ACADEMY STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012


Governmentalactivities

Net (expense)revenue and

Charges for Operating changes inFunctions/programs Expenses services grants net assets

Governmental activities:Instruction 927,372$ -$ 457,833$ (469,539)$ Support services 1,108,858 - 150,702 (958,156) Community services 1,398 - - (1,398) Food service 107,654 150 120,889 13,385 Interest and fees 24,840 - - (24,840) Depreciation (unallocated) 47,319 - - (47,319)

- Total governmental activities 2,217,441$ 150$ 729,424$ (1,487,867)

General revenues:State sources - unrestricted 1,571,289 Federal sources - unrestricted 3,081 Incoming transfer from Ingham ISD 149,925 Other 33,736

Total general revenues 1,758,031

CHANGE IN NET ASSETS 270,164

NET ASSETS, beginning of year 785,133

NET ASSETS, end of year 1,055,297$

Program revenues

MID-MICHIGAN LEADERSHIP ACADEMY BALANCE SHEET

GOVERNMENTAL FUNDS JUNE 30, 2012


General fund

Non-major governmental

(special revenue) fund

Total governmental

fundsASSETS

ASSETS:Cash and cash equivalents 453,759$ -$ 453,759$ Receivables:

Due from other governmental units 367,596 - 367,596 Due from other funds - 32,382 32,382 Other 1,181 157 1,338

Prepaid expenditures 9,196 - 9,196

TOTAL ASSETS 831,732$ 32,539$ 864,271$

LIABILITIES AND FUND BALANCESLIABILITIES:

Accounts payable 44,692$ -$ 44,692$ Due to other funds 32,382 - 32,382 Accrued personnel costs and related items 144,947 623 145,570 Deferred revenue 39,149 - 39,149

TOTAL LIABILITIES 261,170 623 261,793

FUND BALANCES:Nonspendable:

Prepaid expenditures 9,196 - 9,196 Restricted for food service - 31,916 31,916 Committed for combined sewer overflow project 44,148 - 44,148 Unassigned 517,218 - 517,218

TOTAL FUND BALANCES 570,562 31,916 602,478 TOTAL LIABILITIES AND FUND BALANCES 831,732$ 32,539$ 864,271$

Total governmental fund balances 602,478$

Amounts reported for governmental activities in the statement of net assets are different because:Capital assets used in governmental activities are not financial resources and are not reported in the funds:

The cost of the capital assets is 1,178,800$ Accumulated depreciation is (361,211) 817,589

Debt issuance costs 9,498 Accumulated amortization (7,916) 1,582

Long-term liabilities are not due and payable in the current period and are not reported in the funds:

Bonds payable (366,352)

Net assets of governmental activities 1,055,297$

MID-MICHIGAN LEADERSHIP ACADEMY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012


Non-major governmental Total

General (special revenue) governmentalfund fund funds

REVENUES:Local sources:

Food sales -$ 150$ 150$ Other local revenue 33,736 - 33,736

Total local sources 33,736 150 33,886

State sources 1,907,938 5,062 1,913,000 Federal sources 274,967 115,827 390,794 Incoming transfers 149,925 - 149,925

Total revenues 2,366,566 121,039 2,487,605

EXPENDITURES:Current:

Instruction:Basic programs 760,057 - 760,057 Added needs 276,205 - 276,205

- Total instruction 1,036,262 - 1,036,262

Support services:Pupil 164,640 - 164,640 Instructional staff 188,948 - 188,948 General administration 118,810 - 118,810 School administration 105,393 - 105,393 Business services 97,371 - 97,371 Operation and maintenance 235,669 - 235,669 Pupil transportation 63,042 - 63,042 Central support services 117,666 - 117,666

- Total support services 1,091,539 - 1,091,539

Community service 1,398 - 1,398

Food service - 107,654 107,654

Capital outlay 15,419 - 15,419

MID-MICHIGAN LEADERSHIP ACADEMY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012


Non-major governmental Total

General (special revenue) governmentalfund fund funds

EXPENDITURES (Concluded):Debt service:

Principal 68,538$ -$ 68,538$ Interest 24,840 - 24,840

Total debt service 93,378 - 93,378

Total expenditures 2,237,996 107,654 2,345,650

EXCESS OF REVENUES OVER EXPENDITURES 128,570 13,385 141,955

OTHER FINANCING SOURCES (USES):Operating transfers from other funds 513 - 513 Operating transfers to other funds - (513) (513)

Total other financing sources (uses) 513 (513) -

NET CHANGE IN FUND BALANCES 129,083 12,872 141,955

FUND BALANCES:Beginning of year 441,479 19,044 460,523

End of year 570,562$ 31,916$ 602,478$

MID-MICHIGAN LEADERSHIP ACADEMY RECONCILIATION OF THE STATEMENT OF REVENUES,

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



Net change in fund balances total governmental funds 141,955$

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

Governmental funds report capital outlays as expenditures. In the statement ofactivities these costs are allocated over their estimated useful lives as depreciation:

Depreciation expense (47,319) Capital outlay 108,890

Proceeds and repayments of principal on long-term debts are other financing sourcesand expenditures in the governmental funds, but not in the statement of activities (where they are additions and reductions of liabilities):

Principal repayment 68,538 Amortization of bond issuance costs (1,900)

Change in net assets of governmental activities 270,164$

MID-MICHIGAN LEADERSHIP ACADEMY NOTES TO FINANCIAL STATEMENTS

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the Mid-Michigan Leadership Academy have been prepared in

conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Academy’s accounting policies are described below.

A. Reporting Entity

The Mid-Michigan Leadership Academy (the “Academy”) is a public school academy as part of the Michigan Public School System under Public Act No. 362 of 1993. Central Michigan University is the authorizing governing body for the Academy and has contracted with the Academy to charter the public school through June 2014. The Academy’s Board of Directors is approved by the authorizing body and is authorized to manage the Academy and the property and affairs of the Academy. The Academy receives funding from local, state, and federal government sources and must comply with all of the requirements of these funding source entities. However, the Academy is not included in any other governmental reporting entity as defined by accounting principles generally accepted in the United States of America. The Academy’s reporting entity does not contain any component units as defined in Governmental Accounting Standards Board Statements No. 14 and 39.

B. Government-wide and fund financial statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non-fiduciary activities of the Academy. For the most part, the effect of interfund activity has been removed from these statements. The government-wide financial statements categorize primary activities as either governmental or business type. All of the Academy’s activities are classified as 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 paid by recipients who purchase, use or directly benefit from goods or services 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. State Foundation Aid, certain revenue from the intermediate school district and other unrestricted items are not included as program revenues but instead as general revenues. In the government-wide statement of net assets, the governmental activities column (a) is presented on a consolidated basis, and (b) is reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The Academy’s net assets are reported in three parts - invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets.


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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-wide and fund financial statements (Concluded)

The Academy first utilizes restricted resources to finance qualifying activities. The government-wide statement of activities reports both the gross and net cost of each of the Academy’s functions. The functions are also supported by general government revenues (State Foundation Aid, certain intergovernmental revenues, investment income and other revenue). The statement of activities reduces gross expenses by related program revenues and operating grants. Program revenues must be directly associated with the function. Operating grants include operating-specific and discretionary (either operating or capital) grants. The net costs (by function) are normally covered by general revenue (State Foundation Aid, intermediate district sources, interest income and other revenues.)

This government-wide focus is more on the sustainability of the Academy as an entity and the change in the Academy’s net assets resulting from the current year’s activities. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

Governmental Funds - Governmental funds are those funds through which most Academy functions typically are financed. The acquisition, use and balances of the Academy’s expendable financial resources and the related current liabilities are accounted for through governmental funds.

The Academy reports the following major governmental fund:

The general fund is the Academy’s primary operating fund. It accounts for all financial resources of the Academy, except those required to be accounted for in another fund.

The Academy reports the following non-major governmental fund:

The special revenue fund accounts for revenue sources that are legally restricted to expenditures for specific purposes (not including expendable trusts or major capital projects). The Academy accounts for its food service activity in the special revenue fund.


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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation

Accrual Method The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the government-wide financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Modified Accrual Method 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 Academy considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. 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. State and federal aid and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Academy. State Revenue

The State of Michigan utilizes a foundation grant approach which provides for a specific annual amount of revenue per pupil based on a statewide formula. The Foundation is funded from state and local sources. Revenues from state sources are primarily governed by the School Aid Act and the School Code of Michigan. The Michigan Department of Education administers the allocation of state funds to the Academy based on information supplied by the Academy. For the year ended June 30, 2012, the foundation allowance was based on pupil membership counts taken in February and October of 2011.


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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Concluded)

The state portion of the foundation is provided primarily by a state education property tax millage of 6 mills on Principal Residence Exemption (PRE) property and an allocated portion of state sales and other taxes. The State revenue is recognized during the foundation period and is funded through payments from October 2011 to August 2012. Thus, the unpaid portion at June 30th is reported as due from other governmental units.

The Academy also receives revenue from the state to administer certain categorical education programs. State rules require that revenue earmarked for these programs be used for its specific purpose. Categorical funds received, which are not expended by the close of the fiscal year are recorded as deferred revenue.

D. Other Accounting Policies

1. Cash and equivalents include amounts in demand deposits accounts.

The Academy reports its investments in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools and No. 40, Deposits and Investment Risk Disclosures. Under these standards, certain investments are valued at fair value as determined by quoted market prices, or by estimated fair values when quoted market prices are not available. The standards also provide that certain investments are valued at cost (or amortized cost) when they are of a short-term duration, the rate of return is fixed, and the Academy intends to hold the investment until maturity.

State statutes authorize the Academy to invest in bonds and other direct and certain indirect obligations of the U.S. Treasury; certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank, savings and loan association, or credit union, which is a member of the Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Corporation, or National Credit Union Administration, respectively; in commercial paper rated at the time of purchase within the three highest classifications established by not less than two standard rating services and which matures not more than 270 days after the date of purchase. The Academy is also authorized to invest in U.S. Government or federal agency obligation repurchase agreements, bankers’ acceptances of U.S. banks, and mutual funds composed of investments as outlined above.


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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Other Accounting Policies (Continued)

2. Receivables and payables

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.”

All receivables are shown net of an allowance for uncollectibles, if any.

3. Prepaid Expenditures Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid expenditures.

4. Capital assets Capital assets purchased or acquired are capitalized at historical cost or estimated

historical cost. Donated fixed assets are valued at their estimated fair market value on the date received.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. The Academy’s capitalization policy is to capitalize individual amounts exceeding $1,000. Depreciation on all assets is provided on the straight-line basis over the estimated useful lives as follows:

Buildings and improvements 20 years Furniture and fixtures 5 - 20 years Technology and equipment 5 - 20 years

5. Long-term obligation

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net assets.


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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Other Accounting Policies (Continued) In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as debt issuance costs during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

6. Use of estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenditures. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

7. Fund balance

The Academy implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balances more transparent. The following classifications describe the relative strength of the spending constraints: Nonspendable fund balance - amounts that are in nonspendable form (such as inventory or prepaid expenditures) or are either legally or contractually required to be maintained intact. Restricted fund balance - amounts constrained to specific purposes by their providers (such as taxpayers, grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. The Academy’s food service fund balance is considered restricted. Committed fund balance - amounts constrained to specific purposes by the Academy itself, using its highest level of decision-making authority (Board of Directors). To be reported as committed, amounts cannot be used for any other purpose unless the Academy takes the same highest level action to remove or change the constraint. Assigned fund balance - amounts the Academy intends to use for a specific purpose. Intent can be expressed by the Board of Directors or by an official or body to which the Board of Directors delegates the authority.


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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded) D. Other Accounting Policies (Concluded)

Unassigned fund balance - amounts that are available for any purpose. Positive amounts are reported only in the general fund. The Academy would typically use restricted fund balance first, followed by committed resources, and then assigned resources as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these classified funds.

NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the general and special revenue funds.

The Academy follows these procedures in establishing the budgetary data reflected in the financial statements:

1. The Superintendent submits to the Board of Directors a proposed operating budget for the fiscal year commencing on July 1. The operating budget includes proposed expenditures and the means of financing them. The level of control for the budgets is at the functional level as set forth and presented as required supplementary information.

2. Prior to July 1, the budget is legally adopted by Board resolution pursuant to the Uniform Budgeting and Accounting Act (1968 PA 2). The Act requires that the budget be amended prior to the end of the fiscal year when necessary to adjust appropriations if it appears that revenues and other financing sources will be less than anticipated or so that expenditures will not be in excess of original estimates. Expenditures shall not be made or incurred, unless authorized in the budget, in excess of the amount appropriated. Violations, if any, in the general fund are noted in the required supplementary information section.

3. The Superintendent is authorized to transfer budgeted amounts between major

expenditure functions within any fund; however, these transfers and any revisions that alter the total expenditures of any fund must be approved by the Board.

4. Formal budgetary integration is employed as a management control device during the

year for the general and special revenue funds.

5. The budget was amended during the year with supplemental appropriations, the last one approved prior to June 30, 2012. The Academy does not consider these amendments to be significant.


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NOTE 3 - CASH DEPOSITS - CREDIT RISK Cash is held in the name of the Academy. These deposits are subject to custodial credit risk.

This is the risk that in the event of a bank failure, the Academy’s deposits may not be returned to it. The Academy minimizes custodial credit risk on deposits by assessing the credit worthiness of the individual institutions in which it deposits funds. The amount of deposits with each institution is assessed to determine the level of risk it may pose to the Academy in relation to deposits in excess of insured amounts. As of June 30, 2012, $85,551 of the Academy’s bank balance of $467,890 was exposed to custodial credit risk because it was not covered by federal depository insurance and was not collateralized. These deposits have a carrying value of $453,759.

NOTE 4 - CAPITAL ASSETS

A summary of changes in the Academy’s capital assets follows.

Additions Deletions

Capital assets not being depreciated - land 211,000$ -$ -$ 211,000$

Capital assets, being depreciated:Buildings and improvements 544,542 - - 544,542 Technology and equipment 226,074 17,719 96,906 146,887 Furniture and fixtures 185,200 91,171 - 276,371

Depreciable capital assets 955,816 108,890 96,906 967,800

Accumulated depreciation:Buildings and improvements 133,470 27,227 - 160,697 Technology and equipment 189,074 8,501 96,906 100,669 Furniture and fixtures 88,254 11,591 - 99,845

Total accumulated depreciation 410,798 47,319 96,906 361,211

Net assets being depreciated 545,018 61,571 - 606,589

Net capital assets 756,018$ 61,571$ -$ 817,589$

Balance July 1, 2011

Balance June 30,

2012

Depreciation for the fiscal year ended June 30, 2012 amounted to $47,319. The Academy

determined that it was impractical to allocate depreciation to the various governmental activities as the assets serve multiple functions.


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NOTE 5 – NOTES PAYABLE At June 30, 2011 the Academy had an amount outstanding from its state aid anticipation note. The note, dated July 20, 2010, had an interest rate of 3.98% which matured July 20. 2011. The note was secured by future state school aid payment.

Balance BalanceJuly 1, 2011 Additions Payments June 30, 2012

30,000$ -$ (30,000)$ -$

NOTE 6 - LONG-TERM DEBT The following is a summary of long-term obligation transactions of the Academy for the year ended June 30, 2012.

Long-term debt, July 1, 2011 434,890$

Deductions:Principal payments on bonds payable (68,538)

Balance, June 30, 2012 366,352 Less current portion (72,929)

293,423$

Long-term obligations at June 30, 2012 consist of the following.

366,352$

Bonds payable with monthly installments of $7,781 with interest at 6.05%through December 2016. The bonds are secured by a mortgage on the relatedproperty.

The annual requirements to amortize long-term debts outstanding are as follows.

Year endingJune 30, Principal Interest Total

2013 72,929$ 20,449$ 93,378$ 2014 77,530 15,848 93,378 2015 82,422 10,956 93,378 2016 87,609 5,769 93,378 2017 45,862 827 46,689

366,352$ 53,849$ 420,201$


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NOTE 7 - INTERFUND RECEIVABLES AND PAYABLES

Interfund payable and receivable balances at June 30, 2012 are as follows:

Special revenue fund 32,382$ General fund 32,382$

Receivable fund Payable fund

The outstanding balances between funds result mainly 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 systems, and (3) payments between funds are made. NOTE 8 - TRANSFERS

Operating transfers between the governmental funds were as follows.

Special revenue fund 513$ General fund 513$

Operating transfers out Operating transfers in

The operating transfers to the general fund from the special revenue fund were to reimbursement

the general fund for costs incurred. NOTE 9 - OVERSIGHT FEES The Academy pays an administrative oversight fee of 3% of its state school aid to Central Michigan University, as set forth by contract, to reimburse the University Board for the cost of execution of its oversight responsibilities. These oversight responsibilities include the monitoring of the Academy’s compliance with the terms and conditions of the contract, and the review of its audited financial statements and periodic reports. During the year ended June 30, 2012, the Academy incurred expense of approximately $47,000 for oversight fees. NOTE 10 - LEASED EMPLOYEES

The Academy leases all of its employees, with the exception of the superintendent, from a Professional Employment Organization (PEO). Salaries, retirement, social security, health insurance, and unemployment taxes are the responsibility of the PEO. The Academy contributes 4% of the annual compensation each pay period to the PEO retirement plan resulting in retirement expense of approximately $30,000 in 2012.


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NOTE 11 - DEFINED BENEFIT PENSION PLAN AND POSTEMPLOYMENT BENEFITS

Plan Description - The Academy participates in the statewide Michigan Public School Employees’ Retirement System (MPSERS), a cost sharing multiple-employer state-wide defined benefit public employee retirement plan governed by the State of Michigan. The MPSERS provides retirement survivor and disability benefits and postretirement benefits for health, dental and vision for the only employee of the Academy (Superintendent/Principal). The MPSERS was established by Public Act 136 of 1945 and operated under the provisions of Public Act 300 of 1980, as amended. The MPSERS issues a publicly available financial report that includes financial statements and required supplementary information for MPSERS. That report may be obtained by writing to Michigan Public School Employees Retirement System, P.O. Box 30171, Lansing, Michigan 48909-7671 or by calling (800) 381-5111. It is also available at http://www.michigan.gov/orsschools.

Funding Policy - Member Investment Plan (MIP) members enrolled in MIP prior to January 1,

1990 contribute 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 January 1, 1990 or later and returning members who did not work between January 1, 1987 through December 31, 1989 contribute at the following graduated permanently fixed contribution rate: 3% of the first $5,000; 3.6% of $5,001 through $15,000; 4.3% of all wages over $15,000. Members joining the system on or after July 1, 2008 contribute at the following graduated rate: 3% of the first $5,000, 3.6% of $5,001 through $15,000 and 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 interest is posted to member accounts on July 1st on all MIP monies on deposit for 12 months. If a member leaves MPSERS service and no pension is payable, the member’s accumulated contribution plus interest, if any, are refundable.

On May 19, 2010, the Governor signed Public Act 75 of 2010 into law. As a result, any member

of MPSERS who became a member of MPSERS after June 30, 2010 is a Pension Plus Member. The Pension Plus Plan pairs a guaranteed retirement income (defined benefit pension) with a flexible and transferable retirement savings (defined contribution) account. The Academy is required to contribute the full actuarial funding contribution amount to fund pension benefits, plus an additional amount to fund retiree health care benefit amounts on a cash disbursement basis. For the period October 1 through September 30, the Academy pays an amount equal to a percentage of its employees’ wages to the Michigan Public School Employees Retirement System (“MPSERS”), which is administered by the State of Michigan. These contributions are required by law and are calculated by using the contribution rates and periods provided in the table below of the employees’ wages. In addition, the Academy is required to match 50% up to 1% of the employee’s contribution in the Pension Plus plan. The contribution requirements of plan members and the Academy are established and may be amended by the MPSERS Board of Trustees. The Academy contributions to MPSERS were equal to the required contribution for those years.


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NOTE 11 - DEFINED BENEFIT PENSION PLAN AND POSTEMPLOYMENT BENEFITS (Continued)

The Academy’s contributions to MPSERS are as follows:

Pension PlusContribution Period Member Member

October 1, 2011 - September 30, 2012 24.46% 23.23%November 1, 2010 - September 30, 2011 20.66% 19.16%

October 1, 2010 - October 31, 2010 19.41% 17.91%October 1, 2009 - September 30, 2010 16.94% -

July 1, 2010 - September 30, 2010 - 15.44%

Contribution Rate

Fiscal Year Ending ContributionsJune 30, to MPSERS

2012 18,000$ 2011 15,000 2010 9,000

Other Post-employment Benefits - Benefit provisions of the postemployment healthcare plan are

established by State statute, which may be amended. Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions. Retirees have the option of health coverage, which is funded on a cash disbursement basis by the employers. The System has contracted to provide the comprehensive group medical, hearing, dental and vision coverage for retirees and beneficiaries. A significant portion of the premiums is paid by the System with the balance deducted from the monthly pension of each retiree health care recipient. Public Act 75 of 2010 requires each actively employed member of MPSERS after June 30, 2010 to contribute 3% (or 1.5%) of their compensation to offset employer contributions for health care benefits of current retirees. For the school fiscal year that began July 1, 2010, members who were employed by a reporting unit and were paid less than $18,000 in the prior school year and members who were hired on or after July 1, 2010, with a starting salary of less than $18,000 are required to contribute 1.5% of the members’ compensation. For each school fiscal year that begins on or after July 1, 2011, members shall contribute 3% of compensation into the health care funding account.


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NOTE 11 - DEFINED BENEFIT PENSION PLAN AND POSTEMPLOYMENT BENEFITS (Concluded)

On June 28, 2010, the Michigan Court of Claims issued an injunction in response to a challenge

to the authority of the State to require employees who began working before July 1, 2010, to contribute 3% of reportable wages to the retiree health care trust at MPSERS. As a result, the State has adjusted the contribution rate due on employees’ wages paid between November 1, 2010 and September 30, 2011 to 20.66% for members who first worked prior to July 1, 2010 and 19.16% for Pension Plus members. In March 2011, the Court of Claims granted the plaintiffs’ motions for summary disposition finding that the mandatory 3% contribution violated both the U.S. and Michigan constitutions. The State appealed the ruling to the Michigan Court of Appeals. The Court of Appeals accepted the appeal and ordered an expedited review. The Court of Appeals also granted the State’s motion for a stay of proceedings and ordered that the 3% deduction continue to be collected and placed into an escrow account until further order of the Court.

On August 16, 2012 the State of Michigan Court of Appeals affirmed the trial court’s orders

granting summary dispositions in favor of the plaintiffs in each of the cases before it, terminating the stay ordered by this Court on March 18, 2011. The State of Michigan is reviewing the decision of the Michigan Court of Appeals regarding the 3% public school employee contribution to the Retiree Healthcare. The State of Michigan has appealed the decision to the Michigan Supreme Court. The Office of Retirement Services is instructing Michigan public school employers to continue withholding the 3% contribution. Should the plaintiffs prevail, the escrowed funds will be returned to the employees.

Pension recipients are generally eligible for Health Plan coverage and Dental Plan, Vision Plan

and Hearing coverage. The Academy is not responsible for the payment of retirement or post-retirement benefits which

is the responsibility of the State of Michigan. NOTE 12 - RISK MANAGEMENT

The Academy is exposed to various risk of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and natural disasters. To minimize the risk, the Academy carries commercial insurance.


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NOTE 13 - UPCOMING ACCOUNTING PRONOUNCEMENTS GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, was issued in December 2010. This statement incorporates into the GASB literature certain accounting and financial reporting guidance issued on or before November 30, 1989 that is included in FASB Statements and Interpretations, APB Opinions and Accounting Research Bulletins of the AICPA Committee on Accounting Procedure. GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position, was issued by the GASB in June 2011 and will be effective for the Academy’s 2013 fiscal year. The statement incorporates deferred outflows of resources and deferred inflows of resources, as defined by GASB Concepts Statement No. 4, into the definitions of the required components of the residual measure of net position, formerly net assets. This statement also provides a new statement of net position format to report all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. Once implemented, this statement will impact the format and reporting of the balance sheet at the government-wide level and also at the fund level.

GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, was issued by the GASB in March 2012 and will be effective for the Academy’s 2013 fiscal year. The statement incorporates deferred outflows of resources and deferred inflows of resources, as defined by GASB Concepts Statement No. 4, into the definitions of the required components of the residual measure of net position, formerly net assets. This statement provides supplemental guidance when implementing GASB Statement 63.

GASB Statement No. 68, Accounting and Financial Reporting for Pensions, was issued by the GASB in June 2012 and will be effective for the Academy’s 2015 fiscal year. The statement requires governments that participate in defined benefit pension plans to report in their statement of net position a net pension liability. The net pension liability is the difference between the total pension liability (the present value of projected benefit payments to employees based on their past service) and the assets (mostly investments reported at fair value) set aside in a trust and restricted to paying benefits to current employees, retirees, and their beneficiaries. Statement 68 requires cost-sharing employers to record a liability and expense equal to their proportionate share of the collective net pension liability and expense for the cost-sharing plan. The Statement also will improve the comparability and consistency of how governments calculate the pension liabilities and expense.

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REQUIRED SUPPLEMENTARY INFORMATION

MID-MICHIGAN LEADERSHIP ACADEMY REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE GENERAL FUND


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Variance withfinal budget

Original Final positive budget budget Actual (negative)

REVENUES:Local 18,000$ 40,000$ 33,736$ (6,264)$ State sources 1,858,180 1,946,637 1,907,938 (38,699) Federal sources 260,875 316,927 274,967 (41,960) Incoming transfers 183,933 144,706 149,925 5,219

Total revenues 2,320,988 2,448,270 2,366,566 (81,704)

EXPENDITURES: Instruction:

Basic programs 723,899 797,741 760,057 37,684 Added needs 282,757 305,332 276,205 29,127

Total instruction 1,006,656 1,103,073 1,036,262 66,811

Support services:Pupil 184,000 164,310 164,640 (330) Instructional staff 187,089 196,858 188,948 7,910 General administration 126,127 121,596 118,810 2,786 School administration 103,247 112,696 105,393 7,303 Business services 102,346 103,613 97,371 6,242 Operation and maintenance 282,621 279,731 235,669 44,062 Pupil transportation 81,000 81,000 63,042 17,958 Central support services 112,329 123,309 117,666 5,643

Total support services 1,178,759 1,183,113 1,091,539 91,574

Community service activities 950 950 1,398 (448)

Capital outlay 1,600 7,605 15,419 (7,814)

Debt service:Principal 68,538 68,538 68,538 - Interest 24,840 24,840 24,840 -

Total debt service 93,378 93,378 93,378 -

Total expenditures 2,281,343 2,388,119 2,237,996 150,123 EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES 39,645 60,151 128,570 68,419

OTHER FINANCING SOURCES:Operating transfers - - 513 513

Total other financing sources - - 513 513

NET CHANGE IN FUND BALANCE 39,645$ 60,151$ 129,083 68,932$

FUND BALANCE:Beginning of year 441,479 End of year 570,562$

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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

To the Board of Directors Mid-Michigan Leadership Academy

We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Mid-Michigan Leadership Academy as of and for the year ended June 30, 2012, which collectively comprise Mid-Michigan Leadership Academy’s basic financial statements and have issued our report thereon dated September 5, 2012. 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. Internal Control Over Financial Reporting Management of Mid-Michigan Leadership Academy is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Mid-Michigan Leadership Academy’s internal control over financial reporting as a basis for designing our auditing procedures 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 Mid-Michigan Leadership Academy’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Mid-Michigan Leadership Academy’s internal control over financial reporting.

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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Academy’s financial statement will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose

described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

35

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Mid-Michigan Leadership Academy’s financial statements are free of 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. We noted certain matters that we reported to Mid-Michigan Leadership Academy in a separate letter dated September 5, 2012.

This report is intended solely for the information and use of the Board of Directors, management, the U.S. Department of Education and Michigan Department of Education and is not intended to be and should not be used by anyone other than these specified parties. September 5, 2012

September 5, 2012 To the Board of Directors Mid-Michigan Leadership Academy

In planning and performing our audit of the financial statements of Mid-Michigan Leadership

Academy as of and for the year ended June 30, 2012, in accordance with auditing standards generally

accepted in the United States of America, we considered Mid-Michigan Leadership Academy’s internal

control over financial reporting (internal control) as a basis for designing our auditing procedures for the

purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an

opinion on the effectiveness of the Academy’s internal control. Accordingly, we do not express an

opinion on the effectiveness of the Academy’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding

paragraph and would not necessarily identify all deficiencies in internal control that might be significant

deficiencies or material weaknesses. However, during our audit, we noted certain matters involving the

internal control and other operational matters that are presented for your consideration. This letter does

not affect our report dated September 5, 2012 on the financial statements of Mid-Michigan Leadership

Academy. We will review the status of these comments during our next audit engagement. Our

comments and recommendations, all of which have been discussed with appropriate members of

management, are intended to improve the internal control or result in other operating efficiencies. We

will be pleased to discuss these comments in further detail at your convenience, perform any additional

study of these matters, or assist you in implementing the recommendations. Our comments are

summarized as follows.

2

Food Service Fund Balance

According to federal regulations (7 CFR Part 210.14b), an academy shall limit its food service

fund net cash resources to an amount that does not exceed three months average expenditures. At June

30, 2012, the Academy’s Food Service Fund Balance was nearing this limit. We recommend the

Academy develop a plan to ensure that the Food Service Fund Balance does not exceed the three month

threshold.

General Ledger Review

While applying our audit procedures we noted that final review controls by Academy personnel

over the general ledger could be strengthened. We recommend that the Business Manager log into the

general ledger system on a regular basis to review amounts being coded to general ledger accounts for

reasonableness. This review should be documented in writing by the Business Manager.

This report is intended solely for the information and use of Mid-Michigan Leadership Academy,

management, and others within the Academy, and is not intended to be and should not be used by anyone

other than these specified parties.

We appreciate the cooperation we received from your staff during our engagement and the

opportunity to be of service.

Very truly yours,

September 5, 2012 To the Board of Directors Mid-Michigan Leadership Academy We have audited the financial statements of Mid-Michigan Leadership Academy for the year ended June 30, 2012, and have issued our report thereon dated September 5, 2012. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditing Standards Generally Accepted in the United States of America and Government Auditing Standards

As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your responsibilities.

As part of our audit, we considered the internal control of Mid-Michigan Leadership Academy.

Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

As part of obtaining reasonable assurance about whether the financial statements are free of

material misstatement, we performed test of Mid-Michigan Leadership Academy’s compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions.

Planned Scope and Timing of the Audit

We performed the audit according to the planned scope and timing previously communicated to you in our discussion about planning matters.

2

Significant Audit Findings

Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. In

accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by Mid-Michigan Leadership Academy are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2012. We noted no transactions during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred.

Accounting estimates are an integral part of the financial statements prepared by management and

are based on management’s 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. We did not identify any sensitive estimates. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. We did not identify any sensitive disclosures.

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 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 the financial statements taken as a whole.

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as 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.

3

Management Representations We have requested certain representations from management that are included in the management representation letter dated September 5, 2012.

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 Mid-Michigan Leadership Academy’s 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.

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 Mid-Michigan Leadership Academy’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

This information is intended solely for the use of the Board of Directors and management of Mid-Michigan Leadership Academy and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours,

Days Worked Superintendent salary Health insurance Dental Vision Life/LTD HSA

District (2011 W‐2 Medicare Wages)

Mid‐Michigan Leadership Academy 260 $74,057 Blue Cross Blue Shield Blue Cross Blue Shield Blue Cross Blue Shield Unum

Cost per month $686.01 employer $89.92 employer $17.23 employer $25.28 employer $201.59 employer

Professional Associations 2011‐12: Amount

Michigan Association of Public School Academies 804.00

Old Town Commercial Association 100.00

904.00

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