McDONALD LOCAL SCHOOL DISTRICT TRUMBULL COUNTY, OHIO
SINGLE AUDIT REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Zupka & Associates
Certified Public Accountants

Board of Education
McDonald Local School District 600 Iowa Avenue
McDonald, Ohio 44437

We have reviewed the Independent Auditor’s Report of the McDonald Local School District, Trumbull County, prepared by Zupka & Associates, for the audit period July 1, 2022 through June 30, 2023. Based upon this review, we have accepted these reports in lieu of the audit required by Section 117.11, Revised Code. The Auditor of State did not audit the accompanying financial statements and, accordingly, we are unable to express, and do not express an opinion on them.

Our review was made in reference to the applicable sections of legislative criteria, as reflected by the Ohio Constitution, and the Revised Code, policies, procedures and guidelines of the Auditor of State, regulations and grant requirements. The McDonald Local School District is responsible for compliance with these laws and regulations.

Efficient		Effective		Transparent

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McDONALD LOCAL SCHOOL DISTRICT TRUMBULL COUNTY, OHIO
SINGLE AUDIT REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

TABLE OF CONTENTS

PAGE

Independent Auditor’s Report	1-3
Management Discussion and Analysis	5-12
Basic Financial Statements:
Government-wide Financial Statements
Statement of Net Position	14
Statement of Activities	15
Fund Financial Statements:
Balance Sheet - Governmental Funds	16
Reconciliation of Total Governmental Fund Balances to Net Position of
Governmental Activities	17
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds	18
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities	19
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget (Non-GAAP Basis) and Actual - General Fund	20
Notes to the Basic Financial Statements	21-56
Required Supplementary Information:
Schedule of the School District’s Proportionate Share of the Net Pension Liability -
School Employees Retirement System of Ohio - Last Ten Fiscal Years	58-59
Schedule of the School District’s Proportionate Share of the Net OPEB Liability –
School Employees Retirement System of Ohio – Last Seven Fiscal Years	60-61
Schedule of the School District’s Proportionate Share of the Net Pension Liability -
State Teachers Retirement System of Ohio - Last Ten Fiscal Years	62-63
Schedule of the School District’s Proportionate Share of the Net OPEB (Asset) Liability –
State Teachers Retirement System of Ohio – Last Seven Fiscal Years	64-65
Schedule of the School District’s Contributions -
School Employees Retirement System of Ohio - Last Ten Fiscal Years	66-67
State Teachers Retirement System of Ohio – Last Ten Fiscal Years	68-69
Notes to the Required Supplementary Information	70-73
Schedule of Expenditures of Federal Awards	75
Notes to the Schedule of Expenditures of Federal Awards	76
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards	77-78
Independent Auditor’s Report on Compliance for Each Major Federal Program
and on Internal Control Over Compliance Required by the Uniform Guidance	79-81
Schedule of Findings and Questioned Costs	82
Schedule of Prior Audit Findings and Recommendations	83

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Certified Public Accountants

INDEPENDENT AUDITOR’S REPORT
McDonald Local School District Trumbull County
600 Iowa Avenue
McDonald, OH 44437

To the Members of the Board of Education:
Report on the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the McDonald Local School District, Trumbull County, Ohio, (the District) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the McDonald Local School District as of June 30, 2023, and the respective changes in financial position and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards (Government Auditing Standards), issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

4141 Rockside Road, Suite 200, Seven Hills, Ohio 44131	(216) 475-6136	www.zupkacpa.com

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we

exercise professional judgment and maintain professional skepticism throughout the audit.
identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.
evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and Schedules of Net Pension and Postemployment Benefit Liabilities and Pension and Postemployment Benefit Contributions, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2023, on our consideration of the District’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 solely 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 effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Zupka & Associates Certified Public Accountants
December 22, 2023

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As management of the McDonald Local School District (the School District), we offer readers of the School District’s financial statements this narrative and analysis of the financial activities of the School District for the fiscal year ended June 30, 2023. We encourage readers to consider the information presented here in conjunction with the financial statements and notes to the basic financial statements to enhance their understanding of the School District’s financial performance.
Financial Highlights

Net position increased in fiscal year 2023 due mainly to changes in the net pension liability, net OPEB liability and the deferred inflows of resources associated with these liabilities, along with additions to capital assets that outpaced depreciation. The increase in capital assets is from the completion of phase 3 of the athletic complex project.
Capital asset additions included ongoing construction, the completed athletic complex project phase 3, emergency lighting replacement, golf simulator, phone system battery backups, and a new school bus.

The School District’s assessed valuation showed an increase in fiscal year 2023.
The School District implemented GASB 96 during fiscal year 2023 which resulted in the recording of a subscription payable related to software agreements.
During 2023, the School District fully repaid the 2006 School Improvement Bonds.

Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the School District’s basic financial statements. The School District’s basic financial statements are comprised of three components: (1) government-wide statements, (2) fund financial statements, and (3) notes to the basic financial statements.

Government-wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of the School District’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the School District’s assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the four reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the School District is improving or deteriorating.

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

The government-wide financial statement distinguishes functions of the School District that are principally supported by taxes and intergovernmental revenues (governmental activities) from those that are primarily supported through user charges (business-type activities). The School District has no business-type activities. The governmental activities of the School District include instruction, support services, extracurricular activities, operation of non-instructional services and interest and fiscal charges.
Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The School District, like the State and local governments, uses fund accounting to ensure and demonstrate compliance with financial-related legal requirements. These fund financial statements focus on the School District’s most significant funds. The School District’s major governmental funds are the general fund and the district replacement capital projects fund. All of the funds of the School District can be divided into one category: governmental.

Governmental Funds All of the School District’s activities are reported in governmental funds, which focus on how money flows into and out of those funds and balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District’s general governmental operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or difference) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements.

Notes to the Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. Table 1 provides a comparison of the School District’s Net Position for 2023 compared to 2022.

	Table 1		
	Net Position		
	Governmental Activities		
		2023			2022			Change		
Assets
Current and Other Assets	
$8,980,356	
$9,653,597	
($673,241)	
Net OPEB Asset	862,310	730,374	131,936	
Capital Assets, Net		12,926,295 		12,048,646 		877,649 	
Total Assets		22,768,961 		22,432,617 		336,344 	
Deferred Outflows of Resources				
Deferred Charge on Refunding	0	2,333	(2,333)	
Pension	2,165,028	2,392,183	(227,155)	
OPEB		198,458 		253,244 		(54,786) 	
Total Deferred Outflows of Resources		2,363,486 		2,647,760 		(284,274) 	
Liabilities
Current Liabilities	
1,317,546	
1,257,730	
(59,816)	
Long-Term Liabilities				
Due Within One Year	74,526	422,763	348,237	
Due in More Than One Year				
Net Pension Liability	8,673,376	5,322,234	(3,351,142)	
Net OPEB Liability	337,482	473,195	135,713	
Other Amounts		546,139 		570,175 		24,036 	
Total Liabilities		10,949,069 		8,046,097 		(2,902,972) 	
Deferred Inflows of Resources
Property Taxes	
1,737,106	
1,746,760	
9,654	
Pension	1,026,686	4,384,382	3,357,696	
OPEB		1,128,113 		1,088,510 		(39,603) 	
Total Deferred Inflows of Resources		3,891,905 		7,219,652 		3,327,747 	
Net Position
Net Investment in Capital Assets	
12,851,356	
11,777,033	
1,074,323	
Restricted for:				
Capital Projects	237,603	359,470	(121,867)	
Debt Service	0	111,215	(111,215)	
Unclaimed Monies	3,231	3,231	0	
OPEB Plans	215,882	79,860	136,022	
Other Purposes	366,099	534,572	(168,473)	
Unrestricted (Deficit)		(3,382,698) 		(3,050,753) 		(331,945) 	
Total Net Position		$10,291,473 		$9,814,628 		$476,845 	

The net pension liability (NPL) is the largest single liability reported by the School District at June 30, 2023. GASB notes that pension and OPEB obligations, whether funded or unfunded, are part of the “employment exchange” – that is, the employee is trading his or her labor in exchange for wages, benefits, and the promise of a future pension and other postemployment benefits. GASB noted that the unfunded portion of this

promise is a present obligation of the government, part of a bargained-for benefit to the employee, and should accordingly be reported by the government as a liability since they received the benefit of the exchange. However, the School District is not responsible for certain key factors affecting the balance of these liabilities. In Ohio, the employee shares the obligation of funding pension benefits with the employer. Both employer and employee contribution rates are capped by State statute. A change in these caps requires action of both Houses of the General Assembly and approval of the Governor. Benefit provisions are also determined by State statute. The Ohio Revised Code permits, but does not require the retirement systems to provide healthcare to eligible benefit recipients. The retirement systems may allocate a portion of the employer contributions to provide for these OPEB benefits.
Most long-term liabilities have set repayment schedules or, in the case of compensated absences (i.e. sick and vacation leave), are satisfied through paid time-off or termination payments. There is no repayment schedule for the net pension liability or the net OPEB liability. As explained above, changes in benefits, contribution rates, and return on investments affect the balance of these liabilities, but are outside the control of the local government. In the event that contributions, investment returns, and other changes are insufficient to keep up with required payments, State statute does not assign/identify the responsible party for the unfunded portion. Due to the unique nature of how the net pension liability and the net OPEB liability are satisfied, these liabilities are separately identified within the long-term liability section of the statement of net position.

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. For the School District, total assets and deferred outflows of resources exceed total liabilities and deferred inflows of resources by $10,291,473 in fiscal year 2023 and $9,814,628 in fiscal year 2022.
A large portion of the School District’s net position reflects “Net Investment in Capital Assets” (i.e. land, construction in progress, buildings, improvements, furniture, fixtures, equipment and vehicles) less any related debt to acquire those assets that are still outstanding. The School District uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although the School District’s investment in its capital assets is reported net of related debt, it should be noted that resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
Total current and other assets decreased primarily due to a decrease in cash and cash equivalents as available balances went towards ongoing construction. Net capital assets increased as annual depreciation was below current year additions of ongoing construction, the completed athletic complex project phase 3, emergency lighting replacement, golf simulator, phone system battery backups, and a new school bus. Long-term liabilities increased primarily from the increase in net pension liability in fiscal year 2023. The increase in net pension liability is attributable to changes into the pension system valuations. Net position increased due primarily to changes in capital assets, net OPEB liability and the deferred inflows associated with the net pension liability.

In order to further understand what makes up the changes in net position for the current year, the following table gives readers further details regarding the results of activities for 2023 and 2022.

Table 2
Change in Net Position Governmental Activities

		2023			2022			Change		
Program Revenues				
Charges for Services and Sales	$456,091	$524,439	($68,348)	
Operating Grants and Contributions	1,780,990	1,679,885	101,105	
Capital Grants		40,595 		26,599 		13,996 	
Total Program Revenues		2,277,676 		2,230,923 		46,753 	
General Revenues				
Property Taxes	1,788,180	1,870,905	(82,725)	
Grants and Entitlements	6,856,580	6,761,218	95,362	
Investment Earnings/Interest	252,237	20,969	231,268	
Unrestricted Contributions	15,480	14,149	1,331	
Miscellaneous		2,051 		9,825 		(7,774)	
Total General Revenues		8,914,528 		8,677,066 		237,462 	
Total Revenues		11,192,204 		10,907,989 		284,215 	
Program Expenses				
Instruction:				
Regular	5,123,637	5,229,243	105,606	
Special	1,441,864	1,259,356	(182,508)	
Vocational	6	24	18	
Student Intervention Services	157,835	48,753	(109,082)	
Support Services Pupils	
403,682	
396,504	
(7,178)	
Instructional Staff	56,303	52,334	(3,969)	
Board of Education	35,497	52,442	16,945	
Administration	857,439	869,101	11,662	
Fiscal	184,550	274,724	90,174	
Operation and Maintenance of Plant	1,269,924	1,204,798	(65,126)	
Pupil Transportation	140,676	147,308	6,632	
Central	130,413	95,498	(34,915)	
Operation of Non-Instructional Services	46,830	55,697	8,867	
Operation of Food Service	143,343	116,081	(27,262)	
Extracurricular Activities	721,743	515,599	(206,144)	
Interest		1,617 		9,607 		7,990 	
Total Program Expenses		10,715,359 		10,327,069 		(388,290)	
Change in Net Position	476,845	580,920	(104,075)	
Net Position Beginning of Year		9,814,628 		9,233,708 		580,920 	
Net Position End of Year	  $10,291,473 		$9,814,628 		$476,845 	

Analysis of overall financial position and results of operations

The unique nature of property taxes in Ohio creates the need to routinely seek voter approval for operating funds. The overall revenue generated by a voted levy does not increase solely as a result of inflation. It increases as a result of new construction or collection from a new voted levy. Although school districts experience inflationary growth in expenses, tax revenue does not keep pace with the increased expenses due to House Bill 920. As an example, a homeowner with a home valued at $100,000 and taxed at 1.0 mill would pay $35.00 annually in taxes.  If three years later the home were reappraised and increased to
$200,000 (and this inflationary increase in value is comparable to other property owners) the effective tax rate would become .5 mills and the owner would still pay $35.00 and the School District would collect the same dollar value the levy generated in the year it passed. The 10 percent rollback on all residential/agricultural property and the 2.5 percent rollback on all owner occupied homes would reduce the amount of taxes paid.

Thus school districts dependent upon property taxes are hampered by a lack of revenue growth and must regularly return to the voters to maintain a constant level of service.

Revenue is divided into two major components: program revenues and general revenues. Program revenues are defined as fees, restricted grants and charges for services that are program specific. General revenues include taxes and unrestricted grants such as State Foundation support.

Charges for services and sales decreased due to a decrease in tuition and fees related to open enrollment. Operating grants increased in fiscal year 2023, as the School District was awarded additional restricted grant monies. General revenues also had increases in investment earnings/interest, as a result of more favorable rates of return on investments.
Program expenses increased due to changes in the net pension and net OPEB liabilities. Program expenses related to these liabilities were negative ($655,976) in fiscal year 2022 versus a positive $47,341 in fiscal year 2023, which represents an increase of $608,635 in expenses.
In the following table, the total cost of services column contains all costs related to the programs and the net cost of services column shows how much of the total amount is not covered by program revenues. The net costs are program costs that must be covered by unrestricted State aid (State Foundation) or local taxes.

Table 3
Total and Net Cost of Program Services Governmental Activities
	2023	 	2022	

	Total Cost
  of Service		Net Cost
  of Service		Total Cost
  of Service		Net Cost
  of Service		
Instruction:					
Regular	$5,123,637	$4,956,174	$5,229,243	$4,956,842	
Special	1,441,864	686,527	1,259,356	491,988	
Vocational	6	(2,149)	24	13	
Student Intervention Services	157,835	0	48,753	48,753	
Support Services:					
Pupils	403,682	372,522	396,504	387,213	
Instructional Staff	56,303	56,303	52,334	52,334	
Board of Education	35,497	35,497	52,442	52,442	
Administration	857,439	803,263	869,101	831,432	
Fiscal	184,550	184,550	274,724	274,724	
Operation and Maintenance of Plant	1,269,924	688,694	1,204,798	489,145	
Pupil Transportation	140,676	112,861	147,308	147,308	
Central	130,413	109,823	95,498	91,898	
Operation of Non-Instructional Services	46,830	3,770	55,697	55,105	
Operation of Food Service	143,343	(77,641)	116,081	(119,147)	
Extracurricular Activities	721,743	505,872	515,599	326,489	
Interest		1,617 		1,617 		9,607 		9,607 	
Total	 $10,715,359 	  $8,437,683 	 $10,327,069 	  $8,096,146 	

The School District’s dependence upon general revenues for governmental activities is apparent from Table
3. The majority of expenses are supported through taxes and other general revenues.

Financial Analysis of the Government’s Funds
Governmental Funds Information about the School District’s major funds begins with the balance sheet. These funds are accounted for using the modified accrual basis of accounting. The general fund had an increase in fund balance due to current year revenues continuing to exceed current year expenditures in fiscal year 2023 resulting in more cash and cash equivalents in the general fund. The district replacement capital projects fund had a decrease in fund balance due to the School District’s continuation of capital projects resulting in less cash and cash equivalents.

General Fund Budgeting Highlights

The School District’s budget is prepared according to Ohio law and is based on accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The most significant fund to be budgeted is the main operating fund of the School District, the general fund. During the course of fiscal year 2023, the School District amended its general fund budget numerous times. The School District uses site-

based budgeting and the budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.
For the general fund, the final budget basis revenue estimate was more than the original budget estimate. The change was mainly attributed to an increase in interest revenues as a better picture of actual receipts became apparent.
The final budget appropriations were lower than the original budget appropriations of the general fund. This was due to a better representation of what actual expenditure needs were going to be for fiscal year 2023.
Capital Assets and Debt
Capital Assets
For fiscal year 2023, the increase in capital assets was due to an additional year of depreciation being less than capital asset additions which consisted of ongoing construction, the completed athletic complex project phase 3, emergency lighting replacement, golf simulator, phone system battery backups, and a new school bus. For more information about the School District’s capital assets, see Note 8 to the basic financial statements.
Debt
For fiscal year 2023, the School District’s debt obligations consisted of the 2006 School Improvement Bonds which were fully repaid during fiscal year 2023. The financed purchase is specific to the School District wide copiers. See Note 10 to the basic financial statements for additional information on the School District’s long-term obligations.
School District Outlook
The School District is committed to the pursuit of academic excellence, to inspire productive citizenship, and to empower lifelong learning for every student. With this comes the need to remain financially responsible; however, the financial future of the School District is not without challenges. The School District faces uncertainty related to potential expenditure increases in healthcare costs, constant required maintenance of the bus fleet, as well as uncertainty in the long-term future of State funding. The majority of the operating revenue that is received by the School District is from State funding. State foundation is set as part of the State’s biennial budget, which currently goes through fiscal year 2025.
The School District remains dedicated to fiscal responsibility and is committed to maintaining focus on education while providing value and accountability for tax dollars spent. The Board of Education and Administration closely monitor revenue and expenditures in accordance with the financial forecast and work diligently to ensure tax dollars are being used efficiently and effectively. But above all, the Board of Education and Administration continue to carefully plan in order to provide the resources and education required to meet student needs.
Contacting the School District’s Financial Management
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District’s finances and to show the School District’s accountability for the money it receives. If you have any questions about this report or need additional financial information contact Megan Titus, Treasurer, at McDonald Local School District, 600 Iowa Avenue, McDonald, Ohio 44437-1699.

Basic Financial Statements

Statement of Net Position June 30, 2023		

Assets	Governmental
	Activities		
Equity in Pooled Cash and Cash Equivalents	$6,968,181	
Accounts Receivable	375	
Intergovernmental Receivable	12,008	
Prepaid Items	59,638	
Inventory Held for Resale	2,522	
Materials and Supplies Inventory	1,933	
Property Taxes Receivable	1,935,699	
Net OPEB Asset (See Note 15)	862,310	
Non-Depreciable Capital Assets	855,292	
Depreciable Capital Assets, Net		12,071,003 	
Total Assets		22,768,961 	
Deferred Outflows of Resources
Pension	
2,165,028	
OPEB		198,458 	
Total Deferred Outflows of Resources		2,363,486 	
Liabilities
Accounts Payable	
31,116	
Contracts Payable	37,616	
Accrued Wages and Benefits	845,401	
Intergovernmental Payable	303,798	
Matured Compensated Absences Payable	36,950	
Unearned Revenue	62,665	
Long-Term Liabilities:
Due Within One Year	74,526	
Due In More Than One Year
Net Pension Liability (See Note 14)	8,673,376	
Net OPEB Liability (See Note 15)	337,482	
Other Amounts		546,139 	
Total Liabilities		10,949,069 	
Deferred Inflows of Resources
Property Taxes	
1,737,106	
Pension	1,026,686	
OPEB		1,128,113 	
Total Deferred Outflows of Resources		3,891,905 	
Net Position
Net Investment in Capital Assets	
12,851,356	
Restricted for:
Capital Projects	237,603	
Unclaimed Monies	3,231	
OPEB Plans	215,882	
Other Purposes	366,099	
Unrestricted (Deficit)		(3,382,698)	
Total Net Position		$10,291,473 	
See accompanying notes to the basic financial statements		

Statement of Activities
For the Fiscal Year Ended June 30, 2023

	Program Revenues	

Net (Expense) Revenue and Changes in
	Net Position	

	
	Expenses		Charges for Services
	and Sales		
Operating Grants
 and Contributions 	
  Capital Grants		
Governmental
	Activities		
Governmental Activities						
Instruction:						
Regular	$5,123,637	$118,741	$48,722	$0	($4,956,174)	
Special	1,441,864	30,470	724,867	0	(686,527)	
Vocational	6	0	2,155	0	2,149	
Student Intervention Services	157,835	0	157,835	0	0	
Support Services: Pupils	
403,682	
0	
31,160	
0	
(372,522)	
Instructional Staff	56,303	0	0	0	(56,303)	
Board of Education	35,497	0	0	0	(35,497)	
Administration	857,439	54,176	0	0	(803,263)	
Fiscal	184,550	0	0	0	(184,550)	
Operation and Maintenance of Plant	1,269,924	49,200	491,435	40,595	(688,694)	
Pupil Transportation	140,676	0	27,815	0	(112,861)	
Central	130,413	0	20,590	0	(109,823)	
Operation of Non-Instructional/Shared Services	46,830	0	43,060	0	(3,770)	
Operation of Food Service	143,343	37,211	183,773	0	77,641	
Extracurricular Activities	721,743	166,293	49,578	0	(505,872)	
Interest		1,617 		0 		0 		0 		(1,617)	
Totals	  $10,715,359 		$456,091 		$1,780,990 		$40,595 	(8,437,683)	

General Revenues
Property Taxes Levied for:
General Purposes	1,517,115
Debt Service	33,715
Capital Outlay	230,484
Classroom Facilities Maintenance	6,866
Grants and Entitlements not Restricted
to Specific Programs	6,856,580
Investment Earnings/Interest	252,237
Unrestricted Contributions	15,480
Miscellaneous		2,051 

Total General Revenues		8,914,528 

Change in Net Position	476,845

Net Position Beginning of Year		9,814,628 
Net Position End of Year		$10,291,473 

See accompanying notes to the basic financial statements

Balance Sheet Governmental Funds June 30, 2023

Other	Total
District	Governmental	Governmental
	General	  Replacement  	Funds	 	Funds	

Assets
Equity in Pooled Cash and		
Cash Equivalents	$5,785,133	$517,169	$662,648	$6,964,950	
Restricted Assets:					
Equity in Pooled Cash and					
Cash Equivalents	3,231		0		0		3,231	
Accounts Receivable	375		0		0		375	
Intergovernmental Receivable	12,008		0		0		12,008	
Inventory Held for Resale	0		0		2,522		2,522	
Materials and Supplies Inventory	0		0		1,933		1,933	
Property Taxes Receivable	1,688,064		0		247,635		1,935,699	
Prepaid Items	58,767		0		871		59,638	

Total Assets	
	$7,547,578 		
	$517,169 		
	$915,609 		
	$8,980,356 	

Liabilities								
Accounts Payable	$22,719		$0		$8,397		$31,116	
Contracts Payable	1,258		0		36,358		37,616	
Accrued Wages and Benefits	834,345		0		11,056		845,401	
Matured Compensated Absences Payable	36,950		0		0		36,950	
Unearned Revenue	0		0		62,665		62,665	
Intergovernmental Payable		300,915 			0 			2,883 			303,798 	
Total Liabilities		1,196,187 			0 			121,359 			1,317,546 	
Deferred Inflows of Resources								
Property Taxes	1,515,101		0		222,005		1,737,106	
Unavailable Revenue		172,164 			0 			24,210 			196,374 	
Total Deferred Inflows of Resources		1,687,265 			0 			246,215 			1,933,480 	
Fund Balances
Nonspendable	
61,998		
0		
2,804		
64,802	
Restricted	0		0		545,231		545,231	
Committed	0		517,169		0		517,169	
Assigned	57,157		0		0		57,157	
Unassigned		4,544,971 			0 			0 			4,544,971 	
Total Fund Balances		4,664,126 			517,169 			548,035 			5,729,330 	
Total Liabilities, Deferred Inflows of								
Resources and Fund Balances		$7,547,578 			$517,169 			$915,609 			$8,980,356 	

See accompanying notes to the basic financial statements

Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities
June 30, 2023

Total Governmental Fund Balances	$5,729,330

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

Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds.	12,926,295

Other long-term assets are not available to pay for current-period expenditures and therefore are reported as unavailable revenue in the funds.
Delinquent Property Taxes	187,589
Intergovernmental		8,785 
Total	196,374

The net pension liability and net OPEB asset/liability is not due and payable in the current period; therefore, the asset/liability and related deferred inflows/outflows are not reported in governmental funds.
Net OPEB Asset	862,310		
Deferred Outflows - Pension	2,165,028		
Deferred Outflows - OPEB	198,458		
Net Pension Liability	(8,673,376)		
Net OPEB Liability	(337,482)		
Deferred Inflows - Pension	(1,026,686)		
Deferred Inflows - OPEB	  (1,128,113)		
Total		(7,939,861)	

Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
Financed Purchases	(38,581)		
Special Termination Benefits	(40,000)		
Compensated Absences
Total		(542,084)	
	(620,665)	

Net Position of Governmental Activities		$10,291,473  See accompanying notes to the basic financial statements

Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the Fiscal Year Ended June 30, 2023

	

	General		
District
 Replacement 	Other Governmental
	Funds		Total Governmental
	Funds		
Revenues					
Property Taxes	$1,522,575	$0	$287,797	$1,810,372	
Intergovernmental	7,318,690	0	1,280,350	8,599,040	
Investment Earnings/Interest	252,237	0	0	252,237	
Tuition and Fees	149,211	0	0	149,211	
Extracurricular Activities	57,490	0	163,529	221,019	
Contributions and Donations	15,480	7,450	89,975	112,905	
Charges for Services	2,240	0	37,211	39,451	
Rentals	49,200	0	0	49,200	
Miscellaneous		1,740 		0 		311 		2,051 	
Total Revenues		9,368,863 		7,450 		1,859,173 		11,235,486 	
Expenditures					
Current:					
Instruction:					
Regular	4,507,319	0	55,788	4,563,107	
Special	1,196,196	0	276,620	1,472,816	
Vocational	6	0	0	6	
Student Intervention Services	0	0	157,835	157,835	
Support Services: Pupils	
351,973	
0	
59,400	
411,373	
Instructional Staff	56,303	0	0	56,303	
Board of Education	37,957	0	0	37,957	
Administration	775,727	0	137,234	912,961	
Fiscal	251,957	0	4,247	256,204	
Operation and Maintenance of Plant	641,500	134,603	637,470	1,413,573	
Pupil Transportation	100,567	0	27,815	128,382	
Central	111,149	0	20,632	131,781	
Operation of Non-Instructional Services	0	0	46,830	46,830	
Operation of Food Service	0	0	147,606	147,606	
Extracurricular Activities	300,908	0	248,971	549,879	
Capital Outlay	0	1,448,145	17,669	1,465,814	
Debt Service:					
Principal Retirement	16,206	0	160,015	176,221	
Interest		1,326 		0 		3,075 		4,401 	
Total Expenditures		8,349,094 		1,582,748 		2,001,207 		11,933,049 	
Excess of Revenues Over (Under) Expenditures		1,019,769 		(1,575,298)		(142,034)		(697,563)	
Other Financing Sources (Uses)					
Inception of Subscriptions	5,906	0	10,015	15,921	
Transfers In	0	1,115,000	51,784	1,166,784	
Transfers Out		(945,000)		0 		(221,784)		(1,166,784)	
Total Other Financing Sources (Uses)		(939,094)		1,115,000 		(159,985)		15,921 	
Net Change in Fund Balances	80,675	(460,298)	(302,019)	(681,642)	
Fund Balances Beginning of Year		4,583,451 		977,467 		850,054 		6,410,972 	
Fund Balances End of Year		$4,664,126 		$517,169 		$548,035 		$5,729,330 	

See accompanying notes to the basic financial statements

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2023

Net Change in Fund Balances - Total Governmental Funds	($681,642)
Amounts reported for governmental activities in the statement of activities are different because
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.
This is the amount by which capital outlay exceeded depreciation/amortization in the current period.
Capital Asset Additions	$1,614,565
Current Year Depreciation/Amortization		(730,362)
Total	884,203
Governmental funds only report the disposal of capital assets to the extent proceeds are received from the sale. In the statement of activities, a
gain or loss is reported for each disposal.	(6,554)
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.
Delinquent Property Taxes	(22,192)
Intergovernmental		(21,090)
Total	(43,282)
Repayment of principal is an expenditure in the governmental funds, but the repayment
reduces long-term liabilities in the statement of net position.	176,221
Other financing sources in the governmental funds, such as inception of subscriptions,
increase long-term liabilities in the statement of net position.	(15,921)
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.
Accrued Interest	1,521		
Amortization of Premium	3,596		
Amortization of Accounting Loss
Total		(2,333)	
2,784	
Contractually required contributions are reported as expenditures in governmental funds; however, the statement of net position reports these amounts as deferred outflows.
Pension	732,210
OPEB		17,280 
Total	749,490
Except for amounts reported as deferred inflows/outflows, changes in the net pension/OPEB liability are reported as pension expense in the statement of activities.
Pension	(952,811)
OPEB		155,980 
Total	(796,831)
Some expenses reported in the statement of activities do not
require the use of current financial resources and therefore are not reported as expenditures in governmental funds.
Compensated Absences	168,377		
Special Termination Benefits
Total		40,000 	
	208,377 	
Change in Net Position of Governmental Activities			$476,845 	

Statement of Revenues, Expenditures and Changes
In Fund Balance - Budget (Non-GAAP Basis) and Actual General Fund
For the Fiscal Year Ended June 30, 2023

	Budgeted Amounts	
Variance with
		Original			Final			Actual		 Final Budget 	
Revenues					
Property Taxes	$1,483,493	$1,533,066	$1,533,066	$0	
Intergovernmental	7,262,662	7,315,467	7,315,467	0	
Interest	20,000	230,882	230,882	0	
Tuition and Fees	118,824	149,211	149,211	0	
Charges for Services	2,700	2,240	2,240	0	
Rentals	48,520	49,200	49,200	0	
Miscellaneous		6,300 		3,175 		3,175 		0 	
Total Revenues		8,942,499 		9,283,241 		9,283,241 		0 	
Expenditures					
Current:					
Instruction:					
Regular	4,870,415	4,500,052	4,500,052	0	
Special	1,093,248	1,102,016	1,102,016	0	
Vocational	147	6	6	0	
Support Services: Pupils	
323,245	
401,307	
401,307	
0	
Instructional Staff	57,368	54,788	54,788	0	
Board of Education	37,538	50,018	50,018	0	
Administration	806,619	717,660	717,660	0	
Fiscal	237,874	251,792	251,792	0	
Operation and Maintenance of Plant	478,441	625,550	625,550	0	
Pupil Transportation	93,305	102,054	102,054	0	
Central	99,288	110,927	110,927	0	
Extracurricular Activities		237,808 		290,045 		290,045 		0 	
Total Expenditures		8,335,296 		8,206,215 		8,206,215 		0 	
Excess of Revenues Over (Under) Expenditures	607,203	1,077,026	1,077,026	0	
Other Financing Sources (Uses)					
Transfers Out		(525,000)		(945,000)		(945,000)		0 	
Net Change in Fund Balance	82,203	132,026	132,026	0	
Fund Balance Beginning of Year	5,567,011	5,567,011	5,567,011	0	
Prior Year Encumbrances Appropriated		2,994 		2,994 		2,994 		0 	
Fund Balance End of Year		$5,652,208 		$5,702,031 		$5,702,031 		$0 	

See accompanying notes to the basic financial statements

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Note 1 - Description of the School District and Reporting Entity
McDonald Local School District (the School District) is organized under Article VI, Section 2 and 3 of the Constitution of the State of Ohio to provide educational services to students and other community members of the School District. The School District operates under a locally-elected Board form of government consisting of five members elected at-large for staggered four year terms.
The School District serves an area of approximately 3 square miles in Trumbull County, including the Village of McDonald and a portion of Weathersfield Township. The School District operates one elementary school and one comprehensive middle/high school. It is staffed by 60 certified members (including teachers, Title 1 teachers, and administration staff) and 22 classified members (including classified union members, para-professional aids, and administration staff) to provide services to 733 students and other community members.

Reporting Entity

A reporting entity is composed of the primary government, component units and other organizations that are included to ensure that the financial statements are not misleading. The primary government of the School District consists of all funds, departments, boards and agencies that are not legally separate from the School District. For the School District, this includes the agencies and departments that provide the following services: general operations, food service and student related activities of the School District.
Component units are legally separate organizations for which the School District is financially accountable. The School District is financially accountable for an organization if the School District appoints a voting majority of the organization's governing board and (1) the School District is able to significantly influence the programs or services performed or provided by the organization; or (2) the School District is legally entitled to or can otherwise access the organization’s resources; the School District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or the School District is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the School District in that the School District approves the budget, the issuance of debt or the levying of taxes, and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. The School District has no component units.
The School District participates in two jointly governed organizations and one shared risk pool. The organizations are the Northeast Ohio Management Information Network, the Trumbull Career and Technical Center and the Trumbull County Schools Employee Insurance Benefit Consortium. These organizations are presented in Notes 11 and 12 to the basic financial statements.

Note 2 - Summary of Significant Accounting Policies
The financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Described below are the School District’s significant accounting policies.
Basis of Presentation
The School District’s basic financial statements consist of government-wide statements, including a statement of net position and a statement of activities and fund financial statements which provide a more detailed level of financial information.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Government-wide Financial Statements The statement of net position and the statement of activities display information about the School District as a whole. These statements include the financial activities of the primary government. These statements usually distinguish between those activities of the School District that are governmental and those that are considered business-type. The School District, however, has no business-type activities.

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

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

Fund Accounting
The School District uses funds to maintain its financial records during the year. A fund is defined as a fiscal and accounting entity with a self balancing set of accounts. In reporting its financial activities, the School District uses governmental funds.

Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and deferred outflows of resources and liabilities and deferred inflows of resources is reported as fund balance. The following are the School District's major governmental funds:
General Fund The general fund is the operating fund of the School District and is used to account and report for all financial resources except those required to be accounted for and reported in another fund. The general fund balance is available to the School District for any purpose provided it is expended or transferred according to the general laws of Ohio.
District Replacement Fund The district replacement capital projects fund is used to account for and report the monies transferred from the general fund committed to replace items that have become obsolete and require replacement.

The other governmental funds of the School District account for grants and other resources whose use is restricted, committed or assigned to a particular purpose.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Measurement Focus

Government-wide Financial Statements The government-wide financial statements are prepared using the economic resources measurement focus. All assets and deferred outflows of resources and all liabilities and deferred inflows of resources associated with the operation of the School District are included on the statement of net position. The statement of activities presents increases (i.e., revenues) and decreases (i.e., expenses) in total net position.

Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and deferred outflows of resources and current liabilities and deferred inflows of resources, generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (e.g., revenues and other financing sources) and uses (e.g., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government- wide statements and the statements for governmental funds.

Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue, the recording of deferred inflows/outflows of resources, and in the presentation of expenses versus expenditures.
Revenues - Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the School District, available means expected to be received within sixty days of fiscal year-end.
Nonexchange transactions, in which the School District receives value without directly giving equal value in return, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year in which the taxes are levied (See Note 6). Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On a modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized.

Under the modified accrual basis, the following revenue sources are considered to be both measurable and available at fiscal year-end: property taxes available as an advance, interest, tuition, grants, fees and rentals.
Deferred Outflows/Inflows of Resources In addition to assets, the statements of financial position will sometimes report a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period and will not be recognized as an outflow

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

of resources (expense/expenditure) until then. For the School District, deferred outflows of resources are reported on the government-wide statement of net position for pension and OPEB plans. The deferred outflows of resources related to pension and OPEB plans are explained in Notes 14 and 15.
In addition to liabilities, the statements of financial position report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets that applies to a future period and will not be recognized until that time. For the School District, deferred inflows of resources include property taxes, pension, OPEB, and unavailable revenue. Property taxes represent amounts for which there is an enforceable legal claim as of June 30, 2023, but which were levied to finance fiscal year 2024 operations. These amounts have been recorded as a deferred inflow on both the government-wide statement of net position and governmental fund financial statements. Unavailable revenue is reported only on the governmental funds balance sheet, and represents receivables which will not be collected within the available period. For the School District, unavailable revenue includes delinquent property taxes and intergovernmental revenue. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. The details of these unavailable revenues are identified on the Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities found on page 17. Deferred inflows of resources related to pension and OPEB plans are reported on the government- wide statement of net position. (See Notes 14 and 15)
Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they are incurred.
The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amortization, are not recognized in governmental funds.
Pensions/Other Postemployment Benefits (OPEB)
For purposes of measuring the net pension/OPEB liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions/OPEB, and pension/OPEB expense, information about the fiduciary net position of the pension/OPEB plans and additions to/deductions from their fiduciary net position have been determined on the same basis as they are reported by the pension/OPEB plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. The pension/OPEB plans report investments at fair value.
Budgetary Data
All funds are legally required to be budgeted and appropriated. The major documents prepared are the tax budget, the appropriation resolution and the certificate of estimated resources, which are prepared on the budgetary basis of accounting. The tax budget demonstrates a need for existing or increased tax rates. The certificate of estimated resources establishes a limit on the amounts that the Board of Education may appropriate. The appropriation resolution is the Board’s authorization to spend resources and set annual limits on expenditures plus encumbrances at a level of control selected by the Board. The legal level of control has been established by the Board of Education at the fund level for all funds. The Treasurer has been given the authority to allocate board appropriations to the function and object levels within each fund.
The certificate of estimated resources may be amended during the year if projected increases or decreases in revenue are identified by the School District Treasurer. The amounts reported as the original and final budgeted amounts in the budgetary statements reflect the amounts in the amended certificate when the original and final appropriations were passed by the Board of Education. Prior to June 30, the Board requested and received an amended certificate in which estimated revenue matched actual revenue for the fiscal year.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

The appropriation resolution is subject to amendment by the Board throughout the year with the restriction that appropriations may not exceed estimated revenues. The amounts reported as the original budgeted amounts reflect the first appropriation for that fund that covered the entire fiscal year, including amounts automatically carried over from prior fiscal years. The amounts reported as the final budgeted amounts represent the final appropriation amounts passed by the Board during the fiscal year. Prior to year end the Board of Education adopted appropriations which matched actual expenditures plus encumbrances.
Cash and Cash Equivalents
To improve cash management, cash received by the School District is pooled. Monies for all funds are maintained in this pool. Individual fund integrity is maintained through the School District’s records. Interest in the pool is presented as "equity in pooled cash and cash equivalents" on the financial statements.
Under existing Ohio statutes all investment earnings are assigned to the general fund unless statutorily required to be credited to a specific fund. Investment Earnings/Interest revenue credited to the general fund during 2023 amounted to $252,237 which includes $42,707 assigned from other School District funds.
Investments of the cash management pool and investments with an original maturity of three months or less at the time they are purchased by the School District are presented on the financial statements as cash equivalents.

During fiscal year 2023, the School District invested in STAR Ohio. STAR Ohio (the State Treasury Asset Reserve of Ohio), is an investment pool managed by the State Treasurer’s Office which allows governments within the State to pool their funds for investment purposes. STAR Ohio is not registered with the SEC as an investment company, but has adopted Governmental Accounting Standards Board (GASB), Statement No. 79, Certain External Investment Pools and Pool Participants. The School District measures their investment in STAR Ohio at the net asset value (NAV) per share provided by STAR Ohio. The NAV per share is calculated on an amortized cost basis that provides an NAV per share that approximates fair value.
For fiscal year 2023, there were no limitations or restrictions on any participant withdrawals due to redemption notice periods, liquidity fees, or redemption gates. However, twenty-four hours advance notice is appreciated for deposits and withdrawals of $100 million or more is encouraged. STAR Ohio reserves the right to limit the transaction to $250 million per day.
Inventory
Inventories are presented at cost on a first-in, first-out basis and are expended/expensed when used. Inventory consists of expendable supplies and donated and purchased food held for resale.
Prepaid Items

Payments made to vendors for services that will benefit periods beyond June 30, 2023, are recorded as prepaid items using the consumption method by recording a current asset for the prepaid amount and reflecting the expenditure/expense in the year in which the services are consumed.
Restricted Assets
Assets are reported as restricted when limitations on their use change in nature or normal understanding of the availability of the asset. Such constraints are either externally imposed by creditors, contributors, grantors, laws of other governments, or imposed by law through constitutional provisions. Restricted assets in the general fund include unspent resources restricted for unclaimed monies.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Capital Assets

The School District’s only capital assets are general capital assets. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide statement of net position but are not reported in the fund financial statements.

All capital assets (except for intangible right to use subscription assets which are discussed below) are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. The School District was able to estimate the historical cost for the initial reporting of assets by backtrending (i.e., estimating the current replacement cost of the asset to be capitalized and using an appropriate price- level index to deflate the cost to the acquisition year or estimated acquisition year.) Donated capital assets are recorded at their acquisition values as of the date received. The School District maintains a capitalization threshold of five thousand dollars. The School District does not possess any infrastructure. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s life are not capitalized.
All reported capital assets, except land and construction in progress, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives:
Governmental Activities
	Description		 Estimated Lives 
Land Improvements	20 years
Building and Improvements	20 - 50 years
Equipment and Furniture	5 - 20 years Vehicles		8 years
Intangible Right to Use - Software	2-5 years
The School District is reporting intangible right to use assets related to subscription assets. Subscription assets represent intangible right to use assets related to the use of another party’s IT software. These intangible right to use assets are being amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying asset.
Subscription Payable

The School District is reporting Subscription-Based Information Technology Arrangements (SBITAs) for various noncancellable IT software contracts. At the commencement of the subscription term, the School District initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at the commencement of the subscription term, plus certain initial implementation costs. Subsequently, the subscription asset is amortized on in a systematic and rational manner over the shorted of the subscription term or the useful life of the underlying IT asset. Subscription assets are reported with other capital assets and subscription payables are reported with long-term debt on the statement of net position.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Compensated Absences
Vacation benefits are accrued as a liability as the benefits are earned if the employees' rights to receive compensation are attributable to services already rendered and it is probable that the employer will compensate the employees for the benefits through paid time off or some other means. The School District records a liability for accumulated unused vacation time when earned for all employees with more than one year of service.
Sick leave benefits are accrued as a liability using the vesting method. The liability includes the employees who are currently eligible to receive termination benefits and those the School District has identified as probable of receiving payment in the future. The amount is based on accumulated sick leave and employees’ wage rates at fiscal year end, taking into consideration any limits specified in the School District’s termination policy. The School District records a liability for accumulated unused sick leave for all employees at least 50 years of age with 10 years of service and all employees at any age with 20 years of service.

The entire compensated absence liability is reported on the government-wide financial statements.
On the governmental fund financial statements, compensated absences are recognized as a liability and expenditure to the extent payments come due to each period upon the occurrence of employee resignations and retirements. These amounts are reported as “Matured Compensated Absences Payable” in the fund from which the employee has accumulated leave is paid.

Accrued Liabilities and Long-term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide financial statements.
In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources, are reported as obligations of the funds. However, claims and judgments and compensated absences that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are due for payment during the current fiscal year. Net pension/OPEB liability should be recognized in the governmental funds to the extent that benefit payments are due and payable and the pension/OPEB plan’s fiduciary net position is not sufficient for payment of those benefits. Bonds, subscription payable and financed purchases are recognized as a liability on the governmental fund financial statements when due.

Fund Balance
Fund balance is divided into five classifications based primarily on the extent to which the School is bound to observe constraints imposed upon the use of the resources in the governmental funds. The classifications are as follows:
Nonspendable The nonspendable fund balance category includes amounts that cannot be spent because they are not in spendable form, or legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash.
Restricted Fund balance is reported as restricted when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Committed The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by the highest level formal action (resolution) of the School District Board of Education. Those committed amounts cannot be used for any other purpose unless the School District Board of Education removes or changes the specified use by taking the same type of action (resolution) it employed to previously commit those amounts. Committed fund balance also incorporates contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts in the assigned fund balance classification are intended to be used by the School District for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. These amounts are assigned by the School District Board of Education. In the general fund, assigned amounts represent intended uses established by the School District Board of Education or a School District official delegated that authority by State statute. State statute authorizes the Treasurer to assign fund balance purchases on order provided such amounts have been lawfully appropriated. The Board of Education assigned fund balance for administrative purposes.

Unassigned Unassigned fund balance is the residual classification for the general fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance.
The School District applies restricted resources first when expenditures are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.

Net Position

Net position represents the difference between all other elements in a statement of financial position. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Restricted net position for OPEB plans represents the corresponding restricted asset amounts after considering the related deferred outflows and deferred inflows. Net position restricted for other purposes include resources restricted for food service and extracurricular activities.
The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position are available.

Bond Premiums
On the government-wide financial statements, bond premiums are deferred and amortized over the term of the bonds using the straight line method. Bond premiums are presented as an increase of the face amount of the general obligation bonds payable. On fund financial statements, bond premiums are receipted in the year the bonds are issued. Under Ohio law, premiums on the initial issuance of debt are to be deposited to the bond retirement fund to be used for debt retirement and are precluded from being applied to the project fund. Ohio law does allow premiums on refunding debt to be used as part of the payment to the bond escrow agent.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

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

Unearned revenue represents amounts under the accrual and modified accrual basis of accounting for which asset recognition criteria have been met, but for which revenue recognition criteria have not yet been met because the amounts have not yet been earned. The School District recognizes unearned revenue for intergovernmental revenue from grants received before the eligibility requirements are met.

Internal Activity

Transfers between governmental activities are eliminated on the government wide financial statements. Internal events that are allocations of overhead expenses from one function to another or within the same function are eliminated on the Statement of Activities. Interfund payments for services provided and used are not eliminated.

Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after nonoperating revenues and expenses in the internal service fund. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on the financial statements.

Note 3 - Budgetary Basis of Accounting
While the School District is reporting financial position, results of operations and changes in fund balance on the basis of generally accepted accounting principles (GAAP), the budgetary basis as provided by law is based upon accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (Non-GAAP Basis) and Actual for the general fund is presented on the budgetary basis to provide a meaningful comparison of actual results with the budget. The major differences between the budget basis and GAAP basis are that:
Revenues are recorded when received in cash (budget) as opposed to when susceptible to accrual (GAAP).
Expenditures are recorded when paid in cash (budget) as opposed to when the liability is incurred (GAAP).
Encumbrances are treated as expenditures (budget) rather than restricted, committed, or assigned fund balance (GAAP).
Budgetary revenues and expenditures of the public school support special revenue funds are classified to the general fund for GAAP reporting.
Unreported cash represents amounts received but not included as revenue on the budgetary statements, but which are reported on the operating statements prepared using GAAP.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

The following table summarizes the adjustments necessary to reconcile the GAAP basis statements to the budgetary basis statements on a fund type basis for the general fund:
Net Change in Fund Balance

GAAP Basis	$80,675	
Revenue Accruals	2,797	
Beginning Unrecorded Cash	6,829	
Ending Unrecorded Cash	(28,184)	
Expenditure Accruals	80,004	
Perspective Difference:		
Public School Support	(6,664)	
Encumbrances		(3,431)	
Budget Basis		$132,026 	

Note 4 – Fund Balances
Fund balance is classified as nonspendable, restricted, committed, assigned and/or unassigned based primarily on the extent to which the School District is bound to observe constraints imposed upon the use of resources in the governmental funds. The constraints placed on fund balance for the major governmental funds and all other governmental funds are presented in the following table:
Other

	Fund Balances		
	General			District
  Replacement 		Governmental
	Funds			
	Total		
Nonspendable								
Prepaids	$58,767		$0		$871		$59,638	
Materials and Supplies Inventory	0		0		1,933		1,933	
Unclaimed Monies		3,231 			0 			0 			3,231 	
Total Nonspendable		61,998 			0 			2,804 			64,802 	
Restricted for								
Food Service Operations	0		0		224,829		224,829	
Scholarships	0		0		34,278		34,278	
Student Activities and Wellness	0		0		37,245		37,245	
Athletics	0		0		62,288		62,288	
Classroom Facilities Maintenance	0		0		9,556		9,556	
Capital Improvements		0 			0 			177,035 			177,035 	
Total Restricted		0 			0 			545,231 			545,231 	
Committed to								
Capital Projects		0 			517,169 			0 			517,169 	
Assigned to								
Purchases on Order
Instruction	
2,303		
0		
0		
2,303	
Support Services	728		0		0		728	
Administrative		54,126 			0 			0 			54,126 	
Total Assigned		57,157 			0 			0 			57,157 	
Unassigned	4,544,971		0		0		4,544,971	
Total Fund Balances		$4,664,126 			$517,169 			$548,035 			$5,729,330 	

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Note 5 - Deposits and Investments
Monies held by the School District are classified into three categories: active deposits, inactive deposits and interim deposits.
Active deposits are public deposits necessary to meet current demands on the School District treasury. Active monies must be maintained either as cash in the School District treasury, in commercial accounts payable or withdrawable on demand, including negotiable order of withdrawal (NOW) accounts, or in money market deposit accounts.
Inactive deposits are public deposits that the Board has identified as not required for use within the current five year period of designation of depositories. Inactive deposits must either be evidenced by certificates of deposit maturing not later than the end of the current period of designation of depositories, or by savings or deposit accounts including, but not limited to, passbook accounts.

Interim deposits are deposits of interim monies. Interim monies are those monies which are not needed for immediate use but which will be needed before the end of the current period of designation of depositories. Interim deposits must be evidenced by time certificates of deposit maturing not more than one year from the date of deposit or by savings or deposit accounts, including passbook accounts.

Protection of the School District's deposits is provided by the Federal Deposit Insurance Corporation (FDIC), by eligible securities pledged by the financial institution as security for repayment, or by the financial institution’s participation in the Ohio Pooled Collateral System (OPCS), a collateral pool of eligible securities deposited with a qualified trustee and pledged to the Treasurer of State to secure the repayment of all public monies deposited in the financial institution.
Interim monies held by the School District can be deposited or invested in the following securities:

United States Treasury bills, bonds notes, or any other obligation or security issued by the United States Treasury, or any other obligation guaranteed as to principal and interest by the United States;
Bonds, notes, debentures, or any other obligation or security issued by any federal government agency or instrumentality including, but not limited to, the Federal National Mortgage Association, Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation, and Government National Mortgage Association. All federal agency securities shall be direct issuances of federal government agencies or instrumentalities;

Written repurchase agreements in the securities listed above provided the market value of the securities subject to the repurchase agreement must exceed the principal value of the agreement by at least two percent and be marked daily, and the term of the agreement must not exceed thirty days;
Bonds and other obligations of the State of Ohio, and with certain limitations including a requirement for maturity within ten years from the date of settlement, bonds and other obligations of political subdivisions of the State of Ohio, if training requirements have been met;

Time certificates of deposit or savings or deposit accounts including, but not limited to, passbook accounts;

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

No-load money market mutual funds consisting exclusively of obligations described in (1) or (2) and repurchase agreements secured by such obligations, provided that investments in securities described in this division are made only through eligible institutions;

The State Treasurer's investment pool (STAR Ohio); and

Certain bankers’ acceptances (for a period not to exceed one hundred eighty days) and commercial paper notes (for a period not to exceed two hundred seventy days) in an amount not to exceed 40 percent of the interim monies available for investment at any one time if training requirements have been met. The investment in commercial paper notes of a single issuer shall not exceed in the aggregate five percent of interim moneys available for investment at the time of purchase.
Investments in stripped principal or interest obligations, reverse repurchase agreements, and derivatives are prohibited. The issuance of taxable notes for the purpose of arbitrage, the use of leverage, and short selling are also prohibited. An investment must mature within five years from the date of purchase, unless matched to a specific obligation or debt of the School District, and must be purchased with the expectation that it will be held to maturity.
Investments may only be made through specified dealers and institutions. Payment for investments may be made only upon delivery of the securities representing the investments to the treasurer or, if the securities are not represented by a certificate, upon receipt of confirmation of transfer from the custodian.
Investments

As of June 30, 2023, the School District had STAR Ohio as an investment. STAR Ohio is being held with an amount of $3,426,430 which is insured at net asset value per share. The average maturity is 38.5 days.

Note 6 – Property Taxes
Property taxes are levied and assessed on a calendar year basis while the School District’s fiscal year runs from July through June. First half tax collections are received by the School District in the second half of the fiscal year. Second half tax distributions occur in the first half of the following fiscal year.
Property taxes include amounts levied against all real property and public utility property located in the School District. Real property tax revenues received in calendar year 2023 represents collections of calendar year 2022 taxes. Real property taxes received in calendar year 2023 were levied after April 1, 2022, on the assessed value listed as of January 1, 2022, the lien date. Assessed values for real property are established by State law at thirty-five percent of appraised market value. Real property are payable annually or semi- annually. If paid annually, payment is due December 31; if paid semi-annually, the first payment is due December 31 with the remainder payable by June 20. Under certain circumstances, State statute permits alternate payment dates to be established.

Public utility property tax revenues received in calendar year 2023 represents collections of calendar year 2022 taxes. Public utility real and tangible personal property taxes received in calendar year 2022 become a lien December 31, 2021, were levied after April 1, 2022 and are collected in 2023 with real property taxes. Public utility real property is assessed at thirty-five percent of true value; public utility tangible personal property currently is assessed at varying percentages of true value.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

The School District receives property taxes from Trumbull County. The County Auditor periodically advances to the School District its portion of the taxes collected. Second-half real property tax payments collected by the County by June 30, 2023, are available to finance fiscal year 2023 operations. The amount available to be advanced can vary based on the date the tax bills are sent.
Accrued property taxes receivable includes real property and public utility property taxes which are measurable as of June 30, 2023 and for which there is an enforceable legal claim. Although total property tax collections for the next fiscal year are measurable, only the amount of real property taxes available as an advance at June 30 were levied to finance current fiscal year operations are reported as revenue at fiscal year- end. The portion of the receivable not levied to finance current fiscal year operations is offset by a credit to deferred inflows of resources – property taxes. On the accrual basis, collectible delinquent property taxes have been recorded as a receivable and revenue while on the modified accrual basis the revenue has been reported as deferred inflows of resources – unavailable revenue.
The amount available as an advance at June 30, 2023 was $9,584 in the general fund and $1,420 in the permanent improvement capital projects fund. The amount available as an advance at June 30, 2022 was
$20,075 in the general fund, $267 in the classroom facilities special revenue fund, $2,961 in the permanent improvement capital projects fund and $1,640 in the bond retirement debt service fund.

The assessed values upon which the fiscal year 2023 taxes were collected are:
2022 Second

2023 First

	Half Collections			Half Collections	

		Amount			  Percent				Amount			  Percent		
Real Estate	$54,611,220		95.90%		$55,188,900		94.97%	
Public Utility Personal		2,333,690 			4.10				2,923,760 			5.03		
Total		$56,944,910 		  100.00% 			$58,112,660 		  100.00% 	
Full Tax Rate per $1,000 of assessed valuation	
$57.30				
$54.40			

The School District’s full tax rate decreased from the prior year due to the expiration of the bond and classroom facilities levies and due to the increase in assessed values in order for the emergency levies to collect their fixed amounts.

Note 7 - Receivables
Receivables at June 30, 2023, consisted of taxes, accounts and intergovernmental receivables. All receivables are considered collectible in full due to the stable condition of State programs and the current year guarantee of Federal funds. All receivables, except delinquent taxes are expected to be collected within one year. Property taxes, although ultimately collectible, include some portion of delinquencies that will not be collected within one year. At June 30, 2023, the general fund had an intergovernmental receivable for prior year State foundation adjustments of $12,008.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Note 8 – Capital Assets
Capital asset activity for the fiscal year ended June 30, 2023, was as follows:

	Balance			Balance	
	 June 30, 2022 	  Additions		  Deletions		 June 30, 2023 	
Nondepreciable Capital Assets					
Land	$607,342	$0	$0	$607,342	
Construction in Progress		285,996 		1,456,312 		(1,494,358)		247,950 	
Total Nondepreciable					
Capital Assets		893,338 		1,456,312 		(1,494,358)		855,292 	
Depreciable Capital Assets					
Land Improvements	4,170,334	0	(11,400)	4,158,934	
Buildings and Improvements	20,595,230	1,521,808	0	22,117,038	
Equipment and Furniture	878,567	21,002	0	899,569	
Vehicles	305,174	93,880	0	399,054	
Intangible Right to Use - Software**		0 		15,921 		0 		15,921 	
Total at Historical Cost		25,949,305 		1,652,611 		(11,400)		27,590,516 	
Less: Accumulated Depreciation/					
Amortization					
Land Improvements	(691,654)	(182,694)	4,846	(869,502)	
Buildings and Improvements	(13,418,339)	(458,835)	0	(13,877,174)	
Equipment and Furniture	(395,980)	(69,168)	0	(465,148)	
Vehicles	(288,024)	(15,645)	0	(303,669)	
Intangible Right to Use - Software**		0 		(4,020)		0 		(4,020)	
Total Accumulated Depreciation/				
Amortization		(14,793,997)		(730,362) * 	4,846 		(15,519,513)	
Depreciable Capital Assets, Net				
of Accumulated Depreciation/Amortization		11,155,308 		922,249  	(6,554)		12,071,003 	
Governmental Activities Capital Assets, Net	
  $12,048,646 	
  $2,378,561   ($1,500,912)	
  $12,926,295 	

* Depreciation/amortization expense was charged to governmental functions as follows:
Instruction
Regular	$449,319
Support Services
Operation and Maintenance of Plant	80,833	
Pupil Transportation	15,645	
Central	342	
Operation of Food Service	592	
Extracurricular Activities		183,631 	
Total Depreciation/Amortization Expense		$730,362 	
** Of the current year depreciation/amortization total of $730,362, $3,678 is presented as regular instruction and $342 is presented as central support services expense on the Statement of Activities related to the School District’s intangible asset of Software for Adobe, ESET, and Aruba Analyzer, which is included as an Intangible Right to Use Software.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Note 9 - Interfund Transfers
The general fund transferred $50,000 to the district managed student activity special revenue fund to help fund operations. The general fund made a transfer of $895,000 to the district replacement capital projects fund to help with capital projects and purchases. The bond retirement debt service fund made a transfer of
$1,784 to the permanent improvement capital projects fund to help with capital projects and purchases. The permanent improvement capital projects fund made a transfer of $220,000 to the district replacement capital projects to help with capital projects and purchases.

Note 10 – Long-Term Obligations
Original issue amounts and interest rates of the School District’s debt issues were as follows:

		Debt Issue	 	Interest Rate	  Original Issue   Maturity  2006 School Improvement Bonds:
Current Issue Term Bonds	3.70% to 4.10%	$580,000	2023
Financed Purchase:
Ford Business Machine Copiers	3.00	53,917	2027
Changes in long-term obligations of the School District during fiscal year 2023 were as follows:

	Principal						Principal		Amount	
	Outstanding						Outstanding		Due in	
Governmental Activities	 June 30, 2022 		  Additions			  Deductions 		 June 30, 2023 		  One Year		
General Obligation Bonds										
2006 School Improvement Bonds										
Current Interest Term Bonds	$150,000		$0		($150,000)		$0		$0	
Premium on Bonds		3,596 			0 			(3,596)			0 			0 	
Total General Obligation Bonds		153,596 			0 			(153,596)			0 			0 	
Other Long-term Obligations										
Net Pension Liability										
STRS	4,429,151		2,974,022		0		7,403,173		0	
SERS	893,083		377,120		0		1,270,203		0	
Total Net Pension Liability	5,322,234		3,351,142		0		8,673,376		0	
Net OPEB Liability										
SERS	473,195		0		(135,713)		337,482		0	
Financed Purchase From Direct Borrowing	48,881		0		(10,300)		38,581		10,613	
Subscription Payable	0		15,921		(15,921)		0		0	
Special Termination Benefits	80,000		0		(40,000)		40,000		40,000	
Compensated Absences	710,461		193,772		(362,149)		542,084		23,913	
Total Other Long-term Obligations	6,634,771		3,544,914		(548,162)		9,631,523		74,526	
Total Governmental Activities Long-Term Liabilities	
$6,788,367		
$3,544,914		
($701,758)		
$9,631,523		
$74,526	

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

In 2006, the School District issued $1,289,997 in school improvement general obligation bonds which included serial, term and capital appreciation (deep discount) bonds in the amounts of $625,000, $580,000 and $84,997, respectively. The general obligation bonds were issued for the purpose of refunding a portion of the 2001 school improvement bonds to take advantage of lower interest rates. The bonds were issued for a 16 year period with a final maturity at December 1, 2022. The serial and capital appreciation bonds were retired in fiscal year 2017 and fiscal year 2020, respectively. The remaining bonds were retired from the debt service fund.

The term bonds maturing on December 1, 2022 are subject to mandatory sinking fund redemption at a redemption price of 100 percent of the principal amount to be redeemed, plus accrued interest to the date of redemption. These bonds were fully repaid in fiscal year 2023.
Financed Purchase From Direct Borrowing – In 2022, the School District had entered in financed purchase agreements for District wide copiers in the amounts of $53,917 to be paid from the general fund.

The overall debt margin of the School District as of June 30, 2023, was $5,230,139 with an unvoted debt margin of $58,113. Principal and interest requirements to retire financed purchases outstanding at June 30, 2023, are as follows:
From Direct
	Borrowings	
	Financed Purchase	

	Year		 Principal 	  Interest 	
2024	$10,613	$1,012	
2025	10,936	689	
2026	11,269	357	
2027		5,763 		51 	
Total	  $38,581 		$2,109 	
Compensated absences and special termination benefits payable will be paid from the general fund and the food service special revenue fund. There are no repayment schedules for the net pension liability and net OPEB liability. However, employer pension and OPEB contributions are made from the following funds: the general fund and the food service special revenue fund. For additional information related to the net pension and net OPEB liabilities see Notes 14 and 15.
The School District has various outstanding contracts to use a SBITA vendor’s IT software. The future subscription payments were discounted based on the interest rate implicit in the subscription or using the School District’s incremental borrowing rate. This discount is being amortized using the interest method over the life of the subscription. The subscriptions will be paid from the general fund, miscellaneous federal grants special revenue fund and capital improvement capital projects fund. The subscriptions were paid in full during fiscal year 2023.

Note 11 - Jointly Governed Organizations
Northeast Ohio Management Information Network (NEOMIN) NEOMIN is a jointly governed organization among twenty-nine school districts and two educational service centers in Trumbull and Ashtabula Counties. The jointly governed organization was formed for the purpose of applying modern technology with the aid of computers and other electronic equipment to administrative and instructional functions among member districts. Each of the districts supports NEOMIN based upon a per pupil charge. McDonald Local School District paid $34,355 to NEOMIN during fiscal year 2023.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

The Governing board consists of ten members: The Trumbull and Ashtabula County superintendents (permanent members), three superintendents from Ashtabula County participating school districts, three superintendents from Trumbull County participating school districts and the fiscal agent (or NEOMIN). The McDonald Local School District was not represented on the Governing Board during fiscal year 2023. The Board exercises total control over the operations of NEOMIN including budgeting, appropriating, contracting and designating management. The degree of control exercised by any participating school district is limited to its representation on the Governing Board. To obtain a copy of NEOMIN’s financial statements, write to the Trumbull County Educational Service Center, 6000 Youngstown Warren Road, Niles, Ohio 44446.
Trumbull Career and Technical Center The Trumbull Career and Technical Center is a distinct political subdivision of the State of Ohio providing vocational needs of the students. The center is operated under the direction of a Board consisting of one representative from each of the nineteen participating school districts’ elected boards, which possesses its own budgeting and taxing authority. The Board exercises total control over the operations of the Trumbull Career and Technical Center including budgeting, appropriating, contracting and designating management. The degree of control exercised by any participating school district is limited to its representation on the Governing Board. To obtain financial information write to the Trumbull Career and Technical Center, Cody Holecko, who serves as Treasurer, at 528 Educational Highway, Warren, Ohio 44483.

Note 12 – Shared Risk Pool
Trumbull County Schools Employee Insurance Benefit Consortium The School District participates in the Trumbull County Schools Employee Insurance Consortium. This is a shared risk pool comprised of sixteen Trumbull County School Districts. The Consortium is governed by an assembly which consists of one representative from each participating school district (usually the superintendent or designee). The assembly elects officers for one year terms to serve as the Board of Directors. The assembly exercises control over the operation of the Consortium. Consortium revenues are generated from charges for services.

Note 13 - Risk Management
Property and Liability

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and natural disasters. The School District maintains comprehensive commercial insurance coverage through Ohio School Plan for real property, building contents, vehicles, and boilers.

Vehicle policies include liability coverage for bodily injury and property damage. The liability limits are
$1,000,000 for each accident and uninsured motorist of $1,000,000 for each accident with a collision deductible of $1,000 for buses and $500 for all other automobiles, and a comprehensive deductible of $1,000 for buses and $250 for all other automobiles.

Real property and contents are fully insured.  Limits of insurance on real property and equipment are
$47,533,191 with a deductible of $1,000.

The School District has earthquake and flood insurance policies. Limits on these policies are $1,000,000 with a deductible of $25,000.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

The School District liability policy has a limit of $1,000,000 for each occurrence and $3,000,000 aggregate.

The School District cyber coverage policy has a policy aggregate of $5,000,000 and $1,000,000 member aggregate. The policy comes with a loss expense coverage and liability loss expense for $1,000,000 each with a deductible for $250,000.

Trumbull County Schools Employee Insurance Benefit Consortium
The School District has contracted with the Trumbull County Schools Employee Insurance Benefit Consortium to provide employee medical/surgical, dental, and prescription drug benefits. The Trumbull County Schools Employee Insurance Benefit Consortium is a shared risk pool comprised of sixteen Trumbull County school districts. Rates are set through an annual calculation process. The McDonald Local School District pays a monthly contribution which is placed in a common fund from which claim payments are made for all participating school districts. Anthem is the third party administrator for the Consortium. Claims are paid for all participants regardless of claims flow. The board of directors has the right to return monies to an exiting district subsequent to the settlement of all expenses and claims. Employees can choose between two different medical/surgical/prescription plans:
Medical and
	Prescription	 	Monthly Premium	

	 Option 1 	 Option 2 	
Employee	$656.42	$588.00	
Employee and Spouse	1,378.48	1,234.80	
Employee and Child(ren)	1,115.91	999.60	
Family	1,837.97	1,646.40	

For both options, staff pays 10 percent of this premium and the School District pays the remaining percentage. The second option is a high deductible plan. No employees have selected the second option. If the School District were to withdraw from the Consortium, there would be no liability because premium levels fund a reserve for subsequent claim payments.
Settled claims have not exceeded this commercial coverage in any of the past three years. There have been no significant reductions in coverage from last year.
Worker’s Compensation
The School pays the State Worker’s Compensation System a premium for employee injury coverage. The premium is calculated by multiplying the monthly total gross payroll times the contribution rate established by Worker’s Compensation for the School District. This rate is calculated based on accident history and administrative costs.

Note 14 – Defined Benefit Pension Plans
The Statewide retirement systems provide both pension benefits and other postemployment benefits (OPEB).

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Net Pension Liability/Net OPEB Liability (Asset)
The net pension liability and the net OPEB liability (asset) reported on the statement of net position represent liabilities to employees for pensions and OPEB, respectively. Pensions/OPEB are a component of exchange transactions – between an employer and its employees – of salaries and benefits for employee services. Pensions/OPEB are provided to an employee – on a deferred-payment basis – as part of the total compensation package offered by an employer for employee services each financial period. The obligation to sacrifice resources for pensions is a present obligation because it was created as a result of employment exchanges that already have occurred.
The net pension/OPEB liability (asset) represent the School District’s proportionate share of each pension/OPEB plan’s collective actuarial present value of projected benefit payments attributable to past periods of service, net of each pension/OPEB plan’s fiduciary net position. The net pension/OPEB liability (asset) calculation is dependent on critical long-term variables, including estimated average life expectancies, earnings on investments, cost of living adjustments and others. While these estimates use the best information available, unknowable future events require adjusting these estimates annually.
The Ohio Revised Code limits the School District’s obligation for this liability to annually required payments. The School District cannot control benefit terms or the manner in which pensions/OPEB are financed; however, the School District does receive the benefit of employees’ services in exchange for compensation including pension and OPEB.

GASB 68/75 assumes the liability is solely the obligation of the employer, because (1) they benefit from employee services; and (2) State statute requires funding to come from these employers. All pension contributions to date have come solely from these employers (which also includes pension costs paid in the form of withholdings from employees). The retirement systems may allocate a portion of the employer contributions to provide for these OPEB benefits. In addition, health care plan enrollees pay a portion of the health care costs in the form of a monthly premium. State statute requires the retirement systems to amortize unfunded pension liabilities within 30 years. If the pension amortization period exceeds 30 years, each retirement system’s board must propose corrective action to the State legislature. Any resulting legislative change to benefits or funding could significantly affect the net pension/OPEB liability (asset). Resulting adjustments to the net pension/OPEB liability (asset) would be effective when the changes are legally enforceable. The Ohio Revised Code permits, but does not require the retirement systems to provide health care to eligible benefit recipients.
The proportionate share of each plan’s unfunded benefits is presented as a net OPEB asset or long-term net pension/OPEB liability on the accrual basis of accounting. Any liability for the contractually-required pension/OPEB contribution outstanding at the end of the year is included in intergovernmental payable on both the accrual and modified accrual bases of accounting. The remainder of this note includes the required pension disclosures. See Note 15 for the required OPEB disclosures.
School Employees Retirement System (SERS)

Plan Description – School District non-teaching employees participate in SERS, a cost-sharing multiple- employer defined benefit pension plan administered by SERS. SERS provides retirement, disability and survivor benefits, and death benefits to plan members and beneficiaries. Authority to establish and amend benefits is provided by Ohio Revised Code Chapter 3309. SERS issues a publicly available, stand-alone financial report that includes financial statements, required supplementary information and detailed information about SERS’ fiduciary net position. That report can be obtained by visiting the SERS website at www.ohsers.org under Employers/Audit Resources.

Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2023

Age and service requirements for retirement are as follows:

Eligible to	Eligible to Retire on or before	Retire on or after
	August 1, 2017 *	 	August 1, 2017	

Full Benefits	Any age with 30 years of service credit	Age 67 with 10 years of service credit; or
Age 57 with 30 years of service credit

Actuarially Reduced Benefits		Age 60 with 5 years of service credit	Age 62 with 10 years of service credit; or Age 55 with 25 years of service credit		Age 60 with 25 years of service credit

* Members with 25 years of service credit as of August 1, 2017, will be included in this plan.

Annual retirement benefits are calculated based on final average salary multiplied by a percentage that varies based on years of service; 2.2 percent for the first 30 years of service and 2.5 percent for years of service credit over 30. Final average salary is the average of the highest three years of salary.

An individual whose benefit effective date is before April 1, 2018, is eligible for a cost of living adjustment (COLA) on the first anniversary date of the benefit. New benefit recipients must wait until the fourth anniversary of their benefit for COLA eligibility. The COLA is added each year to the base benefit amount on the anniversary date of the benefit. The COLA is indexed to the percentage increase in the CPI-W, not to exceed 2.5 percent and with a floor of 0 percent. A three-year COLA suspension was in effect for all benefit recipients for the years 2018, 2019, and 2020. The Retirement Board approved a 2.5 percent COLA for calendar year 2023.

Funding Policy – Plan members are required to contribute 10 percent of their annual covered salary and the School District is required to contribute 14 percent of annual covered payroll. The contribution requirements of plan members and employers are established and may be amended by the SERS’ Retirement Board up to statutory maximum amounts of 10 percent for plan members and 14 percent for employers. The Retirement Board, acting with the advice of the actuary, allocates the employer contribution rate among four of the System’s funds (Pension Trust Fund, Death Benefit Fund, Medicare B Fund, and Health Care Fund). For the fiscal year ended June 30, 2023, the allocation to pension, death benefits, and Medicare B was 14.0 percent. For fiscal year 2023, the Retirement Board did not allocate any employer contribution to the Health Care Fund.
The School District’s contractually required contribution to SERS was $134,501 for fiscal year 2023. Of this amount $22,244 is reported as an intergovernmental payable.
State Teachers Retirement System (STRS)

Plan Description – School District licensed teachers and other faculty members participate in STRS Ohio, a cost-sharing multiple employer public employee retirement system administered by STRS. STRS provides retirement and disability benefits to members and death and survivor benefits to beneficiaries. STRS issues a stand-alone financial report that includes financial statements, required supplementary information, and detailed information about STRS’ fiduciary net position. That report can be obtained by writing to STRS, 275 East Broad Street, Columbus, Ohio 43215-3771, by calling (888) 227-7877, or by visiting the STRS website at www.strsoh.org.

New members have a choice of three retirement plans; a Defined Benefit (DB) Plan, a Defined Contribution (DC) Plan, and a Combined Plan. Benefits are established by Ohio Revised Code Chapter 3307.

The DB plan offers an annual retirement allowance based on final average salary multiplied by a percentage that varies based on years of service. Effective August 1, 2015, the calculation is 2.2 percent of final average salary for the five highest years of earnings multiplied by all years of service. In April 2017, the Retirement Board made the decision to reduce COLA granted on or after July 1, 2017, to 0 percent upon a determination by its actuary that it was necessary to preserve the fiscal integrity of the retirement system. Benefit recipients’ base benefit and past cost-of living increases are not affected by this change. Effective July 1, 2022, an ad-hoc COLA of 3 percent of the base benefit was granted to eligible benefit recipients to begin on the anniversary of their retirement benefit in fiscal year 2023 as long as they retired prior to July 1, 2018. Eligibility changes will be phased in until August 1, 2023, when retirement eligibility for unreduced benefits will be five years of service credit and age 65, or 35 years of service credit and at least age 60.

Eligibility changes for DB Plan members who retire with actuarially reduced benefits will be phased in until August 1, 2023, when retirement eligibility will be five years of qualifying service credit and age 60, or 30 years of service credit regardless of age.

The DC Plan allows members to place all their member contributions and 9.53 percent of the 14 percent employer contributions into an investment account. The member determines how to allocate the member and employer money among various investment choices offered by STRS. The remaining 4.47 percent of the 14 percent employer rate is allocated to the defined benefit unfunded liability. A member is eligible to receive a retirement benefit at age 50 and termination of employment. The member may elect to receive a lifetime monthly annuity or a lump sum withdrawal.
The Combined Plan offers features of both the DB Plan and the DC Plan. In the Combined Plan, 12 percent of the 14 percent member rate is deposited into the member’s DC account, and the remaining 2 percent is applied to the DB Plan. Member contributions to the DC Plan are allocated among investment choices by the member, and contributions to the DB Plan from the employer and the member are used to fund the defined benefit payment at a reduced level from the regular DB Plan. The defined benefit portion of the Combined Plan payment is payable to a member on or after age 60 with five years of service. The defined contribution portion of the account may be taken as a lump sum payment or converted to a lifetime monthly annuity at age 50 and after termination of employment.

New members who choose the DC plan or Combined Plan will have another opportunity to reselect a permanent plan during their fifth year of membership. Members may remain in the same plan or transfer to another STRS plan. The optional annuitization of a member’s defined contribution account or the defined contribution portion of a member’s Combined Plan account to a lifetime benefit results in STRS bearing the risk of investment gain or loss on the account. STRS has therefore included all three plan options as one defined benefit plan for GASB 68 reporting purposes.
A DB or Combined Plan member with five or more years of credited service who is determined to be disabled may qualify for a disability benefit. New members on or after July 1, 2013, must have at least ten years of qualifying service credit that apply for disability benefits. Members in the DC Plan who become disabled are entitled only to their account balance. Eligible survivors of members who die before service retirement may qualify for monthly benefits. If a member of the DC Plan dies before retirement benefits begin, the member’s designated beneficiary is entitled to receive the member’s account balance.
Funding Policy – Employer and member contribution rates are established by the State Teachers Retirement Board and limited by Chapter 3307 of the Ohio Revised Code. The 2023 employer and employee contribution rate of 14 percent was equal to the statutory maximum rates. For 2023, the full employer contribution was allocated to pension.
The School District’s contractually required contribution to STRS was $597,709 for fiscal year 2023. Of this amount $177,605 is reported as an intergovernmental payable.

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

The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The School District's proportion of the net pension liability was based on the School District's share of contributions to the pension plan relative to the contributions of all participating entities. Following is information related to the proportionate share and pension expense:

Proportion of the Net Pension Liability:		SERS			STRS	 	Total		
Current Measurement Date	0.02348410%	0.03330243%	
Prior Measurement Date	  0.02420470%	  0.03464090%	

Change in Proportionate Share	 -0.00072060%  -0.00133847%

Proportionate Share of the Net Pension Liability	$1,270,203	$7,403,173	$8,673,376	
Pension Expense	$82,219	$870,592	$952,811	

At June 30, 2023, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

	SERS	
Deferred Outflows of Resources
Differences between expected and actual experience	$51,445		STRS	

$94,770		Total	

$146,215	
Changes of assumptions	12,533
Net difference between projected and
actual earnings on pension plan investments	0	885,938

257,614	898,471

257,614	
Changes in proportionate share and			
difference between School District contributions and proportionate share of contributions	
14,453	
116,065	
130,518	
School District contributions subsequent to the measurement date	
	134,501 	
	597,709 	
	732,210 	
Total Deferred Outflows of Resources		$212,932 		$1,952,096 		$2,165,028 	

Deferred Inflows of Resources
Differences between expected and actual experience	

$8,339	

$28,319	

$36,658	
Changes of assumptions	0	666,856	666,856	
Net difference between projected and
actual earnings on pension plan investments	
44,324	
0	
44,324	
Changes in proportionate share and				
difference between School District contributions
and proportionate share of contributions			25,634  		253,214  		278,848  Total Deferred Inflows of Resources		$78,297  	$948,389  	$1,026,686 

$732,210 reported as deferred outflows of resources related to pension resulting from School District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows:

Fiscal Year Ending June 30:		SERS			STRS			Total		
2024	$6,694	($27,277)	($20,583)	
2025	(16,901)	(79,192)	(96,093)	
2026	(63,318)	(238,336)	(301,654)	
2027		73,659 		750,803 		824,462 	
Total		$134 		$405,998 		$406,132 	
Actuarial Assumptions – SERS
SERS’ total pension liability was determined by their actuaries in accordance with GASB Statement No. 67, as part of their annual actuarial valuation for each defined benefit retirement plan. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts (e.g., salaries, credited service) and assumptions about the probability of occurrence of events far into the future (e.g., mortality, disabilities, retirements, employment termination). Actuarially determined amounts are subject to continual review and potential modifications, as actual results are compared with past expectations and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employers and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employers and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations.
Actuarial calculations reflect a long-term perspective. For a newly hired employee, actuarial calculations will take into account the employee’s entire career with the employer and also take into consideration the benefits, if any, paid to the employee after termination of employment until the death of the employee and any applicable contingent annuitant. In many cases actuarial calculations reflect several decades of service with the employer and the payment of benefits after termination.
Key methods and assumptions used in calculating the total pension liability in the latest actuarial valuation, prepared as of June 30, 2022, are presented below:

	June 30, 2022	

Inflation	2.4 percent
Future Salary Increases, including inflation  3.25 percent to 13.58 percent COLA or Ad Hoc COLA	2.0 percent, on or after
April 1, 2018, COLAs for future retirees will be delayed for three years following commencement
Investment Rate of Return	7.00 percent net of System expenses
Actuarial Cost Method		Entry Age Normal (Level Percent of Payroll)

Mortality rates were based on the PUB-2010 General Employee Amount Weight Below Median Healthy Retiree mortality table projected to 2017 with ages set forward 1 year and adjusted 94.20 percent for males and set forward 2 years and adjusted 81.35 percent for females. Mortality among disabled members were based upon the PUB-2010 General Disabled Retiree mortality table projected to 2017 with ages set forward 5 years and adjusted 103.3 percent for males and set forward 3 years and adjusted 106.8 percent for females. Future improvement in mortality rates is reflected by applying the MP-2020 projection scale generationally.
The most recent experience study was completed for the five year period ended June 30, 2020.
The long-term return expectation for the Pension Plan Investments has been determined by using a building- block approach and assumes a time horizon, as defined in SERS’ Statement of Investment Policy. A forecasted rate of inflation serves as the baseline for the return expectation. Various real return premiums over the baseline inflation rate have been established for each asset class. The long-term expected nominal rate of return has been determined by calculating an arithmetic weighted average of the expected real return premiums for each asset class, adding the projected inflation rate, and adding the expected return from rebalancing uncorrelated asset classes.

 Asset Class		Target
  Allocation 	Long-Term Expected
  Real Rate of Return 	
Cash	2.00	%	(0.45) %	
US Equity	24.75		5.37	
Non-US Equity Developed	13.50		6.22	
Non-US Equity Emerging	6.75		8.22	
Fixed Income/Global Bonds	19.00		1.20	
Private Equity	11.00		10.05	
Real Estate/Real Assets	16.00		4.87	
Multi-Asset Strategy	4.00		3.39	
Private Debt/Private Credit		3.00		5.38	
Total		100.00  %		

Discount Rate The total pension liability for 2022 was calculated using the discount rate of 7.00 percent. The projection of cash flows used to determine the discount rate assumed the contributions from employers and from the members would be computed based on contribution requirements as stipulated by State statute. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.00 percent). Based on those assumptions, the plan’s fiduciary net position was projected to be available to make all future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefits to determine the total pension liability.

Sensitivity of the School District's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate Net pension liability is sensitive to changes in the discount rate, and to illustrate the potential impact the following table presents the School District’s proportionate share of the net pension liability calculated using the discount rate of 7.00 percent, as well as what the School District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00 percent), or one percentage point higher (8.00 percent) than the current rate.

	
1% Decrease	Current
Discount Rate	
1% Increase	
		(6.00%)			(7.00%)			(8.00%)		
School District's proportionate share				
of the net pension liability	$1,869,678	$1,270,203	$765,153	

Actuarial Assumptions – STRS

Key methods and assumptions used in the June 30, 2022, actuarial valuation are presented below:

	June 30, 2022	

Inflation	2.50 percent
Salary increases	From 2.5 percent to 12.5 percent based on age
Investment Rate of Return	7.00 percent, net of investment
expenses, including inflation
Discount Rate of Return	7.00 percent
Payroll Increases	3.00 percent
Cost-of-Living Adjustments (COLA) 0.0 percent, effective July 1, 2017

For 2022, post-retirement mortality rates are based on the Pub-2010 Teachers Healthy Annuitant Mortality Table, adjusted 110 percent for males, projected forward generationally using mortality improvement scale MP-2020. Pre-retirement mortality rates are based on Pub-2010 Teachers Employee Table adjusted 95 percent for females, projected forward generationally using mortality improvement scale MP-2020. Post- retirement disabled mortality rates are based on Pub-2010 Teachers Disable Annuitant Table projected forward generationally using mortality improvement scale MP-2020.
For 2021, post-retirement mortality rates are based on RP-2014 Annuitant Mortality Table with 50 percent of rates through age 69, 70 percent of rates between ages 70 and 79, 90 percent of rates between ages 80 and 84, and 100 percent of rates, thereafter, projected forward generationally using mortality improvement scale MP- 2016. Pre-retirement mortality rates are based on RP-2014 Employee Mortality Table, projected forward generationally using mortality improvement scale MP-2016. Post-retirement disabled mortality rates are based on the RP-2014 Disabled Mortality Table with 90 percent of rates for males and 100 percent of rates for females, projected forward generationally using mortality improvement scale MP-2016.
Actuarial assumptions used in the June 30, 2022, valuation are based on the results of an actuarial experience study for the period July 1, 2015, through June 30, 2021. An actuarial experience study is done on a quinquennial basis.
STRS’ investment consultant develops an estimate range for the investment return assumption based on the target allocation adopted by the Retirement Board. The target allocation and long-term expected rate of return for each major asset class are summarized as follows:

 Asset Class		Target
 Allocation *	Long-Term Expected
  Rate of Return **		
Domestic Equity	26.00%	6.60%	
International Equity	22.00	6.80	
Alternatives	19.00	7.38	
Fixed Income	22.00	1.75	
Real Estate	10.00	5.75	
Liquidity Reserves		1.00			1.00		
Total	  100.00% 		

* Target allocation percentage is effective July 1, 2022. Target weights were phased in over a 3 month period concluding on October 1, 2022
** 10 year annualized geometric nominal returns, which include the real rate of return and inflation of 2.25 percent, and is net
of investment expenses. Over a 30-year period, STRS' investment consultant indicates that the above target allocations should generate a return above the actuarial rate of return, without net value added by management.
Discount Rate The discount rate used to measure the total pension liability was 7.00 percent as of June 30, 2022. The projection of cash flows used to determine the discount rate assumes that member and employer contributions will be made at the statutory contribution rates in accordance with rate increases described above. For this purpose, only employer contributions that are intended to fund benefits of current plan members and their beneficiaries are included. Based on those assumptions, STRS’ fiduciary net position was projected to be available to make all projected future benefit payments to current plan members as of June 30, 2022. Therefore, the long-term expected rate of return on pension plan investments of 7.00 percent was applied to all periods of projected benefit payment to determine the total pension liability as of June 30, 2022.
Sensitivity of the School District's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following table presents the School District's proportionate share of the net pension liability calculated using the current period discount rate assumption of 7.00 percent, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is one-percentage-point lower (6.00 percent) or one-percentage-point higher (8.00 percent) than the current rate:
Current
1% Decrease	Discount Rate	1% Increase
	(6.00%)	 	(7.00%)	 	(8.00%)	
School District's proportionate share
of the net pension liability	$11,183,498	$7,403,173	$4,206,187

Note 15 – Defined Benefit OPEB Plans
See Note 14 for a description of the net OPEB liability (asset).

School Employees Retirement System (SERS)

Health Care Plan Description - The School District contributes to the SERS Health Care Fund, administered by SERS for non-certificated retirees and their beneficiaries. For GASB 75 purposes, this plan is considered a cost-sharing other postemployment benefit (OPEB) plan. SERS’ Health Care Plan provides healthcare benefits to eligible individuals receiving retirement, disability, and survivor benefits, and to their eligible dependents. Members who retire after June 1, 1986, need 10 years of service credit, exclusive of most types of purchased credit, to qualify to participate in SERS’ health care coverage. The following types of credit purchased after January 29, 1981 do not count toward health care coverage eligibility: military, federal, out- of-state, municipal, private school, exempted, and early retirement incentive credit. In addition to age and service retirees, disability benefit recipients and beneficiaries who are receiving monthly benefits due to the death of a member or retiree, are eligible for SERS’ health care coverage. Most retirees and dependents choosing SERS’ health care coverage are over the age of 65 and therefore enrolled in a fully insured Medicare Advantage plan; however, SERS maintains a traditional, self-insured preferred provider organization for its non-Medicare retiree population. For both groups, SERS offers a self-insured prescription drug program. Health care is a benefit that is permitted, not mandated, by statute. The financial report of the Plan is included in the SERS Annual Comprehensive Financial Report which can be obtained on SERS’ website at www.ohsers.org under Employers/Audit Resources.

Access to health care for retirees and beneficiaries is permitted in accordance with Section 3309 of the Ohio Revised Code. The Health Care Fund was established and is administered in accordance with Internal Revenue Code Section 105(e). SERS’ Retirement Board reserves the right to change or discontinue any health plan or program. Active employee members do not contribute to the Health Care Plan. The SERS Retirement Board established the rules for the premiums paid by the retirees for health care coverage for themselves and their dependents or for their surviving beneficiaries. Premiums vary depending on the plan selected, qualified years of service, Medicare eligibility, and retirement status.

Funding Policy - State statute permits SERS to fund the health care benefits through employer contributions. Each year, after the allocation for statutorily required pensions and benefits, the Retirement Board may allocate the remainder of the employer contribution of 14 percent of covered payroll to the Health Care Fund in accordance with the funding policy. For fiscal year 2023, no allocation was made to health care. An additional health care surcharge on employers is collected for employees earning less than an actuarially determined minimum compensation amount, pro-rated if less than a full year of service credit was earned. For fiscal year 2023, this amount was $25,000. Statutes provide that no employer shall pay a health care surcharge greater than 2 percent of that employer’s SERS-covered payroll; nor may SERS collect in aggregate more than 1.5 percent of the total statewide SERS-covered payroll for the health care surcharge. For fiscal year 2023, the School District’s surcharge obligation was $17,280.

The surcharge, added to the allocated portion of the 14 percent employer contribution rate is the total amount assigned to the Health Care Fund. The School District’s contractually required contribution to SERS was
$17,280 for fiscal year 2023. Of this amount $17,280 is reported as an intergovernmental payable.

State Teachers Retirement System (STRS)

Plan Description – The State Teachers Retirement System of Ohio (STRS) administers a cost-sharing Health Plan administered for eligible retirees who participated in the defined benefit or combined pension plans offered by STRS. Ohio law authorizes STRS to offer this plan. Benefits include hospitalization, physicians’ fees, prescription drugs and partial reimbursement of monthly Medicare Part B premiums. The Plan is included in the report of STRS which can be obtained by visiting www.strsoh.org or by calling (888) 227- 7877.

Funding Policy – Ohio Revised Code Chapter 3307 authorizes STRS to offer the Plan and gives the Retirement Board discretionary authority over how much, if any, of the health care costs will be absorbed by STRS. Active employee members do not contribute to the Health Care Plan. All benefit recipients pay a portion of the health care costs in the form of a monthly premium. Under Ohio law, funding for post- employment health care may be deducted from employer contributions, currently 14 percent of covered payroll. For the fiscal year ended June 30, 2023, STRS did not allocate any employer contributions to post- employment health care.

OPEB Liabilities (Asset), OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
The net OPEB liability (asset) was measured as of June 30, 2022, and the total OPEB liability used to calculate the net OPEB liability (asset) was determined by an actuarial valuation as of that date. The School District's proportion of the net OPEB liability (asset) was based on the School District's share of contributions to the respective retirement systems relative to the contributions of all participating entities. Following is information related to the proportionate share and OPEB expense:

Proportion of the Net OPEB Liability/Asset:		SERS				STRS			Total		
Current Measurement Date	0.02403700%		0.03330243%		
Prior Measurement Date	  0.02500260%		  0.03464090%		
Change in Proportionate Share	-0.00096560%		-0.00133847%		

Proportionate Share of the: Net OPEB Liability	

$337,482		

$0	

$337,482	
Net OPEB (Asset)	$0		($862,310)	($862,310)	
OPEB Expense	($19,958)		($136,022)	($155,980)	
At June 30, 2023, the School District reported	deferred outflows		of resources and	deferred inflows of	
resources related to OPEB from the following sources:

Deferred Outflows of Resources		SERS			STRS			Total		
Differences between expected and actual experience	$2,837	$12,500	$15,337	
Changes of assumptions	53,681	36,732	90,413	
Net difference between projected and
actual earnings on OPEB plan investments	
1,754	
15,011	
16,765	
Changes in proportionate share and
difference between School District contributions and proportionate share of contributions	

28,009	

30,654	

58,663	
School District contributions subsequent to the measurement date	
	17,280 	
	0 	
	17,280 	
Total Deferred Outflows of Resources		$103,561 		$94,897 		$198,458 	
Deferred Inflows of Resources
Differences between expected and actual experience	
$215,879	
$129,502	
$345,381	
Changes of assumptions
Changes in proportionate share and
difference between School District contributions and proportionate share of contributions	138,538

	32,371 	611,461

	362 	749,999

	32,733 	
Total Deferred Inflows of Resources		$386,788 		$741,325 		$1,128,113 	

$17,280 reported as deferred outflows of resources related to OPEB resulting from School District contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability or an increase in the net OPEB asset in the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Fiscal Year Ending June 30:		SERS			STRS			Total		
2024	($64,779)	($178,403)	($243,182)	
2025	(65,252)	(185,650)	(250,902)	
2026	(57,160)	(92,080)	(149,240)	
2027	(37,386)	(38,363)	(75,749)	
2028	(27,930)	(50,162)	(78,092)	
Thereafter		(48,000) 		(101,770) 		(149,770) 	
Total		($300,507) 		($646,428) 		($946,935) 	

Actuarial Assumptions – SERS
The total OPEB liability is determined by SERS’ actuaries in accordance with GASB Statement No. 74, as part of their annual actuarial valuation for each retirement plan. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts (e.g., salaries, credited service) and assumptions about the probability of occurrence of events far into the future (e.g., mortality, disabilities, retirements, employment terminations). Actuarially determined amounts are subject to continual review and potential modifications, as actual results are compared with past expectations and new estimates are made about the future.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employers and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employers and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations.
Actuarial calculations reflect a long-term perspective. For a newly hired employee, actuarial calculations will take into account the employee's entire career with the employer and also take into consideration the benefits, if any, paid to the employee after termination of employment until the death of the employee and any applicable contingent annuitant. In many cases, actuarial calculations reflect several decades of service with the employer and the payment of benefits after termination.
Key methods and assumptions used in calculating the total OPEB liability in the latest actuarial valuation date of June 30, 2022, are presented below:
	June 30, 2022	

Inflation	2.40 percent
Future Salary Increases, including inflation
Wage Increases	3.25 percent to 13.58 percent

Investment Rate of Return	7.00 percent net of investment expense, including inflation
Fiduciary Net Position is Projected
to be Depleted	2044
Municipal Bond Index Rate:
Measurement Date	3.69 percent
Prior Measurement Date	1.92 percent Single Equivalent Interest Rate,
net of plan investment expense, including price inflation
Measurement Date	4.08 percent
Prior Measurement Date	2.27 percent Health Care Cost Trend Rate
Medicare	5.125 to 4.40 percent
Pre-Medicare	6.75 to 4.40 percent
Medical Trend Assumption	7.00 to 4.40 percent

Mortality rates among healthy retirees were based on the PUB-2010 General Employee Amount Weighted Below Median Healthy Retiree mortality table projected to 2017 with ages set forward 1 year and adjusted
94.20 percent for males and set forward 2 years and adjusted 81.35 percent for females. Mortality among disabled members were based upon the PUB-2010 General Disabled Retiree mortality table projected to 2017 with ages set forward 5 years and adjusted 103.3 percent for males and set forward 3 years and adjusted
106.8 percent for females. Mortality rates for contingent survivors were based on PUB-2010 General Amount Weighted Below Median Contingent Survivor mortality table projected to 2017 with ages set forward 1 year and adjusted 105.5 percent for males and adjusted 122.5 percent for females. Mortality rates for actives is based on PUB-2010 General Amount Weighted Below Median Employee mortality table.

The most recent experience study was completed for the five year period ended June 30, 2020.

The long-term expected rate of return on plan assets is reviewed as part of the actuarial five-year experience study. The most recent study covers fiscal years 2016 through 2020, and was adopted by the Board in 2021.

Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and a long-normal distribution analysis in which best-estimate ranges of expected future real rates of return were developed by the investment consultant for each major asset class. These ranges were combined to produce the long-term expected rate of return, 7.00 percent, by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The capital market assumptions developed by the investment consultant are intended for use over a 10-year horizon and may not be useful in setting the long-term rate of return for funding pension plans which covers a longer timeframe. The assumption is intended to be a long-term assumption and is not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in future years.

The SERS health care plan follows the same asset allocation and long-term expected real rate of return for each major asset class as the pension plan, see Note 14.
Discount Rate The discount rate used to measure the total OPEB liability at June 30, 2022 was 4.08 percent. The discount rate used to measure total OPEB liability prior to June 30, 2021, was 2.27 percent. The projection of cash flows used to determine the discount rate assumed that contributions will be made from members and the System at the contribution rate of 1.50 percent of projected covered payroll each year, which includes a 1.50 percent payroll surcharge and no contributions from the basic benefits plan. Based on these assumptions, the OPEB plan’s fiduciary net position was projected to become insufficient to make all projected future benefit payments of current System members by SERS actuaries. The Municipal Bond Index Rate is used in the determination of the SEIR for both the June 30, 2022, and the June 30, 2021 total OPEB liability. The Municipal Bond Index rate is the single rate that will generate a present value of benefit payments equal to the sum of the present value determined by the long-term expected rate of return, and the present value determined by discounting those benefits after the date of depletion. The Municipal Bond Index Rate is 3.69 percent at June 30, 2022 and 1.92 percent at June 30, 2021.
Sensitivity of the School District's Proportionate Share of the Net OPEB Liability to Changes in the Discount Rate and Changes in the Health Care Cost Trend Rates The net OPEB liability is sensitive to changes in the discount rate and the health care cost trend rate. The following table presents the net OPEB liability of SERS, what SERS' net OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (3.08%) and higher (5.08%) than the current discount rate (4.08%). Also shown is what SERS' net OPEB liability would be based on health care cost trend rates that are 1 percentage point lower (6.00% decreasing to 3.40%) and higher (8.00% decreasing to 5.40%) than the current rate.

1% Decrease	Current
Discount Rate	
1% Increase	
		(3.08%)			(4.08%)			(5.08%)		
School District's proportionate share				
of the net OPEB liability	$419,158	$337,482	$271,547	

Current
1% Decrease	Trend Rate	1% Increase
(6.00 % decreasing  (7.00 % decreasing  (8.00 % decreasing
	to 3.40%)	 	to 4.40%)	 	to 5.40%)	
School District's proportionate share
of the net OPEB liability	$260,259	$337,482	$438,347

Actuarial Assumptions – STRS

Key methods and assumptions used in the June 30, 2022, actuarial valuation are presented below:

		June 30, 2022			June 30, 2021		
Projected salary increases	Varies by service from 2.5 percent	Varies by age from 2.5 percent	
	to 8.5 percent	to 12.50 percent	
Investment Rate of Return	7.00 percent, net of investment	7.00 percent, net of investment	
	expenses, including inflation	expenses, including inflation	
Payroll Increases	3 percent	3 percent	
Discount Rate of Return	7.00 percent	7.00 percent	
Health Care Cost Trends			
Medical			
Pre-Medicare	7.50 percent initial	5.00 percent initial	
	3.94 percent ultimate	4 percent ultimate	
Medicare	-68.78 percent initial	-16.18 percent initial	
	3.94 percent ultimate	4 percent ultimate	
Prescription Drug			
Pre-Medicare	9.00 percent initial	6.50 percent initial	
	3.94 percent ultimate	4 percent ultimate	
Medicare	-5.47 percent initial	29.98 percent initial	
	3.94 percent ultimate	4 percent ultimate	

Projections of benefits include the historical pattern of sharing benefit costs between the employers and retired plan members.
For 2022, healthy retirees post-retirement mortality rates are based on the Pub-2010 Teachers Healthy Annuitant Mortality Table, adjusted 110 percent for males, projected forward generationally using mortality improvement scale MP-2020; pre-retirement mortality rates are based on Pub-2010 Teachers Employee Table adjusted 95 percent for females, projected forward generationally using mortality improvement scale MP-2020. For disabled retirees, mortality rates are based on the Pub-2010 Teachers Disabled Annuitant Table projected forward generationally using mortality improvement scale MP-2020.

For 2021, healthy retirees the mortality rates are based on the RP-2014 Annuitant Mortality Table with 50 percent of rates through age 69, 70 percent of rates between ages 70 and 79, 90 percent of rates between ages 80 and 84, and 100 percent of rates thereafter, projected forward generationally using mortality improvement scale MP-2016. For disabled retirees, mortality rates are based on the RP-2014 Disabled Mortality Table with 90 percent of rates for males and 100 percent of rates for females, projected forward generationally using mortality improvement scale MP-2016.

Actuarial assumptions used in the June 30, 2022, valuation are based on the results of an actuarial experience study for the period July 1, 2015 through June 30, 2021. An actuarial experience study is done on a quinquennial basis.

The STRS health care plan follows the same asset allocation and long-term expected real rate of return for each major asset class as the pension plan, see Note 14.
Discount Rate The discount rate used to measure the total OPEB liability was 7.00 percent as of June 30, 2022. The projection of cash flows used to determine the discount rate assumed STRS continues to allocate no employer contributions to the health care fund. Based on these assumptions, the OPEB plan’s fiduciary

net position was projected to be available to make all projected future benefit payments to current plan members as of June 30, 2022. Therefore, the long-term expected rate of return on health care plan investments of 7.00 percent was applied to all periods of projected health care costs to determine the total OPEB liability as of June 30, 2022.

Sensitivity of the School District’s Proportionate Share of the Net OPEB Asset to Changes in the Discount and Health Care Cost Trend Rate The following table represents the net OPEB asset as of June 30, 2022, calculated using the current period discount rate assumption of 7.00 percent, as well as what the net OPEB asset would be if it were calculated using a discount rate that is one percentage point lower (6.00 percent) or one percentage point higher (8.00 percent) than the current assumption. Also shown is the net OPEB asset as if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current health care cost trend rates.

Current
1% Decrease	Discount Rate	1% Increase
	(6.00%)	 	(7.00%)	 	(8.00%)	
School District's proportionate share
of the net OPEB (asset)	($797,184)	($862,310)	($918,098)

School District's proportionate share

Current
 1% Decrease  	Trend Rate	  1% Increase	

of the net OPEB (asset)	($894,426)	($862,310)	($821,773)

Note 16 - Other Employee Benefits
Compensated Absences

The criteria for determining vacation and sick leave benefits are derived from negotiated agreements and State laws. Classified employees earn ten to twenty-five days of vacation per year, depending upon length of service and hours worked. Teachers and most administrators do not earn vacation. Teachers, administrators and classified employees earn sick leave at the rate of one and one-fourth days per month. Certificated employees with ten years or more of service upon separation receive payment for twenty-five percent of the total sick leave accumulation, up to a maximum of 80 days. Classified employees with ten years or more of service upon retirement receive payment for twenty-five percent of the total sick leave accumulation.
Life Insurance Benefits

The School District provides life insurance to most employees through Voya Financial, in the amount of
$50,000 for all employees. Some administrators receive additional life insurance coverage paid by the Board of Education. Premiums are paid for by the Board of Education.

Note 17 - Set Asides
The School District is required by State statute to annually set aside in the general fund an amount based on a statutory formula for the acquisition and construction of capital improvements. Amounts not spent by the end of the fiscal year or offset by similarly restricted resources received during the year must be held in cash at year end and carried forward to be used for the same purposes in future years.

The following cash basis information describes the change in the fiscal year end set aside amounts for capital acquisition. Disclosure of this information is required by State statute.

Capital
 Improvements 
Set-Aside Balance as
of June 30, 2022	$0
Current Year Set-aside Requirement	164,418 Offsets	 (153,075)
Qualifying Disbursements		(121,427) 
Total		($110,084) 
Set-aside Balance Carried
Forward to Future Fiscal Years		$0 
Set-aside Balance as
of June 30, 2023		$0 

Although the School District had qualifying disbursements and offsets during the fiscal year that reduced the capital acquisition set-aside amounts below zero, these extra amounts will not be used to reduce the set-aside requirements of future years. The negative amounts will not be presented as being carried forward to the next fiscal year.

Note 18 – Contingencies
Grants

The School District received financial assistance from federal and State agencies in the form of grants. The expenditure of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the general fund or other applicable funds. However, the effect of any such disallowed claims on the overall financial position of the School District at June 30, 2023, if applicable, cannot be determined at this time.

School Foundation
School District foundation funding is based on the annualized full-time equivalent (FTE) enrollment of each student. The Ohio Department of Education (ODE) is legislatively required to adjust/reconcile funding as enrollment information is updated by schools throughout the State, which can extend past the fiscal year end. As of the date of this report, all ODE adjustments for fiscal year 2023 have been finalized.

Litigation

The School District is not party to legal proceedings as of June 30, 2023.

Note 19 – Significant Commitments
Contractual Commitments

At June 30, 2023, the School District had the following contract balances for two construction projects:
Amount
	Project	  Outstanding 
Vasco Asphalt Company	$197,352
Sure Line Incorporation		35,718 
Total		$233,070 

Remaining commitments were encumbered at year-end. The amounts of $36,358 in contracts payable for governmental activities have been capitalized.
Encumbrances
Encumbrances are commitments related to unperformed contracts for goods or services. Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. At year end the amount of encumbrances expected to be honored upon performance by the vendor in the next year were as follows:

Governmental Funds		
General	$3,431	
District Replacement	212,152	
Other Governmental Funds		99,259 	
Total Governmental Funds	$314,842	

Note 20 – COVID-19
The United States and the State of Ohio declared a state of emergency in March of 2020 due to the COVID- 19 pandemic. Ohio’s state of emergency ended in June of 2021 while the national state of emergency ended in April 2023. During fiscal year 2023, the School District received COVID-19 funding. The School District will continue to spend available COVID-19 funding consistent with the applicable program guidelines.

Note 21 – Change in Accounting Principle
For fiscal year 2023, the School District implemented Governmental Accounting Standards Board (GASB) No. 91, Conduit Debt Obligations, Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, GASB Statement No. 96, Subscription-Based Information Technology Arrangements, and GASB Statement No. 99, Omnibus 2022.
GASB 91 clarifies the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. The School District did not have any debt that met the definition of conduit debt.

GASB Statement 94 improves financial reporting by addressing issues related to public-private and public- public partnership arrangements (PPPs). This Statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). The School District did not have any arrangements that met the GASB 94 definition of a PPP or an APA.

GASB Statement 96 provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). These changes were incorporated in the School District’s 2023 financial statements. The School District recognized $15,921 in subscriptions payable at July 1, 2022 which was offset by the subscription asset.

GASB Statement 99 addresses various issues including items related to leases, PPPs, and SBITAs. The requirements related to PPPs and SBITAs were incorporated with the corresponding GASB 94 and GASB 96 changes identified above.

Required Supplementary Information

McDonald Local School District
Required Supplementary Information
Schedule of the School District's Proportionate Share of the Net Pension Liability School Employees Retirement System of Ohio

		2023			2022			2021			2020		
School District's Proportion of the Net Pension Liability	
0.02348410%	
0.02420470%	
0.02317600%	
0.02279510%	
School District's Proportionate Share of the Net Pension Liability	
$1,270,203	
$893,083	
$1,532,910	
$1,363,871	

School District's Covered Payroll	$892,164	
$835,521	
$829,007	
$786,022	
Pension Liability as a Percentage
of its Covered Payroll	142.37%	
106.89%	
184.91%	
173.52%	

Last Ten Fiscal Years

School District's Proportionate Share of the Net

Plan Fiduciary Net Position as a Percentage of the Total Pension
Liability	75.82%	82.86%	68.55%	70.85%

Amounts presented for each fiscal year were determined as of the School District's measurement date which is the prior fiscal year end.

See accompanying notes to the required supplementary information

	2019			2018			2017			2016			2015			2014		

0.02357330%	
0.02288770%	
0.02223310%	
0.01954910%	
0.01992600%	
0.01992600%	

$1,350,088	
$1,367,489	
$1,627,256	
$1,115,491	
$1,008,444	
$1,184,935	
$809,215	$748,050	$693,279	$590,279	$558,511	$520,069	

166.84%	
182.81%	
234.72%	
188.98%	
180.56%	
227.84%	

71.36%	
69.50%	
62.98%	
69.16%	
71.70%	
65.52%	

McDonald Local School District
Required Supplementary Information
Schedule of the School District's Proportionate Share of the Net OPEB Liability School Employees Retirement System of Ohio
Last Seven Fiscal Years (1)

	2023	 	2022	 	2021	

School District's Proportion of the Net OPEB
Liability	0.02403700%	0.02500260%	0.02429930%

School District's Proportionate Share of the Net
OPEB Liability	$337,482	$473,195	$528,103	
School District's Covered Payroll	$892,164	$835,521	$829,007	
School District's Proportionate Share of the Net OPEB Liability as a Percentage
of its Covered Payroll	

37.83%	

56.63%	

63.70%	
Plan Fiduciary Net Position as a				
Percentage of the Total OPEB				
Liability	30.34%	24.08%	18.17%	

(1) Information prior to 2017 is not available.

Amounts presented for each fiscal year were determined as of the School District's measurement date which is the prior fiscal year end.

See accompanying notes to the required supplementary information

	2020			2019			2018			2017		

0.02341970%	
0.02372870%	
0.02308200%	
0.02241330%	

$588,958	
$658,298	
$619,459	
$638,862	
$786,022	$809,215	$748,050	$693,279	

74.93%	
81.35%	
82.81%	
92.15%	

15.57%	
13.57%	
12.46%	
11.49%	

McDonald Local School District
Required Supplementary Information
Schedule of the School District's Proportionate Share of the Net Pension Liability State Teachers Retirement System of Ohio
Last Ten Fiscal Years

	2023	 	2022	 	2021	 	2020	

School District's Proportion of the Net Pension
Liability	0.03330243%	0.03464090%	0.03366387%	0.03405352%

School District's Proportionate Share of the Net

$4,449,914	$4,222,214	$4,098,264	$4,025,493	

166.37%	
104.90%	
198.75%	
187.08%	

Pension Liability	$7,403,173	$4,429,151	$8,145,459	$7,530,732 School District's Covered Payroll
School District's Proportionate Share of the Net Pension Liability as a Percentage
of its Covered Payroll

Plan Fiduciary Net Position as a Percentage of the Total Pension
Liability	78.90%	87.80%	75.50%	77.40%

Amounts presented for each fiscal year were determined as of the School District's measurement date which is the prior fiscal year end.

See accompanying notes to the required supplementary information

	2019			2018			2017			2016			2015			2014		

0.03375248%	
0.03223152%	
0.03088894%	
0.03118773%	
0.03054766%	
0.03054766%	

$7,421,411	
$7,656,666	
$10,339,461	
$8,619,376	
$7,430,248	
$8,850,863	
$3,881,564	$3,588,700	$3,288,450	$3,222,664	$3,148,557	$2,893,669	

191.20%	
213.35%	
314.42%	
267.46%	
235.99%	
305.87%	

77.30%	
75.30%	
66.80%	
72.10%	
74.70%	
69.30%	

McDonald Local School District
Required Supplementary Information
Schedule of the School District's Proportionate Share of the Net OPEB (Asset) Liability State Teachers Retirement System of Ohio
Last Seven Fiscal Years (1)

	2023	 	2022	 	2021	

School District's Proportion of the Net OPEB
Asset/Liability	0.03330243%	0.03464090%	0.03366387%

School District's Proportionate Share of the Net
OPEB (Asset) Liability	($862,310)	($730,374)	($591,640)	
School District's Covered Payroll	$4,449,914	$4,222,214	$4,098,264	
School District's Proportionate Share of the Net OPEB (Asset) Liability as a Percentage
of its Covered Payroll	

-19.38%	

-17.30%	

-14.44%	
Plan Fiduciary Net Position as a				
Percentage of the Total OPEB				
Liability	230.70%	174.70%	182.10%	

(1) Information prior to 2017 is not available.

Amounts presented for each fiscal year were determined as of the School District's measurement date which is the prior fiscal year end.

See accompanying notes to the required supplementary information

	2020			2019			2018			2017		

0.03405352%	
0.03375248%	
0.03223152%	
0.03088894%	

($564,008)	
($542,369)	
$1,257,555	
$1,651,949	
$4,025,493	$3,881,564	$3,588,700	$3,288,450	

-14.01%	
-13.97%	
35.04%	
50.23%	

174.70%	
176.00%	
47.10%	
37.30%	

McDonald Local School District
Required Supplementary Information Schedule of the School District's Contributions School Employees Retirement System of Ohio Last Ten Fiscal Years

		2023				2022				2021				2020		
Net Pension Liability								
Contractually Required Contribution	$134,501		$124,903		$116,973		$116,061	
Contributions in Relation to the								
Contractually Required Contribution		(134,501)			(124,903)			(116,973)			(116,061)	
Contribution Deficiency (Excess)		$0 			$0 			$0 			$0 	
School District Covered Payroll (1)	$960,721		$892,164		$835,521		$829,007	
Pension Contributions as a Percentage of Covered Payroll	
	14.00%		
	14.00%		
	14.00%		
	14.00%	
Net OPEB Liability								
Contractually Required Contribution (2)	17,280		15,822		16,267		16,791	
Contributions in Relation to the								
Contractually Required Contribution		(17,280)			(15,822)			(16,267)			(16,791)	
Contribution Deficiency (Excess)		$0 			$0 			$0 			$0 	
OPEB Contributions as a Percentage of Covered Payroll	
	1.80%		
	1.77%		
	1.95%		
	2.03%	
Total Contributions as a Percentage of Covered Payroll (2)	
	15.80%		
	15.77%		
	15.95%		
	16.03%	
(1) The School District's covered payroll is the same for Pension and OPEB.
(2) Includes Surcharge

See accompanying notes to the required supplementary information

	2019				2018				2017				2016				2015				2014		
$106,113		$109,244		$104,727		$97,059		$77,799		$77,410	
	(106,113)			(109,244)			(104,727)			(97,059)			(77,799)			(77,410)	
	$0 			$0 			$0 			$0 			$0 			$0 	
$786,022		$809,215		$748,050		$693,279		$590,279		$558,511	
	13.50%			13.50%			14.00%			14.00%			13.18%			13.86%	

18,502		

16,037		

11,915		

10,837		

14,474		

9,985	
	(18,502)			(16,037)			(11,915)			(10,837)			(14,474)			(9,985)	
	$0 			$0 			$0 			$0 			$0 			$0 	

	2.35%		
	1.98%		
	1.59%		
	1.56%		
	2.45%		
	1.79%	

	15.85%		
	15.48%		
	15.59%		
	15.56%		
	15.63%		
	15.65%	

McDonald Local School District
Required Supplementary Information Schedule of the School District's Contributions State Teachers Retirement System of Ohio Last Ten Fiscal Years

		2023				2022				2021				2020		
Net Pension Liability								
Contractually Required Contribution	$597,709		$622,988		$591,110		$573,757	
Contributions in Relation to the								
Contractually Required Contribution		(597,709)			(622,988)			(591,110)			(573,757)	
Contribution Deficiency (Excess)		$0 			$0 			$0 			$0 	
School District Covered Payroll (1)	$4,269,350		$4,449,914		$4,222,214		$4,098,264	
Pension Contributions as a Percentage of Covered Payroll	
	14.00%		
	14.00%		
	14.00%		
	14.00%	
Net OPEB Liability								
Contractually Required Contribution	$0		$0		$0		$0	
Contributions in Relation to the								
Contractually Required Contribution		0 			0 			0 			0 	
Contribution Deficiency (Excess)		$0 			$0 			$0 			$0 	
OPEB Contributions as a Percentage of Covered Payroll	
	0.00%		
	0.00%		
	0.00%		
	0.00%	
Total Contributions as a Percentage of Covered Payroll	
	14.00%		
	14.00%		
	14.00%		
	14.00%	

(1) The School District's covered payroll is the same for Pension and OPEB. See accompanying notes to the required supplementary information

	2019				2018				2017				2016				2015				2014		
$563,569		$543,419		$502,418		$460,383		$451,173		$409,312	
	(563,569)			(543,419)			(502,418)			(460,383)			(451,173)			(409,312)	
	$0 			$0 			$0 			$0 			$0 			$0 	
$4,025,493		$3,881,564		$3,588,700		$3,288,450		$3,222,664		$3,148,557	
	14.00%			14.00%			14.00%			14.00%			14.00%			13.00%	

$0		

$0		

$0		

$0		

$0		

$31,486	
	0 			0 			0 			0 			0 			(31,486)	
	$0 			$0 			$0 			$0 			$0 			$0 	

	0.00%		
	0.00%		
	0.00%		
	0.00%		
	0.00%		
	1.00%	

	14.00%		
	14.00%		
	14.00%		
	14.00%		
	14.00%		
	14.00%	

Net Pension Liability

Changes in Assumptions – SERS

Beginning in fiscal year 2018, on each anniversary of the initial retirement, the allowance of all retirees and survivors may be increased by the annual rate of increase in the CPI-W measured as of the June preceding the beginning of the applicable calendar year. The annual rate of increase shall not be less than 0 percent nor greater than 2.5 percent. The COLA was suspended for 2018-2020. Prior to 2018, an assumption of 3 percent was used.
Amounts reported in 2022 incorporate changes in assumptions used by SERS in calculating the total pension liability in the latest actuarial valuation. These assumptions compared with those used in prior years are presented below:

	Fiscal Year 2022	 	Fiscal Years 2021-2017	   Fiscal Year 2016 and Prior	

Wage Inflation	2.4 percent	3.00 percent	3.25 percent	
Future Salary Increases,				
including inflation	3.25 percent to 13.58 percent	3.50 percent to 18.20 percent	4.00 percent to 22.00 percent	
Investment Rate of Return	7.0 percent net of	7.50 percent net of investments	7.75 percent net of investments	
	system expenses	expense, including inflation	expense, including inflation	

Beginning in 2022, amounts reported use mortality rates based on the PUB-2010 General Employee Amount Weight Below Median Healthy Retiree mortality table projected to 2017 with ages set forward 1 year and adjusted 94.20 percent for males and set forward 2 years and adjusted 81.35 percent for females. Mortality among disabled members were based upon the PUB-2010 General Disabled Retiree mortality table projected to 2017 with ages set forward 5 years and adjusted 103.3 percent for males and set forward 3 years and adjusted 106.8 percent for females. Future improvement in mortality rates is reflected by applying the MP-2020 projection scale generationally.
Amounts report for 2017 through 2021 use mortality rates that are based on the RP-2014 Blue Collar Mortality Table with fully generational projection and a five year age set-back for both males and females. Amounts reported for fiscal year 2016 and prior, use mortality assumptions that are based on the 1994 Group Annuity Mortality Table set back one year for both men and women. Special mortality tables were used for the period after disability retirement.

Changes in Assumptions - STRS

Beginning with fiscal year 2022, amounts reported incorporate changes in assumptions and changes in benefit terms used by STRS in calculating the total pension liability in the latest actuarial valuation. These new assumptions compared with those used in fiscal years 2018-2021 and fiscal year 2017 and prior are presented below:

Fiscal Year 2022	Fiscal Years 2021-2018	Fiscal Year 2017 and Prior

Inflation	2.50 percent		2.50 percent		2.75 percent Projected salary increases   From 2.5 percent to 12.5 percent	12.50 percent at age 20 to	12.25 percent at age 20 to
based on age	2.50 percent at age 65		2.75 percent at age 70 Investment Rate of Return	7.00 percent, net of investment   7.45 percent, net of investment	7.75 percent, net of investment
expenses, including inflation	expenses, including inflation	expenses, including inflation
Payroll Increases	3 percent	3 percent	3.5 percent
Cost-of-Living Adjustments 0.0 percent, effective July 1, 2017 0.0 percent, effective July 1, 2017 2 percent simple applied as follows: (COLA)	for members retiring before
August 1, 2013, 2 percent per year;
for members retiring August 1, ,2013 or later, 2 percent COLA commences on fifth anniversary of retirement date
Beginning with fiscal year 2022, post-retirement mortality rates are based on the Pub-2010 Teachers Healthy Annuitant Mortality Table, adjusted 110 percent for males, projected forward generationally using mortality improvement scale MP-2020. Pre-retirement mortality rates are based on Pub-2010 Teachers Employee Table adjusted 95 percent for females, projected forward generationally using mortality improvement scale MP-2020. Post-retirement disabled mortality rates are based on Pub-2010 Teachers Disable Annuitant Table projected forward generationally using mortality improvement scale MP-2020.

Beginning with fiscal year 2018, post-retirement mortality rates for healthy retirees were based on the RP- 2014 Annuitant Mortality Table with 50 percent of rates through age 69, 70 percent of rates between ages 70 and 79, 90 percent of rates between ages 80 and 84, and 100 percent of rates thereafter, projected forward generationally using mortality improvement scale MP-2016. Post-retirement disabled mortality rates are based on the RP-2014 Disabled Mortality Table with 90 percent of rates for males and 100 percent of rates for females, projected forward generationally using mortality improvement scale MP-2016. Pre-retirement mortality rates are based on RP-2014 Employee Mortality Table, projected forward generationally using mortality improvement scale MP-2016.

For fiscal year 2017 and prior actuarial valuation, mortality rates were based on the RP-2000 Combined Mortality Table (Projection 2022—Scale AA) for Males and Females. Males’ ages are set-back two years through age 89 and no set-back for age 90 and above. Females younger than age 80 are set back four years, one year set back from age 80 through 89, and no set back from age 90 and above.

Changes in Benefit Term – STRS
For fiscal year 2023, the Board approved a one-time 3 percent COLA effective on the anniversary of a benefit recipient’s retirement date for those eligible during fiscal year 2023 and eliminated the age 60 requirement to receive unreduced retirement that was scheduled to go into effect August 1, 2026.

Net OPEB Liability (Asset) Changes in Assumptions – SERS
Beginning with fiscal year 2022, amounts reported incorporate changes in assumptions and changes in benefit terms used by SERS in calculating the total OPEB liability in the latest actuarial valuation. These new assumptions compared with those used in fiscal year 2021 and prior are presented below:

	2022	 	2021 and Prior	

Inflation	2.40 percent	3.00 percent Future Salary Increases, including inflation
Wage Increases	3.25 percent to 13.58 percent	3.50 percent to 18.20 percent

Investment Rate of Return	7.00 percent net of investment	7.50 percent net of investment
expense, including inflation	expense, including inflation

Amounts reported incorporate changes in key methods and assumptions used in calculating the total OPEB liability as presented below:

Municipal Bond Index Rate:
Fiscal year 2023	3.69 percent
Fiscal year 2022	1.92 percent
Fiscal year 2021	2.45 percent
Fiscal year 2020	3.13 percent
Fiscal year 2019	3.62 percent
Fiscal year 2018	3.56 percent
Fiscal year 2017	2.92 percent
Single Equivalent Interest Rate, net of plan investment expense, including price inflation
Fiscal year 2023	4.08 percent
Fiscal year 2022	2.27 percent
Fiscal year 2021	2.63 percent
Fiscal year 2020	3.22 percent
Fiscal year 2019	3.70 percent
Fiscal year 2018	3.63 percent
Fiscal year 2017	2.98 percent

Changes in Assumptions – STRS

For fiscal year 2018, the discount rate was increased from 3.26 percent to 4.13 percent based on the methodology defined under GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans (OPEB) and the long term expected rate of return was reduced from 7.75 percent to 7.45 percent. Valuation year per capita health care costs were updated, and the salary scale was modified. The percentage of future retirees electing each option was updated based on current data and the percentage of future disabled retirees and terminated vested participants electing health coverage were decreased. The assumed mortality, disability, retirement, withdrawal and future health care cost trend rates were modified along with the portion of rebated prescription drug costs.

For fiscal year 2019, the discount rate was increased from the blended rate of 4.13 percent to the long-term expected rate of return of 7.45.
For fiscal year 2022, the discount rate was decreased from 7.45 percent to the long-term expected rate of return of 7.00.
For fiscal year 2023, the projected salary increases were changed from age based (2.5 percent to 12.50 percent) to service based (2.5 percent to 8.5 percent.)

Changes in Benefit Terms – STRS

For fiscal year 2018, the subsidy multiplier for non-Medicare benefit recipients was reduced from 2.1 percent to 1.9 percent per year of service. Medicare Part B premium reimbursements were discontinued for certain survivors and beneficiaries and all remaining Medicare Part B premium reimbursements will be discontinued beginning January 2020.

For fiscal year 2019, the subsidy multiplier for non-Medicare benefit recipients was increased from 1.9 percent to 1.944 percent per year of service effective January 1, 2019. The non-Medicare frozen subsidy base premium was increased effective January 1, 2019 and all remaining Medicare Part B premium reimbursements will be discontinued beginning January 1, 2020.

For fiscal year 2020, there was no change to the claims costs process. Claim curves were trended to the fiscal year ending June 30, 2020 to reflect the current price renewals. The non-Medicare subsidy percentage was increased effective January 1, 2020 from 1.944 percent to 1.984 percent per year of service. The non- Medicare frozen subsidy base premium was increased effective January 1, 2020. The Medicare subsidy percentages were adjusted effective January 1, 2021 to 2.1 percent for the Medicare plan. The Medicare Part B monthly reimbursement elimination date was postponed to January 1, 2021.

For fiscal year 2021, there was no change to the claims costs process. Claim curves were updated to reflect the projected fiscal year ending June 30, 2021 premium based on June 30, 2020 enrollment distribution. The non-Medicare subsidy percentage was increased effective January 1, 2021 from 1.984 percent to 2.055 percent per year of service. The non-Medicare frozen subsidy base premium was increased effective January 1, 2021. The Medicare subsidy percentages were adjusted effective January 1, 2021 to 2.1 percent for the AMA Medicare plan. The Medicare Part B monthly reimbursement elimination date was postponed indefinitely.

For fiscal year 2022, there was no change to the claims costs process. Claim curves were updated to reflect the projected fiscal year ending June 30, 2022 premium based on June 30, 2021 enrollment distribution. The non-Medicare subsidy percentage was increased effective January 1, 2022 from 2.055 percent to 2.1 percent per year of service. The non-Medicare frozen subsidy base premium was increased effective January 1, 2022. The Medicare Part D Subsidy was updated to reflect it is expected to be negative in CY 2022. The Part B monthly reimbursement elimination date was postponed indefinitely.

For fiscal year 2023, healthcare trends were updated to reflect emerging claims and recoveries experience.

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SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Federal Grantor/	Assistance
Pass-Through Grantor/	Listing	Non-Cash
Program or Cluster Title	Number	Expenditures	Expenditures
U.S. Department of Agriculture
Passed through Ohio Department of Education
Child Nutrition Cluster:		
School Breakfast Program	10.553	$	24,147	$	0	
National School Lunch Program	10.555	79,897	18,654	
COVID-19 - National School Lunch Program	10.555		23,202 		0 	
Total Child Nutrition Cluster			127,246 		18,654 	
COVID-19 - Pandemic EBT Administrative Costs	10.649		628 		0 	
Total U.S. Department of Agriculture			127,874 		18,654 	
U.S. Department of Education				
Passed through Ohio Department of Education				
Title I - Grants to Local Educational Agencies	84.010		112,875 		0 	
Special Education Cluster (IDEA):				
Special Education - Grants to States	84.027	161,431	0	
Special Education - Preschool Grants	84.173		2,558 		0 	
Total Special Education Cluster (IDEA)			163,989 		0 	
Improving Teacher Quality State Grants	84.367		20,205 		0 	
Student Support and Academic Enrichment Program	84.424		10,000 		0 	
Education Stabilization Fund -				
COVID 19 - Education Stabilization Fund - ESSER II	84.425D	189,100	0	
COVID-19 - Education Stabilization Fund - ARP ESSER	84.425U		470,360 		0 	
Total ALN #84.425			659,460 		0 	
Total U.S. Department of Education			966,529 		0 	
U.S. Department of the Treasury				
Passed through Ohio Facilities Construction Commission
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds	
21.027	
	68,219 	
	0 	
Total U.S. Department of the Treasury			68,219 		0 	
U.S. Federal Communications Commission				
Direct Program				
Universal Service Fund - Schools and Libraries	32.004		16,990 			0 	
Total U.S. Federal Communications Commission			16,990 			0 	
TOTAL EXPENDITURES OF FEDERAL AWARDS		 $  1,179,612 		 $	18,654 	
See accompanying notes to the Schedule of Expenditures of Federal Awards.					

NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2023

NOTE 1:	BASIS OF PRESENTATION

The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of the McDonald Local School District under programs of the federal government for the year ended June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the McDonald Local School District, it is not intended to and does not present the financial position or changes in net position of the McDonald Local School District.

NOTE 2:	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the Schedule are reported on the cash basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

NOTE 3:	INDIRECT COST RATE
The McDonald Local School District has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

NOTE 4:	CHILD NUTRITION CLUSTER
Cash receipts from the U.S. Department of Agriculture are commingled with State grants. It is assumed federal monies are expended first.

NOTE 5:	FOOD DONATION PROGRAM
Program regulations do not require the District to maintain separate inventory records for purchased food and food received from the U.S. Department of Agriculture. This non- monetary assistance (expenditures) is reported in the Schedule at the fair value of the commodities received.

Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

McDonald Local School District Trumbull County
600 Iowa Avenue
McDonald, OH 44437
To the Members of the Board of Education:

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the McDonald Local School District, Trumbull County, Ohio, (the District) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated December 22, 2023.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified.

4141 Rockside Road, Suite 200, Seven Hills, Ohio 44131	(216) 475-6136	www.zupkacpa.com

McDonald Local School District Trumbull County
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Page 2
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Zupka & Associates Certified Public Accountants
December 22, 2023

Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

McDonald Local School District Trumbull County
600 Iowa Avenue
McDonald, OH 44437

To the Members of the Board of Education:
Report on Compliance for Each Major Federal Program

Opinion on Each Major Federal Program

We have audited the McDonald Local School District, Trumbull County, Ohio’s (the District) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on the District’s major federal program for the year ended June 30, 2023. The District’s major federal program is identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.

In our opinion, the McDonald Local School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2023.
Basis for Opinion on Each Major Federal Program
We conducted an audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the McDonald Local School District, and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the McDonald Local School District’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance

Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements to the McDonald Local School District’s federal programs.

4141 Rockside Road, Suite 200, Seven Hills, Ohio 44131	(216) 475-6136	www.zupkacpa.com

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the McDonald Local School District’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the McDonald Local School District’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we

exercise professional judgment and maintain professional skepticism throughout the audit.
identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the McDonald Local School District’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
obtain an understanding of the McDonald Local School District’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the McDonald Local School District’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Zupka & Associates Certified Public Accountants

December 22, 2023

SUMMARY OF AUDITOR'S RESULTS
2023(i)	Type of Financial Statement Opinion	Unmodified 2023(ii)	Were there any material control weaknesses reported at the
financial statement level (GAGAS)?	No

2023(ii)	Were there any significant deficiencies in internal control reported
at the financial statement level (GAGAS)?	No

2023(iii)	Was there any reported material noncompliance at the
financial statement level (GAGAS)?	No

2023(iv)	Were there any material internal control weaknesses reported for
major federal programs?	No

2023(iv)	Were there any significant deficiencies in internal control
reported for major federal programs?	No

2023(v)	Type of Major Programs' Compliance Opinions	Unmodified 2023(vi)	Are there any reportable findings under 2 CFR 200.516(a)?	No 2023(vii)	Major Programs (list):
Education Stabilization Fund:
COVID-19 - ESSER II - ALN #84.425D COVID-19 - ARP ESSER - ALN #84.425U

2023(viii)	Dollar Threshold: A/B Program	Type A: $750,000 Type B: All Others less
than $750,000

2023(ix)	Low Risk Auditee?	No

FINDINGS RELATED TO THE FINANCIAL STATEMENTS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS

None.

FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS

None.

The audit report for the fiscal year ending June 30, 2022, included no findings or management letter recommendations.

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MCDONALD LOCAL SCHOOL DISTRICT TRUMBULL COUNTY

AUDITOR OF STATE OF OHIO CERTIFICATION

This is a true and correct copy of the report, which is required to be filed pursuant to Section 117.26, Revised Code, and which is filed in the Office of the Ohio Auditor of State in Columbus, Ohio.

Certified for Release 2/15/2024

88 East Broad Street, Columbus, Ohio 43215 Phone: 614-466-4514 or 800-282-0370
This report is a matter of public record and is available online at www.ohioauditor.gov