Annual Comprehensive Financial Report for the FY Ended June 30, 2025

As management of School District 27J, counties of Adams, Weld and Broomfield, Colorado (the School District), we offer readers of the School District’s Annual Comprehensive Financial Report this narrative overview and analysis of the financial activities of the School District for the fiscal year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal; which can be found on pages 4-8 of this report, and the School District’s financial statements, which follow this section.

Financial Highlights

• Effective July 1, 2014, the District is required to apply the Governmental Accounting Standards Board (GASB) Statement No. 68 Accounting and Financial Reporting for Pensions (GASB 68). GASB 68 revises and establishes new financial reporting requirements for governments that provide their employees with pension benefits. The School District provides its employees with pension benefits through a multiple employer cost sharing defined benefit retirement program administered by the Public Employees’ Retirement Association of Colorado (PERA).
• Due to the effect of GASB 68, the assets and deferred outflows of resources of the School District only exceeded its liabilities and deferred inflows of resources at June 30, 2025, by $74.9 million (net position).
• During the November 2020 election, the School District voters successfully passed an authorization for issuance of $515 million of bonds. The bonds are funding building a new comprehensive high school; two new middle schools; STEM/CTE centers at all three of the current high schools, all of which opened in the fall of 2023; a K-8 school, Discovery Magnet, which opened in the fall of 2023 and the second phase of a new elementary, Southlawn Elementary, which opened in fall of 2022. In addition, the School District will increase safety and security measures district-wide and lengthen the life of existing educational facilities through repairs, maintenance and renovations.
• During the November 2022 election, the School District voters successfully passed a Mill Levy Override to increase the District’s taxes by $17.74 million beginning in tax collection year 2023, and by whatever amounts as may be generated annually thereafter by the imposition of an additional mill levy of not to exceed 8 mills. This funding is used for the safety of students, staff, and community; Compensation to attract and retain effective and experienced staff to serve and support students; and for career and technical education/stem center staffing.
• The net position of the School District governmental activities includes $133.0 million net investment in capital assets; net position of $94.3 million restricted for debt service payments, $8.0 million required emergency reserves; and an unrestricted net position balance of negative $(170.0) million.

Overview of the Financial Statements

The discussion and analysis provided are intended to serve as an introduction to the School District’s basic financial statements. The School District’s basic financial statements consist of three components: (1) government-wide financial statements, (2) fund financial statements, and (3) the notes to the financial statements. This report also includes required supplementary information intended to furnish additional detail to support the basic financial statements themselves.

Government-wide Financial Statements

The government-wide financial statements are designed to provide the reader of the School District’s Annual Comprehensive Financial Report a broad overview of the School District’s finances in a manner similar to a private sector business. The government-wide financial statements include the statement of net position and the statement of activities.

The statement of net position presents financial information on all of the School District’s assets, deferred outflows or resources, liabilities and deferred inflows of resources with the difference 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 as a whole is improving or deteriorating. Evaluation of the overall health of the School District would extend to other non-financial factors such as diversification of the taxpayer base or the condition of School District infrastructure, in addition to the financial information provided in this report.

The statement of activities presents information showing how the School District’s net position changed during the current 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 for some items that will only result in cash flows in future fiscal periods. The purpose of the statement of activities is to show the financial reliance of the School District's activities or functions on revenues provided by the School District's taxpayers.

In the government-wide financial statements, the School District’s activities include:

• Governmental activities: Most of the School District’s basic services are included here, such as instruction and support services that are principally supported by property taxes and state funding.

The government-wide financial statements include not only financial data for the School District itself (known as the primary government), but also the legally separate Capital Facility Fee Foundation and seven legally separate charter schools for which the School District is financially accountable. Financial information for these component units is presented separately from the financial information presented for the primary government itself.

The government-wide financial statements can be found on pages 26-27 of this report.

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 uses funds to ensure and demonstrate compliance with finance-related laws and regulations. Individual fund data for non-major funds is provided in the form of combining statements in a later section of this report. All of the funds of the School District can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Government funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating annual financing requirements of governmental programs and the commitment of spendable resources for the near-term.

Since the governmental funds and the governmental activities report information using the same functions, it is useful to compare the information presented. Because the focus of each report differs, a reconciliation is provided on the fund financial statements to assist the reader in comparing the near-term requirements with the long-term needs.

The School District maintains nine individual governmental funds. The major funds are the general fund, the capital projects fund, the government designated purpose grants fund, the debt service fund, and the nutrition services fund. They are presented separately in the fund financial statements with the remaining governmental funds combined into a single aggregated presentation labeled other governmental funds. Individual fund information for the nonmajor funds is presented as supplementary information in this document. The School District adopts an annual appropriated budget for each of the governmental funds. Budgetary comparison statements for the nine governmental funds are included in the supplementary information to demonstrate compliance with the amended budget.

The basic governmental fund financial statements can be found on pages 28-31 of this report.

Proprietary funds: Effective July 1, 2014 the School District maintains one type of proprietary fund, internal service funds. Internal service funds are used to accumulate and allocate costs internally among the governmental functions. The School District has two internal service funds, the risk management/dental insurance fund, which is used for the School District self-insured dental program and the print shop fund, which is used for the in-house printing services. The School District adopts an annual appropriated budget for each of the proprietary funds. Budgetary comparison statements for the two proprietary funds are included in the supplementary information to demonstrate compliance with the amended budget.

The basic proprietary fund financial statements can be found on pages 32-34 of this report.

Private Purpose Trust Fund: The private purpose trust fund is used to account for resources held for the benefit of parties outside of the School District. The private purpose trust fund is not reflected in the government-wide financial statements because the resources of those funds are not available to support the School District’s own programs. The accounting used for private purpose trust funds is much like that used for proprietary funds. The School District has one private purpose trust fund which is primarily used for scholarship activity.

The basic private purpose trust fund financial statements can be found on pages 35-37 of this report.

Notes to the Basic Financial Statements

The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the School District's budget presentations. Budgetary comparison statements are included as “required supplementary information” for the general fund, nutrition services fund and the government designated purpose grant fund. Budgetary comparison schedules for all other governmental funds can be found in a later section of this report. These statements and schedules demonstrate compliance with the School District’s adopted budget.

As discussed, the School District reports major funds in the basic financial statements. Combining and individual fund statements and schedules for non-major funds can be found beginning on page 109 of this report.

Government-wide Overall Financial Analysis

Government-wide Net Position

As noted earlier, net position may serve as a useful indicator of a government’s financial position. At June 30, 2025, the assets and deferred outflows of resources of the School District exceeded its liabilities and deferred inflows by $74.9 million. This positive net position is inclusive of a $319 million net pension liability that is due to the effect of GASB 68.

The assets of the School District are classified as current assets, capital assets, net of depreciation and amortization and other non-current assets. Cash, investments, deposit with insurance pool, receivables, inventories and prepaid expenses are current assets. These assets are available to provide resources for the near-term operations of the School District. Cash and investments account for 93.9% of the current assets. Receivables are due in large part as a result of the property tax collection process. The School District receives close to 95% of the annual property tax assessment between March and June. The School District reports deferred outflows of resources related to pensions and the loss on refunding.

Current and noncurrent liabilities are classified based on anticipated liquidation either in the near-term or in the future. Current liabilities include accounts payable, accrued salaries and benefits, accrued interest payable, unearned revenue, early retirement payable, compensated absences payable, leases payable, SBITAs payable, estimates for claims and premiums, and current debt obligations. The liquidation of current liabilities is anticipated to be from current available resources, current assets or new resources that become available during fiscal year 2025-2026. Noncurrent liabilities such as long-term debt obligations and compensated absences will be liquidated from resources that will become available after fiscal year 2025-2026.

The School District’s net position includes a $133.0 million investment in capital assets net of accumulated depreciation and amortization and any related outstanding debt that was used to acquire those assets. The School District uses these capital assets to provide educational services to its students. Although the School District’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Net position of $94.3 million, accumulated due to voter approved bonded debt mill levy assessments, have been restricted to provide resources to liquidate the current general obligation bond principal and related interest payments.

Unrestricted net position is different than what would be reflected on a governmental fund accounting basis. This is due to GASB 68 and 75 along with the accounting treatment in the government-wide statements of accrued salaries and benefits earned but unpaid and compensated absences payable. The $2.0 million long-term portion of compensated absences is recorded as a liability on the government-wide statements, but not on the governmental fund statements because they are not payable with current funds. The GASB 68 net pension liability and GASB 75 net other post-employment benefit liability are reported in the same manner as compensated absences and are $319.0 million and $5.7 million, respectively.

The School District’s overall net position increased $28.0 million from the prior fiscal year. Further detail for this overall increase is provided in the following sections for governmental activities.

Pie chart labeled Sources of Revenue for FY 25. Fractional components from largest to smallest are 'Taxes' corresponding with 44.1%; 'State formula aid' corresponding with 38.1%; 'Operating grants and contributions' corresponding with 9.8%; 'Other' corresponding with 5.1%; and 'Charges for services' corresponding with 2.9%.

Bar chart labeled '10 Year District Enrollment Growth'. X-axis shows school years from 2015-2016 through 2024-2025 in one year increments. Y-axis shows number of students from 0 to 25,000 in increments of 5,000. 2015-2016 shows approximately 17,500 students, with mostly steady increases through 2024-2025 at about 23,500 students.

Government-wide expenses increased $38.8 million from the prior year. A large portion of this was due to the increase in the amount the State contributed to the state pension fund and the amount the District was required to report as an “on-behalf” benefit as well as an investment in total compensation to School District employees. Direct governmental instructional expenses make up 35.5% of the total governmental expenses. This category includes direct instruction to students. Support services, which includes but is not limited to operations and maintenance, transportation, pupil services, and other general support services is 29.6% of the total governmental expenses. Charter schools’ governmental expenses constitute 18.1% of the total governmental expenses in fiscal year 2025. The remaining 16.8% of the total governmental expenses include community services, pupil activities, nutrition services and debt service interest payments.

Pie chart labeled 'Expenses for FY 25'. Fractional components from largest to smallest are 'Instruction' corresponding with 35.5%; 'Supporting Services' corresponding with 29.6%; 'Charter Schools' corresponding with 18.1%; 'Debt Service' corresponding with 12.5%; 'Nutrition Services' corresponding with 2.6%; 'Pupil Activity' corresponding with 1.2%; and 'Community Service' corresponding with 0.6%.

Financial Analysis of Governmental Funds

As noted earlier, the School District uses fund accounting to ensure and demonstrate compliance with financerelated laws and regulations.

Governmental Funds

The focus of the School District’s governmental funds is to provide information on near-term inflows, outflow, and balances of spendable resources. This information is useful in assessing resources available at the end of the year in comparison with upcoming financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the School District, or a group or individual that has been delegated authority to assign resources for particular purposes by School District’s Board of Education.

Of this year-end total, $38.1 million is unassigned, indicating availability for continuing School District service requirements. Legally restricted fund balances include $94.3 million for debt service, $172.3 million for capital projects and $7.9 million restricted pursuant to the TABOR Amendment. Article X 20(5) of the Colorado State Constitution (TABOR Amendment), requires that an amount equal to 3% or more of its fiscal year spending excluding debt service be set aside. Committed fund balances include $7.5 million for special revenue funds, $8.2 million for Board contingencies, and $4.1 million for risk management insurance.

Bar chart titled 'General Fund Components of Fund Balance June 30, 2024 and 2025'. X-axis shows money in USD from '$-' to $50,000,000 in increments of $10,000,000. Y-axis shows five unitless categories, from bottom to top, labeled 'Unassigned', 'Assigned', 'Committed', 'Restricted', and 'Nonspendable'. Each of these five categories has a bar corresponding to 2024 and another corresponding to 2025. For 'Unassigned', 2024 corresponds with approximately $43,000,000, and 2025 corresponds with approximately $38,000,000. For 'Assigned', 2024 corresponds with approximately $23,000,000, and 2025 corresponds with approximately $26,000,000. For 'Committed', 2024 corresponds with approximately $10,500,000, and 2025 corresponds with approximately $13,000,000. For 'Restricted', 2024 corresponds with approximately $12,000,000, and 2025 corresponds with approximately $10,000,000. For 'Nonspendable', 2024 corresponds with approximately $1,500,000, and 2025 corresponds with approximately $3,000,000.

The General Fund is the School District’s primary operating fund and the largest source of day-to-day service delivery. At the end of the current fiscal year, unassigned fund balance in the general fund was $38.1 million, while total fund balance decreased $0.1 million to $88.6 million. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. Unassigned fund balance represents approximately 16.8% of total general fund expenditures net of intergovernmental – charter schools, while total fund balance represents approximately 39.0% of that same amount.

Bar chart titled 'Other Governmental Funds Components of Fund Balance June 30, 2024 and 2025'. X-axis shows money in USD from '$-' to $300,000,000 in increments of $50,000,000. Y-axis shows five unitless categories, from bottom to top, labeled 'Unassigned', 'Assigned', 'Committed', 'Restricted', and 'Nonspendable'. Each of these five categories has a bar corresponding to 2024 and another corresponding to 2025. For 'Unassigned', both 2024 and 2025 correspond with $0. For 'Assigned', both 2024 and 2025 correspond with $0. For 'Committed', 2024 corresponds with approximately $10,000,000, and 2025 corresponds with approximately $11,000,000. For 'Restricted', 2024 corresponds with approximately $225,000,000 and 2024 corresponds with approximately $275,000,000. For 'Nonspendable', 2024 corresponds with approximately $0, and 2025 corresponds with approximately $500,000.

The Other Governmental Funds consist of the School District’s Capital Projects, Government Designated Purposed Grants, Debt Service, Nutrition Services, and Non-Major Governmental Funds. At the end of the current fiscal year, the restricted fund balance in the other governmental funds was $278.4 million, an increase of $54.7 million from the prior year. This increase is primarily due to an increase in the Capital Projects fund with the issuance of the General Obligation 2024A Bond Series.

Proprietary Funds

The School District’s proprietary funds consist of two internal service funds that provide the same type of information found in the government-wide financial statements, but in more detail. In fiscal year 2025, the School District accounted for the School District’s self-insured dental plan and print shop as part of the proprietary funds.

The unrestricted net position for the School District’s self-insured dental plan and print shop is $0.68 million, with the School District’s self-insured dental plan accounting for 100 percent of the total.

General Fund Budgetary Highlights

Revenue - Actual revenues were $8.0 million more than the final approved budget. This is primarily due to receiving more than budgeted in specific ownership taxes from Adams County, investment earnings and state categorical revenue.

Expenditures – General fund expenditures were $64.7 million less than budgeted. The fiscal year 2025 budget includes reserves to account and prepare for the new mill levy override funds received in fiscal year 2025 but not expensed until fiscal year 2026. In addition, the District negotiated an increase to compensation that was budgeted in fiscal year 2025 to go into effect in fiscal year 2026, since this is a recurring cost to the District.

Capital Assets and Debt Administration

Capital assets

The School District's investment in capital assets, net of accumulated depreciation and amortization, for governmental activities as of June 30, 2025, was $642.6 million. The overall increase in this net investment was $81.0 million. This increase is due to the increase in construction in progress, purchase of capital equipment and new subscription based software leases. See Note 2-D for additional information about changes in capital assets during the fiscal year and outstanding at the end of the year. The following table provides a summary of capital asset activity.

Long-term debt

At the end of the fiscal year, the School District had outstanding general obligation bonds of $613.8 million.

This debt is backed by the full faith and credit of the School District (general obligation bonds) with debt service fully funded by voter-approved property taxes.

The School District has incurred liabilities for early retirement obligations and compensated absences earned by employees. The following chart provides summary information on the School District’s long-term debt:

The School District maintains an “A+” rating from Standard & Poor’s and an “Aa3” from Moody’s Investors Service for general obligation debt.

Additional information on the School District’s long-term debt can be found in Note 2-I of this report.

Economic Factors and Budget Highlights

The School District is highly dependent upon the State of Colorado for operating revenue. Amendment 10 of the Colorado Constitution, TABOR, restricts the School District’s ability to raise property taxes without a vote of the electorate. The School District has seen lower than expected funding from the state for ten consecutive years.

The State economy heading into the 2025-2026 fiscal year reflects a slightly optimistic outlook for revenue stated in the Governor’s budget published November 2025. However, the effects of the state’s budget deficit remain unknown.

The Board of Education established a course of action for 2025-2026 fiscal year planning and budgeting. The direction from the Board is “Financial planning for any fiscal year or the remaining part of any fiscal year will not deviate materially from the Board’s Goals priorities, risk financial jeopardy, or fail to be derived from a multi-year plan.” The Board’s Global Goals are:

1. The graduation/completer rate will increase by 2% per year until 95% is attained at which it will not drop lower.
2. 1. Every student will graduate from High School prepared to enroll in a 2 or 4-year college, enter the workforce with employment credentials, or enlist in the military.
   2. 27J Schools’ matriculation rate will increase by 2% every year.
3. The 27J School District will increase the Academic Growth and Performance score by 2.5 points or more per year, based on the 27J Academic Dashboard
4. 1. Each 27J managed school will increase the percentage of students who are demonstrating proficient social emotional skills by 2% each year until every student demonstrates proficient social emotional skills.
   2. Each 27J managed school will decrease the percentage of students demonstrating “at risk” behavior by 2% until there are no students behaving “at risk.” C) 80% of district managed schools will have an accomplishing rating on the 27J Schools Climate/Culture Dashboard.

The key principles of the budget development process are:

• Maximize resources in direct and indirect instruction of students
• Increase parent involvement and communications
• Focus on enrollment growth and seat capacity where needed
• Maintain fiscal stability by keeping expenditures (of which employee compensation is the largest component) in-line with revenue expectations
• Continued support of current technology in schools
• Investment in asset protection and maintenance of facilities
• Maintenance of strategic long range financial plan

Contacting the School District’s Financial Management

The intent of this financial report is to provide a general overview of the School District’s finances, comply with finance-related laws and regulations, and demonstrate the School District’s commitment to public accountability. If there are questions about this report or you would like to request additional information, contact the School District’s Finance Department at the Educational Services Center located at 1850 E. Egbert Street in Brighton, CO 80601. You can also visit the School District’s website at www.sd27j.org for additional information about its schools, departments, and finances.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

See accompanying notes to the basic financial statements.

Counties of Adams, Weld and Broomfield School District 27J, Colorado (the School District) is a school district located northeast of Denver, Colorado. The School District provides Preschool through 12th Grade Public Education.

Note 1 - Summary of Significant Accounting Policies

The financial statements of the School District have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) in the United States of America as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for government accounting and financial reporting. The most significant of the School District’s accounting policies are described below

1-A. Reporting Entity

The reporting entity is comprised of the primary government, component units and other organizations that are included to ensure that the financial statements are not misleading. The primary government consists of all funds, departments, boards and agencies that are not legally separate from the School District. For the School District, this reporting entity includes the legal entity, School District 27J, Colorado and seven discretely presented component units.

The reporting entity is comprised of the primary government, component units and other organizations that are included to ensure that the financial statements are not misleading. The primary government consists of all funds, departments, boards and agencies that are not legally separate from the School District. For the School District, this reporting entity includes the legal entity, School District 27J, Colorado and seven discretely presented component units.

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 organizations; 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 also may include organizations that are fiscally dependent on the School District in that the School District approves the budget, levies their taxes or issues their debt. Finally, the School District may include separate legal entities that do not meet the above criterion; however, the School District would consider the financial statements to be misleading if omitted.

The component unit column included on the government-wide financial statements identifies the financial data of the School District’s aggregate discretely presented component units. They are reported separately to emphasize that they are legally separate from the School District.

Significant transactions between the School District and its component unit Charter Schools consist of monthly payments to each Charter School for their share of mill levy override and state equalization money and charges from the School District to each Charter School for contracted purchased services. Brief descriptions of the discretely presented component units follow: The Bromley East Charter School was established by contract with the School District during fiscal year 2000. The School is a legally separate entity. The contract between the Bromley East Charter School and the School District was executed on April 26, 2000, for the purpose of establishing and clarifying the relationship between the Bromley East Charter School and the School District. The Bromley East Charter School is deemed to be a component unit of the School District because the organization is dependent upon the School District for the majority of its funding and the School District approves the charter and excluding the Bromley East Charter School would result in misleading financial reporting. Financial activity of the Bromley East Charter School is included within the School District’s financial statements.

The Belle Creek Charter School was established by contract with the School District during fiscal year 2002. The School is a legally separate entity. The contract between the Belle Creek Charter School and the School District was executed on June 25, 2002, for the purpose of establishing and clarifying the relationship between the Belle Creek Charter School and the School District. The Belle Creek Charter School is deemed to be a component unit of the School District because the organization is dependent upon the School District for the majority of its funding and the School District approves the charter and excluding the Belle Creek Charter School would result in misleading financial reporting. Financial activity of the Belle Creek Charter School is included within the School District’s financial statements The Landmark Academy Charter School was established by contract with the School District during fiscal year 2008. The School is a legally separate entity. The contract between the Landmark Academy Charter School and the School District was executed on January 23, 2007 for the purpose of establishing and clarifying the relationship between the Landmark Academy Charter School and the School District, but the school did not open until fiscal year 2008. Landmark Academy Charter School has entered into a management agreement with National Heritage Academies, Inc. (NHA) which requires NHA to provide administration, strategic planning and all labor, materials, equipment and supervision necessary for the provision of educational services to students. As part of the consideration received under the agreement, NHA also provides the facility in which the Landmark Academy Charter School operates. Under the terms of the agreement, NHA receives as remuneration for its services an amount equal to the total revenue received by the Landmark Academy Charter School from all revenue sources. The Landmark Academy Charter School is deemed to be a component unit of the School District because the organization is dependent upon the School District for the majority of its funding and the School District approves the charter and excluding the Landmark Academy Charter School would result in misleading financial reporting. Financial activity of the Landmark Academy Charter School is included within the School District’s financial statements.

The Foundations Academy Charter School was established by contract with the School District during fiscal year 2011. The Foundations Academy Charter School is a legally separate entity. The contract between the Foundations Academy Charter School and the School District was executed on October 19, 2008, for the purpose of establishing and clarifying the relationship between the Foundations Academy Charter School and the School District, but the school did not open until fiscal year 2011. Foundations Academy Charter School has entered into a management agreement with National Heritage Academies, Inc. (NHA) which requires NHA to provide administration, strategic planning and all labor, materials, equipment and supervision necessary for the provision of educational services to students. As part of the consideration received under the agreement, NHA also provides the facility in which the Foundations Academy Charter School operates. Under the terms of the agreement, NHA receives as remuneration for its services an amount equal to the total revenue received by the Foundations Academy Charter School from all revenue sources. The Foundations Academy Charter School is deemed to be a component unit of the School District because the organization is dependent upon the School District for the majority of its funding and the School District approves the charter and excluding the Foundations Academy Charter School would result in misleading financial reporting. Financial activity of the Foundations Academy Charter School is included within the School District’s financial statements.

The Eagle Ridge Academy Charter School was established by contract with the School District and is a legally separate entity. A contract between the Eagle Ridge Academy Charter School and the School District was executed in July 2010 for the purpose of establishing and clarifying the relationship between this Eagle Ridge Academy Charter School and the School District. The Eagle Ridge Academy Charter School is deemed to be a component unit of the School District because the organization is dependent upon the School District for the majority of its funding and the School District approves the charter and excluding Eagle Ridge Academy Charter School would result in misleading financial reporting. Financial activity of the Eagle Ridge Academy Charter School is included within the School District’s financial statements.

The STEAD School was established by contract with the School District and is a legally separate entity. A contract between The STEAD School and the School District was executed in August 2020 for the purpose of establishing and clarifying the relationship between this The STEAD School and the School District, but the school did not open until fiscal year 2022. The STEAD School is deemed to be a component unit of the School District because the organization is dependent upon the School District for the majority of its funding and the School District approves the charter and excluding The STEAD School would result in misleading financial reporting. Financial activity of The STEAD School is included within the School District’s financial statements.

The School District 27J Capital Facility Fee Foundation (Foundation) was established during fiscal year 2001 in response to rapid growth with the onset of the development of the Denver International Airport. The School District wanted to be proactive about the growth rather than reactive and began discussion in the late 1990’s with the primary municipalities within the School District. This included Brighton, Commerce City and Thornton as well as a group of developers with projects within the School District. At the time, the primarily rural School District would not have had the financial capacity to raise enough capital through the sale of voter-approved bonds to meet the needs for new schools in a timely manner.

A small group of builders and developers and School District representatives formed a working group to find solutions to address the shortfall needs. A program of voluntary financial contributions was implemented. The Foundation is a 501(c)(3) organization whose purpose is to promote and assist in the development, financing, and acquisition of educational facilities and capital improvements in the School District. The Foundation consists of a nine-member board of directors and includes three representatives of contributing builders or developers, three School District representatives, and one city council representative of each city. Voluntary contributions are accepted by the Foundation and kept in foundation-managed accounts. The Board of Education makes requests for the release of Foundation funds for school construction purposes as needed. The Foundation Board determines if the request meets the requirements for disbursement of the funds.

The Capital Facility Fee Foundation is deemed to be a component unit of the School District because the Foundation may only distribute funds to the School District and only at the request of the School District. Because of this restricted use of Foundation Funds, the Foundation is a discretely presented component unit.

Complete financial statements for each of the individual component units may be obtained at each entity’s administrative offices.

• Eagle Ridge Academy
  3551 Southern Street
  Brighton, CO 80601
• Belle Creek Charter School
  9290 E 107th Ave
  Henderson, CO 80640
• Landmark Academy Charter School
  c/o National Heritage Academies, Inc.
  3850 Broadmoor SE, Suite 201
  Grand Rapids, MI 49512
• Bromley East Charter School
  c/o Bart A. Skidmore, CPA
  356 Longspur Drive
  Brighton, CO 80601
• School District 27J
  Capital Facility Fee Foundation
  18551 East 160th Avenue
  Brighton, CO 80601
• Foundations Academy
  c/o National Heritage Academies, Inc.
  3850 Broadmoor SE, Suite 201
  Grand Rapids, MI 49512
• The STEAD School
  18251 Homestead Trail
  Commerce City, CO 80022

Related Organization - The 27J Education Foundation provides opportunities for individuals and/or groups beyond what the School District can offer. Their mission is to preserve, support and improve the educational opportunities within the community by developing a community partnership among schools, businesses and individuals. Through this partnership, this Foundation encourages a wide variety of educational experiences through grants awarded to individuals and organizations. The Foundation is governed by a twelve-member board consisting of community members and education members. The School District Board does not appoint members of the 27J Education Foundation, nor is this Foundation fiscally dependent on the School District and therefore, this Foundation is not considered a component unit and is not included in the School District’s financial statements

1-B. 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.

Government-wide Financial Statements - The government-wide financial statements include the Statement of Net Position and the Statement of Activities. These statements report financial information for the School District as a whole. The primary government and the component units are presented separately within these financial statements with the focus on the primary government. Individual funds are not displayed but the statements distinguish governmental activities, generally supported by grants and governmental general revenues, from business-type activities, generally financed in whole or in part with fees charged to external customers. However, the District has no business-type activities. Fiduciary funds and fiduciary-type component units are excluded from the government-wide financial statements because the School District holds these assets in a purely custodial capacity and cannot use these resources for School District programs.

The Statement of Net Position presents the financial position of the governmental activities of the School District and the School District’s discretely presented component units at year-end. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District activities and for each identifiable activity of the business-type activities of the School District’s component units. Direct expenses are those that are specifically associated with a function and therefore clearly identifiable to that particular function. The School District does not allocate indirect expenses to functions in the Statement of Activities.

The Statement of Activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include: (1) charges for services which report fees and other charges to users of the School District's services; (2) operating grants and contributions which finance annual operating activities including restricted investment earnings; and (3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets. When identifying which function program revenue pertains to, the determining factor for charges for services is which function generates the revenue. For grants and contributions, the determining factor is for which function the revenues are restricted. Other revenue sources not properly included with program revenues are reported as general revenues of the School District. The comparison of direct expenses with program revenues identifies the extent to which each governmental function and each identifiable business activity 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. Fund financial statements are provided for governmental, proprietary and fiduciary funds. Major individual governmental funds are reported in separate columns.

Fund Accounting - The School District uses funds to maintain its financial records during the year. A fund is a fiscal and accounting entity with a self-balancing set of accounts. The School District uses three categories of funds: governmental, proprietary and fiduciary.

Governmental Funds - School District 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. Fund liabilities are assigned to the fund from which they will be liquidated. The School District reports the difference between governmental fund assets, liabilities, and deferred inflows of resources as fund balance. The following are the School District's major governmental funds:

• General Fund - The general fund accounts for all financial resources except those required to be accounted for in another fund.
• Capital Projects Fund - This fund accounts for bond proceeds and other revenues used for the construction and acquisition of major capital facilities other than those related to the nutrition services fund.
• Governmental Designated-Purpose Grants Fund - This fund accounts for grants received for designated programs funded by federal, state or local governments. It is a special revenue fund.
• Debt Service Fund - This fund accounts for the accumulated resources (normally property taxes) used to retire principal and interest on general long-term debt.
• Nutrition Services Fund – This fund accounts for financial resources related to food service operations. The School District receives USDA school breakfast/lunch money in this fund. It is a special revenue fund.

The School District also has four non-major governmental funds that account for financial resources specific to each funds purpose.

Additionally, the School District reports the following fund types:

• Proprietary Funds - Proprietary fund reporting focuses on the determination of operating income, changes in net position, financial position and cash flows. The School District’s proprietary funds are classified as internal service funds.
• Internal Service Funds - The internal service funds account for the School District’s self-insured dental plan and the School District’s print shop.
• Private Purpose Trust Funds – Funds that are fiduciary in nature and present changes in fiduciary net position. Private purpose trust funds are accounted for using the full accrual basis of accounting. These funds are used to account for assets the School District holds for others in a fiduciary capacity. The School District’s fiduciary fund provides scholarships to students.

1-C. Measurement Focus

Government-wide Financial Statements - The government-wide financial statements are prepared using the economic resources measurement focus. All assets, deferred outflows/inflows of resources and liabilities associated with the operation of the School District are included on the Statement of Net Position. The Statement of Activities reports revenues and expenses.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the School District’s governmental and component units. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Fund Financial Statements - The governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances reports the sources (i.e., revenues and other financing sources) and uses (i.e., 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 reconciliation with brief explanations to better identify the relationship between the government-wide statements and the governmental fund statements.

Like the government-wide statements, all proprietary fund types are accounted for on a flow of economic resources measurement focus on both financial reporting levels. All assets and all liabilities associated with the operation of these funds are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position presents increases (i.e., revenues) and decreases (i.e., expenses) in net total position. The Statement of Cash Flows provides information about how the School District finances and meets the cash flow needs of its proprietary activities. The School District’s fiduciary funds are accounted for on an economic resources measurement focus.

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. At the fund reporting level, governmental funds use the modified accrual basis of accounting. Proprietary funds use the accrual basis of accounting at both reporting levels. The fiduciary funds use the 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 and outflows of resources, and in the presentation of expenses versus expenditures.

Revenues – 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 the modified accrual basis, revenue is recorded when the exchange takes place and 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, the phrase “available for exchange transactions” means expected to be received within 60 days of year-end.

Revenues – Non-exchange Transactions - Non-exchange transactions in which the School District receives value without directly giving equal value in return, include grants, taxes and donations. Revenue from property taxes and specific ownership taxes is recognized in the fiscal year for which the taxes are levied (Note 2-C). Revenue from grants 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 non-exchange transactions also must be available (i.e., collected by the School District within 60 days except for specific ownership taxes which use a 30-day available period, and grant revenues which use a 180-day available period) before it can be recognized.

Under the modified accrual basis, the following revenue sources are considered to be susceptible to accrual: property taxes, specific ownership taxes, interest and federal and state grants.

Unearned Revenue - Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied and when certain grants are received before eligibility requirements are met.

On governmental fund financial statements (i.e., on the modified accrual basis), receivables that will not be collected within the available period have been reported as deferred inflows of resources (i.e., they are measurable but not available) rather than as revenue.

Grants and entitlements received before the eligibility requirements are met (e.g., cash advances) also are recorded as unearned revenue at both reporting levels.

Expenses/Expenditures - On the accrual basis of accounting, expenses are recognized at the time they are incurred. On the modified accrual basis, expenditures generally are recognized in the accounting period in which the related fund liability is incurred and due, if measurable.

1-E. Assets, Deferred Outflows, Liabilities, Deferred Inflows of Resources and Fund Balance/Net Position

1-E-1. Cash, Cash Equivalents, and Investments

The School District utilizes the pooled cash concept whereby cash balances of each of the School District’s funds are pooled and invested by the School District in short-term certificates of deposit, repurchase agreements, money market deposit accounts, government pools, and U.S. Treasury obligations.

For the purposes of the Statement of Cash Flows, cash and cash equivalents include amounts in demand deposits as well as short-term investments with a maturity date within three months of the date acquired by the School District to be cash equivalents.

Generally, the School District invests in governmental securities, local government investment pools, and collateralized certificates of deposits in Colorado banks and repurchase agreements. Investments are either measured at net asset value, which approximates fair value, or at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application.

1-E-2. Receivables

All trade and property tax receivables are reported net of an allowance for uncollectibles, where applicable.

1-E-3. Interfund Balances

On the fund financial statements, receivables and payables resulting from short-term interfund loans are classified as "interfund receivables/ interfund payables". Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide financial statements as “internal balances.”

1-E-4. Consumable Inventories

On the government-wide financial statements, inventories are presented at the lower of cost or market on a first-in, first-out basis and are expensed when used (i.e., the consumption method).

On the fund financial statements all inventories are stated at cost. For all fund level reporting, cost is determined on a first-in, first-out basis. Donated surplus commodities received are valued based upon the cost furnished by the Federal Government.

1-E-5. Prepaid Items

Payments made to vendors for services that will benefit periods beyond current fiscal year are recorded as prepaid items using the consumption method by recording an asset for the prepaid amount and reflecting the expenditure/expense in the year in which services are consumed. At the fund reporting level, an equal amount of fund balance is non-spendable in the governmental fund types as this amount is not available for general appropriation.

1-E-6. Capital Assets

Capital assets from governmental activities are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in governmental funds. The School District reports these assets in the governmental activities column of the government-wide Statement of Net Position but does not report these assets in the governmental fund financial statements.

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated capital assets are recorded at their acquisition value as of the date received. The School District maintains a capitalization threshold of five thousand dollars. Improvements to capital assets 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 expensed. All reported capital assets are depreciated except for land, water rights and construction in progress. Improvements are depreciated over the remaining useful lives of the related capital assets. The adjustment for removal of salvage value is shown in the Capital Assets Note 2-D. Depreciation is computed using the straight-line method over the following useful lives:

At the inception of right-to-use asset leases at the governmental fund reporting level, expenditures and an “other financing source” of an equal amount are reported at the net present value of future minimum lease payments.

At the inception of right-to-use asset leases at the governmental fund reporting level, expenditures and an “other financing source” of an equal amount are reported at the net present value of future minimum lease payments.

1-E-7. Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position and fund level balance sheet will sometimes report a separate section for deferred outflows and inflows of resources. Deferred outflows of resources represent a consumption of net assets and deferred inflows represent an acquisition of net assets that applies to future periods and so will not be recognized as an outflow or inflow of resources until then. Deferred charge on refunding is reported in the government-wide Statement of Net Position as a deferred outflow of resources. A deferred charge on refunding results from the difference in the carrying value of refunded debt and reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the Statement of Net Position and fund level balance sheet will sometimes report a separate section for deferred inflows of resources. This section represents acquisition of net assets that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. Receivables for long-term leases where the school district is the lessor are reported in the government-wide Statement of Net Position and governmental fund financial statements as a deferred inflow of resources. On governmental fund financial statements (i.e., on the modified accrual basis), other receivables that will not be collected within the available period have been reported as deferred inflows of resources (i.e., they are measurable but not available) rather than as revenue.

Deferred outflows of resources and deferred inflows of resources as related to pensions and other post-employment benefits can result from the net difference between expected and actual experience, projected and actual earnings on plan investments, changes in the District’s proportionate of liability, changes of assumptions, as well as contributions made by the District to PERA after PERA’s measurement date. Generally, deferred inflows are not aggregated with deferred outflows.

1-E-8. 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. Temporary leave (sick leave, personal and bereavement) benefits are accrued as a liability using the termination payment method. An accrual for earned temporary leave is made to the extent that it is probable that the benefits will result in termination payments. The liability is based on the School District’s past experience of making termination payments.

In fiscal year 2014, the District offered Early Separation Plans and Long Term Service Benefits to its employees. Only those employees who have completed fifteen or more years of service in the District as of July 1, 2009 are eligible after completing twenty years of service. These plans ended on June 30, 2014. Classified employees may receive 90% of their current year’s salary at either July 31st or January 31st of the year following their retirement. Eligible certified employees who voluntarily resign or retire shall receive a payout that equals the difference between the certified employee’s actual salary for the 2008- 2009 school years and the $45,129 average salary of full-time teachers hired by the District during that school year. Administrators may receive the average paid out to certified employees during the year of their retirement. There were no early separation plan/long term service payments in fiscal year 2024. As of June 30, 2024, there were four certified employees who were eligible for future payments at a total remaining cost of $216,056.

All compensated absence liabilities include salary-related payments, where applicable.

The total compensated absence liability is reported on the government-wide financial statements. Proprietary funds report the total compensated liability in each individual fund at the fund reporting level. Governmental funds report the compensated absence liability at the fund reporting level only “when due”.

1-E-9. Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide financial statements. In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts and deferred amounts on refunding bonds, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of applicable bond premiums and discounts.

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 these funds. However, 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 year. Bonds are recognized as a liability in the governmental fund financial statements when due.

1-E-10. Leases and Subscription Based Information Technology Arrangements (SBITA)

For arrangements where the District is a lessee or enters into a SBITA, a liability and a right to use (RTU) intangible asset are recognized at the commencement of the lease or arrangement term. RTU assets represent the District’s right to use an underlying asset for the contracted term and liabilities represent the District’s obligation to make payments arising from the lease or arrangement. RTU assets and liabilities are recognized at the lease or arrangement commencement date based on the estimated present value of the payments over the contracted term. Subsequently, the liability is reduced by the principal portion of payments made. The RTU asset is initially measured as the initial amount of the liability, adjusted for payments made at or before the commencement date, plus certain initial direct costs and is amortized on a straight-line basis over its useful life for leases and subscription term for SBITAs.

Key estimates and judgements related to leases and SBITAs include how the School determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease or arrangement term, and (3) payments.

• The District uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the District generally uses its estimated incremental borrowing rate as the discount rate.
• The term includes the noncancellable period of the lease or arrangement. Payments included in the measurement of the liability are composed of fixed payments and purchase option price that the District is reasonably certain to exercise.

The District monitors changes in circumstances that would require a remeasurement and will remeasure the RTU asset and liability if certain changes occur that are expected to significantly affect the amount of the liability. RTU assets are reported with other capital assets and liabilities are reported with long-term debt on the statement of net position. For government-wide and fund statements, for arrangements in which the District is the lessor, a lease receivable and a deferred inflow of resources is recognized at the commencement of the lease term. The deferred inflows of resources should be measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relates to future periods.

1-E-11. Bond Premiums, Discounts and Issuance Costs

On the government-wide Statement of Net Position and the proprietary fund type Statement of Net Position, bond premiums and discounts are netted against bonds payable and bond issuance costs are reported as an expense in the year they are charged. On the government-wide and proprietary fund type Statement of Activities, gains/losses on refunding are recognized as deferred inflows/outflows and amortized over the life of the bonds using the effective interest method.

In the fund financial statements, governmental funds recognize bond premiums, discounts, and bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Payments of bond proceeds made to an escrow agent for refunding bonds are reported as other financing uses.

1-E-12. Fund Balance/Net Position

Fund equity at the governmental fund financial reporting level is classified as “fund balance”. Fund equity for all other reporting is classified as “net position”.

Fund Balance – Generally, fund balance represents the difference between the fund assets and fund liabilities. The SchoolDistrict restricts those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and therefore are not available for appropriation or expenditure. Unassigned fund balance indicates that portion of fund balance that is available for appropriation in future periods.

Assignments are management’s intent to set aside these resources for specific services. The School District follows GASB 54, Fund Balance Reporting and Government Fund Type Definition, and records fund balances in the following classifications depicting the relative strength of the spending constraints placed on the purposed for which resources can be used:

• Non-spendable fund balance – amounts that are not in a spendable form (such as inventory or prepaid items) or are required to be maintained intact (such as the corpus of an endowment fund).
• Restricted fund balance – amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions, or by enabling legislation.
• Committed fund balance – amounts that can be used only for specific purposes determined by a formal action of the Board of Education, the highest level of decision-making authority for the District. Commitments may be established, modified or rescinded only through resolutions approved by the Board of Education.
• Assigned fund balance – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Under the Board of Education’s adopted policy, only the Superintendent or his/her designee may assign amounts for specific purposes.
• Unassigned fund balance – amounts that are available for any purpose; a positive unassigned fund balance is reported only in the general fund.

The School District adopted fund balance policy (Superintendent Policy DA-R(1)) in fiscal year 2011. The governing body’s process for assigning fund balance is determined by the Chief Financial Officer.

The District’s order of fund balance spending policy is to apply expenditures against restricted fund balance, committed fund balance, assigned fund balance, and unassigned fund balance. The District reserves the right to selectively spend unassigned fund balance.

Net Position - Net position represents the difference between assets and deferred outflows and liabilities and deferred inflows. The net investment in capital assets consists of capital assets, net of accumulated depreciation and related debt. Net position is reported as restricted when there are limitations imposed on its use either through enabling legislation or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. All other net position is reported as unrestricted.

The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position are available.

1-E-13. Operating Revenues and Expenses

Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating expenses are necessary costs incurred to provide meals, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenue and expense.

1-E-14. Contributions of Capital

Contributions of capital in proprietary fund financial statements arise from outside contributions of capital assets or from grants or outside contributions of resources restricted to capital acquisition and construction.

1-E-15. Interfund Activity

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 the non-operating revenues/expenses section in proprietary funds. The effect of interfund activity has been eliminated from the government-wide financial statements. Repayments from funds responsible for particular expenditures/expenses to the funds that initially paid for them are not presented on the financial statements.

Transfers between governmental and business-type activities on the government-wide Statement of Activities are reported as general revenues. Transfers between funds reported in the governmental activities column are eliminated.

Since the internal service fund revenues are employee payments for dental insurance, they are not eliminated (i.e., they do not relate to other funds, rather they relate to third parties).

1-E-16. Estimates

The preparation of the financial statements, in conformity with accounting principles generally accepted in the United States of America, 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.

1-E-17. Budgets

A budget was adopted for all government funds, proprietary funds, internal service funds and fiduciary funds on a basis consistent with Generally Accepted Accounting Principles. A proposed budget is submitted to the Board of Directors for the fiscal year commencing the following July 1. The budget is adopted by the board prior to June 30.

Expenditures may not legally exceed appropriations at the fund level. Revisions must be approved by the Board. The budget includes proposed expenditures and the means of financing them.

Note 2 – Detailed Notes on All Funds

2-A. Cash and Investments

Restricted Cash and Investments - As of June 30, 2025, the School District has restricted cash and investments of $192,742,217 recorded in the School District’s capital projects fund for that purpose.

Local Government Investment Pool - These are investment trusts established for local government entities in Colorado to pool surplus funds and are registered with the State Securities Commissioner. These pools operate similarly to a money market fund and each share is equal in value to $1. Investments of the pool consist of U.S. Treasury bills, notes and note strips, and repurchase agreements collateralized by pools in connection with the direct investment and withdrawal functions of the pools. Substantially all securities owned by the pool are held by the Federal Reserve Bank in the account maintained for the custodial banks. The custodian’s internal records identify the investments owned by the School District. Due to their high liquidity, these funds are classified as investments for reporting purposes. The Trusts or Pools are rated AAAm by Standard and Poor’s.

Interest Rate Risk – The School District and the component units do not have formal investment policies that limit investment maturities as a means of managing its exposure to fair value loss resulting from increasing interest rates. The Colorado Revised Statute 24-75-601 limits investment maturities to five years or less without governing board approval. Based on the current rate environment, the School District and the component units assume that investments will be held to maturity.

As of June 30, 2025, no coupon and discount securities had investment maturities greater than five years. The weighted average maturity of the local government entity investment pools investments shall not exceed 60 days for ColoTrust and CSAFE at June 30, 2025.

Credit Risk – State statute limit investments in U.S. Government Agency securities to the highest rating issued by Nationally Recognized Statistical Rating Organizations (NRSROs).

Concentration of Credit Risk – State statutes do not limit the amount the School District may invest in one issuer. The School District has adopted a policy which is more restrictive and limits investments to: not more than 25% of the School District’s portfolio invested in the securities in any “one” government agency with the exception of United States Treasury securities; not more than 25% of the School District’s portfolio invested in deposit accounts; money market mutual funds shall be diversified so that no fund shall hold more than 50% of the School District’s portfolio; combined fund investments not to exceed 75% of the total portfolio and not exceeding 25% of the School District’s total portfolio in repurchase agreements.

All of the Charter Schools and the Capital Facility Fee Foundation have adopted an investment policy that does not vary significantly from Colorado State Statutes.

Foundation Academy Charter School and Landmark Academy Charter School did not have investments in marketable securities or ColoTrust and CSAFE investment pools at June 30, 2025.

2-B. Receivables

Receivables at June 30, 2025, consisted of taxes, interest, accounts (billings for user charges) and School District receivables arising from grants, fiduciary activity and lease payments.

Receivables and payables are recorded on the governmental financial statements to the extent that the amounts are determined to be material and substantiated not only by supporting documentation, but also by a reasonable, systematic method of determining their existence, completeness, valuation, and in the case of receivables, collectability.

Leases Receivable

The School District, serving in a lessor capacity, is required to recognize a lease receivable for certain lease transactions. These Lease assets receivables are offset by a deferred inflows of resources as well as accrued interest earned. For the period, principal lease revenue of $38,384 was collected along with interest revenue of $2,276

AT&T In February of 2019, the District entered into a lease agreement with New Cingular Wireless PCS, LLC to lease approximately six hundred (600) square feet of land, including the air space above such ground space, owned by the District and located at S. 8th avenue and E. Southern Street in the City of Brighton, Adams County, Colorado. New Cingular Wireless will use a portion of the Property in connection with its federally licensed communications business. The initial term of the lease will be five (5) years, commencing on February 2019. The lease will automatically renew for four (4) additional five (5) year terms unless the tenant notifies the landlord in writing of its intention not to renew the lease agreement. The lease requires monthly lease payments to the District of $1,217 with rent payments increasing fifteen percent (15.0%) on an annual basis. The outstanding lease receivable on June 30, 2025, is $369,624

Verizon - In November of 2019, the District entered into a lease agreement with Verizon Wireless, LLC to lease approximately two thousand nine hundred (2,900) square feet of land, including the air space above such ground space, owned by the District and located at Brighton Gardens in the City of Brighton, Adams County, Colorado. Verizon Wireless will use a portion of the Property in connection with its federally licensed communications business. The initial term of the lease will be five (5) years, commencing on November 2019. The lease will automatically renew for two (2) additional five (5) year terms unless the tenant notifies the landlord in writing of its intention not to renew the lease agreement. The lease requires monthly lease payments to the District of $1,808 with rent payments increasing fifteen percent (15.0%) on an annual basis. The outstanding lease receivable on June 30, 2025, is $254,219.

2-C. Property Taxes

The Board of Education levies property taxes. The levy is based on assessed valuations determined by the County Assessors’ offices generally as of January 1st of each year. The levy is set by December 15th by certification to the County Commissioners to put the tax lien on the individual properties as of December of each year. The County Treasurers’ offices collect the determined taxes during the ensuing calendar year. The taxes are payable by April 30th or, if in equal installments, at the taxpayer’s election on February 28th and June 15th. Delinquent taxpayers are notified in August and tax sales of the liens on delinquent properties are held in November. The County Treasurers’ offices remit the taxes collected to the School District on the 10th of each month and on March 25th, May 25 and June 25th.

At December 31, 2024, the School District’s proportion was 1.8485361046% which was an increase of 0.0229474208% from its proportion measured as of December 31, 2023.

¹Post-retirement benefit increases are provided by the AIR, accounted separately within each Division Trust Fund, and subject to moneys being available; therefore, liabilities related to increases for members of these benefit tiers can never exceed available assets.

The actuarial assumptions used in the December 31, 2023, valuation were based on the 2020 experience analysis, dated October 28, 2020, for the period January 1, 2016, through December 31, 2019. Revised economic and demographic assumptions were adopted by the PERA Board on November 20, 2020.

Based on the 2024 experience analysis, dated January 3, 2025, for the period January 1, 2020, to December 31, 2023, revised actuarial assumptions were adopted by PERA’s Board on January 17, 2025, and were effective as of December 31, 2024. The following assumptions were reflected in the roll forward calculation of the total pension liability from December 31, 2023, to December 31, 2024.

Salary increases, including wage inflation: 4.00%-13.40%

Salary scale assumptions were altered to better reflect actual experience.

Rates of termination/withdrawal, retirement, and disability were revised to more closely reflect actual experience.

The estimated administrative expense as a percentage of covered payroll was increased from 0.40% to 0.45%.

The adjustments for credibility applied to the Pub-2010 mortality tables for active and retired lives, including beneficiaries, were updated based on the experience. All mortality assumptions are developed on a benefit-weighted basis. Note that in all categories, displayed as follows, the mortality tables are generationally projected using the 2024 adjusted MP-2021 projection scale.

The long-term expected return on plan assets is monitored on an ongoing basis and reviewed as part of periodic experience studies prepared every four years, and asset/liability studies, performed every three to five years for PERA. The most recent analyses were outlined in the 2024 Experience Study report dated January 3, 2025.

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 log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected return, net of investment expense and inflation) were developed for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentages and then adding expected inflation.

Note: In setting the long-term expected rate of return, projections employed to model future returns provide a range of expected long-term returns that, including expected inflation, ultimately support a long- term expected nominal rate of return assumption of 7.25%.

Discount rate - The discount rate used to measure the TPL was 7.25%. The projection of cash flows used to determine the discount rate applied the actuarial cost method and assumptions shown above. In addition, the following methods and assumptions were used in the projection of cash flows:

• Total covered payroll for the initial projection year consists of the covered payroll of the active membership present on the valuation date and the covered payroll of future plan members assumed to be hired during the year. In subsequent projection years, total covered payroll was assumed to increase annually at a rate of 3.00%.
• Employee contributions were assumed to be made at the member contribution rates in effect for each year, including the scheduled increases in SB 18-200 and required adjustments resulting from the 2018 and 2020 AAP assessments. Employee contributions for future plan members were used to reduce the estimated amount of total service costs for future plan members.
• Employer contributions were assumed to be made at rates equal to the fixed statutory rates specified in law for each year, including the scheduled increase in SB 18-200 and required adjustments resulting from the 2018 and 2020 AAP assessments. Employer contributions also include current and estimated future AED and SAED, until the actuarial value funding ratio reaches 103%, at which point the AED and SAED will each drop 0.50% every year until they are zero. Additionally, estimated employer contributions reflect reductions for the funding of the AIR and retiree health care benefits. For future plan members, employer contributions were further reduced by the estimated amount of total service costs for future plan members not financed by their member contributions.
• As specified in law, the State, as a nonemployer contributing entity, will provide an annual direct distribution of $225 million commencing July 1, 2018, that is proportioned between the State, School, Judicial, and DPS Division Trust Funds based upon the covered payroll of each Division. The annual direct distribution ceases when all Division Trust Funds are fully funded.
• Employer contributions and the amount of total service costs for future plan members were based upon a process to estimate future actuarially determined contributions assuming an analogous future plan member growth rate.
• The AIR balance was excluded from the initial FNP, as, per statute, AIR amounts cannot be used to pay benefits until transferred to either the retirement benefits reserve or the survivor benefits reserve, as appropriate. AIR transfers to the FNP and the subsequent AIR benefit payments were estimated and included in the projections.
• Benefit payments and contributions were assumed to be made at the middle of the year.