Page 80 - Hudson CAFR Report 2018

HUDSON CITY SCHOOL DISTRICT
SUMMIT COUNTY, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018

NOTE 9 - CAPITALIZED LEASES - LESSEE DISCLOSURE

The District has entered into a lease agreement to acquire copiers and copier equipment. Capital assets
consisting of equipment have been capitalized in the amount of $1,190,970. Accumulated depreciation as
of June 30, 2018 was $178,645, leaving a current book value of $1,012,325. Lease payments have been
reclassified and are reflected as debt service expenditures in the financial statements for the governmental
funds. Principal and interest payments of $197,129 and $39,316, respectively, were paid from the general
fund. An additional $323,066 was recorded as a current expenditure (regular instruction) in the general
fund which represents the amount to discharge the prior lease agreement. This amount is included in the
“Deletions” column on the long-term obligations summary table in Note 8.A.

The following is a schedule of the future long-term minimum lease payments required under the lease
agreement and the present value of the future minimum lease payments as of June 30, 2018:

Fiscal Year Ending June 30 Amount

2019 $ 267,324
2020 267,324
2021 267,324
2022 267,324
2023 66,831

Total minimum lease payments 1,136,127
Less: amount representing interest (110,239)

Total $ 1,025,888

NOTE 10 - COMPENSATED ABSENCES

The criteria for determining vacation and sick leave benefits are derived from negotiated agreements and
State laws. Classified employees working 11 or 12 months per year are entitled to an annual vacation, with
pay, based on length of service in the District. Accumulated unused vacation time is paid to employees
upon termination of employment. Teachers and administrators working fewer than ten months per year do
not earn vacation time. Teachers, administrators and classified employees earn sick leave at the rate of one
and one-fourth days per month. Sick leave may be accumulated for an unlimited number of days. For both
certified and classified employees, payment is made at retirement for accumulated sick leave and is
determined by taking one-fourth of the first 144 days and adding to that one day for every eight days in
excess of 144 days to a maximum of 36 additional days of severance. Maximum severance in total is 72
days. See Note 1.K. for further detail on the financial reporting of the District’s compensated absences.

NOTE 11 - RISK MANAGEMENT

A. General Insurance

The District is exposed to various risks of loss related to torts, theft, damage to or destruction of assets,
errors and omissions, employee injuries, and natural disasters. The District has a comprehensive
property and casualty policy with deductibles that vary from $0 to $50,000 depending on the type of
coverage. The District’s vehicle liability insurance policy limit is $5,000,000 with a $1,000 collision
deductible. All Board Members, administrators and employees are covered under a District liability
policy. The limits of this coverage are $5,000,000 per occurrence and $7,000,000 in aggregate.
Settled claims have not exceeded this commercial coverage in any of the past three years. There was
no significant reduction in coverage from the prior year.

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