3-2023 Lycoming-Clinton Joinder Board - Final Audit Report.pdf

LYCOMING-CLINTON JOINDER BOARD

FINANCIAL STATEMENTS AND SINGLE AUDIT REPORT

YEAR ENDED JUNE 30, 2023

TABLE OF CONTENTS

Page

Independent Auditor’s Report 1-3

Basic Financial Statements: 4

Government-Wide Financial Statements Statement of Net Position 5 Statement of Activities 6

Fund Financial Statements Balance Sheet – Governmental Funds 7 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 8 Statement of Revenues, Expenditures, and Changes in Fund Balance -

Governmental Funds 9 Reconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balance of Governmental Funds to the Statement of Activities 10

Notes to the Financial Statements 11-22

Required Supplementary Information: 23

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Lycoming-Clinton Mental Health and Intellectual Disabilities Fund 24

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Lycoming Children and Youth Services Fund 25

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – HealthChoices Fund 26

Other Supplementary Information: 27

Single Audit Report:

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 28-29

Independent Auditor’s Report on Compliance for Each Major Federal and Pennsylvania Department of Human Services Program and Report on Internal Control Over Compliance Required by the Uniform Guidance and the Pennsylvania Department of Human Services Single Audit Supplement 30-32

Schedule of Expenditures of Federal Awards 33 Notes to the Schedule of Expenditures of Federal Awards 34 Schedule of Findings and Questioned Costs 35-36 Summary of Prior Audit Findings 37

Agreed-Upon Procedures Report:

Independent Accountant’s Report on Applying Agreed-upon Procedures to the

Financial Schedules and Exhibits Required by the Pennsylvania Department of Human Services 38-40

TABLE OF CONTENTS (CONTINUED)

Page Schedules of Revenues, Expenditures, and Carryover Funds – Mental Health

Services – Exhibit IV(a) MH NBG 41 Report of Income and Expenditures – Mental Health Services – Exhibit IV(b)

MH NBG 42

Schedules of Revenues, Expenditures, and Carryover Funds – Intellectual

Disabilities Services – Exhibit IV(c) ID NBG 43 Report of Income and Expenditures – Intellectual Disabilities Services – Exhibit

IV(d) ID NBG 44 Schedules of Revenues, Expenditures, and Carryover Funds – Early Intervention

Services – Exhibit V(a) EI 45 Report of Income and Expenditures – Early Intervention Services – Exhibit V(b) EI 46 Reconciliation Schedule – Exhibit XX 47 County Children and Youth Agency Child Protective Services Law (CPSL)

Monitoring of In-Home Purchased Service Providers – Exhibit XXI 48

INDEPENDENT AUDITOR’S REPORT

Board of Commissioners Lycoming-Clinton Joinder Board

Report on the Audit of the Financial Statements

Opinions

We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Lycoming-Clinton Joinder Board (the “Joinder”), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Joinder’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements 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 Joinder, as of June 30, 2023, and the respective changes in financial position thereof 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 (GAS), 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 Joinder 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

The Joinder’s 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 Joinder’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.

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 GAS 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.

Lycoming-Clinton Joinder Board

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 GAS, 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 Joinder’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 Joinder’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.

Adoption of Governmental Accounting Standards Board (GASB) Pronouncements

As described in Note 1 to the financial statements, in 2023 the Joinder adopted the provisions of Governmental Accounting Standards Board’s Statements No. 91, “Conduit Debt Obligations”, Statement No. 94, “Public-Private and Public-Public Partnerships and Availability Payment Arrangements”, Statement No. 96, “Subscription-Based Information Technology Arrangements”, and part of Statement No. 99, “Omnibus 2022”. Our opinion is not modified with respect to these matters.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 24 through 26 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 inquires 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.

Other Matters

Omission of Management’s Discussion and Analysis

Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Joinder’s basic financial statements. The accompanying Schedule of Expenditures of Federal Awards, 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, is presented for purposes of additional analysis and is not a required part of the financial statements.

The Schedule of Expenditures of Federal Awards 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. Such 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 financial statements or to the 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 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 March 21, 2024, on our consideration of the Joinder’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 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 Joinder’s internal control over financial reporting and compliance.

ZELENKOFSKE AXELROD LLC

Harrisburg, Pennsylvania March 21, 2024

Basic Financial Statements

Assets Governmental

Activities Current assets:

Cash and cash equivalents 16,422,116$ Accounts receivable 5,727,979 Due from other governments 3,804,220 Other assets 3,272,688

Total current assets 29,227,003

Noncurrent assets:

Loans receivable 221 Capital assets, being depreciated, net 584,112

Total noncurrent assets 584,333 Total Assets 29,811,336

Liabilities Current liabilities:

Accounts payable 14,249,711 Accrued liabilities 411,081 Unearned revenue 6,926,036 Due to DHS - MCO assessment tax 4,226,006 Line of credit 1,218,000 Unapplied allocations 2,225,550 Lease liability 508,290

Total current liabilities 29,764,674

Noncurrent liabilities:

Compensated absences 488,132 Lease liability 76,327

Total noncurrent liabilities 564,459 Total liabilities 30,329,133

Net Position Net investment in capital assets (505) Restricted for mental health/intellectual disabilities/early intervention 7,132 Unrestricted (524,424)

Total Net Position (517,797)$

June 30, 2023 Statement of Net Position

Lycoming-Clinton Joinder Board

The accompanying notes are an integral part of these financial statements

Net (Expense) Revenue and

Changes in Net Position

Functions/Programs: Expenses Charges for

Services

Operating Grants and

Contributions Governmental

Activities Government activities:

Mental health/intellectual disabilities/ early intervention 12,055,124$ 89,219$ 11,847,470$ (118,435)$

Children and youth 9,657,957 122,848 9,472,255 (62,854) HealthChoices 62,673,273 27,338 61,952,522 (693,413) Other 115,157 - 114,423 (734)

Total governmental activities 84,501,511$ 239,405$ 83,386,670$ (875,436)

General Revenues:

Investment Earnings 752,223 Total General Revenues 752,223 Changes in Net Position (123,213)

Net Position - Beginning (394,584) Net Position - Ending (517,797)$

Program Revenues

Statement of Activities Year Ended June 30, 2023

Lycoming-Clinton Joinder Board

Lycoming- Clinton Mental

Health/ Intellectual Disabilities Program

Lycoming Children and

Youth Services HealthChoices

Other Governmental

Funds

Total Governmental

Funds Assets Cash and cash equivalents 41,784$ 315,616$ 15,997,530$ 67,186$ 16,422,116$ Receivables:

Accounts 14,441 720,933 4,992,605 - 5,727,979 Loans - - - 221 221

Due from other governments 1,956,450 1,847,770 - - 3,804,220 Due from other funds 350,207 194 5 372,152 722,558 Other assets 41,137 48,050 3,183,501 - 3,272,688

Total Assets 2,404,019$ 2,932,563$ 24,173,641$ 439,559$ 29,949,782$

Liabilities and Fund Balance Liabilities:

Accounts payable 816,642$ 378,508$ 13,022,556$ 32,005$ 14,249,711$ Accrued liabilities 27,320 9,234 2,047 372,480 411,081 Unearned revenue - - 6,906,497 19,539 6,926,036 Due to other funds 186,715 511,126 16,535 8,182 722,558 Due to DHS - MCO assessment tax - - 4,226,006 - 4,226,006 Line of credit - 1,218,000 - - 1,218,000 Unapplied allocations:

Commonwealth of Pennsylvania, Department of Human Services 1,409,855 - - - 1,409,855

Lycoming County - 815,695 - - 815,695 Total Liabilities 2,440,532 2,932,563 24,173,641 432,206 29,978,942

Fund Balance:

Nonspendable:

Loans - - - 221 221 Restricted:

Mental health/intellectual disabilities/ early intervention - - - 7,132 7,132

Unassigned (36,513) - - - (36,513) Total Fund Balance (36,513) - - 7,353 (29,160)

Total Liabilities and Fund Balance 2,404,019$ 2,932,563$ 24,173,641$ 439,559$ 29,949,782$

June 30, 2023 Balance Sheet - Governmental Funds

Lycoming-Clinton Joinder Board

Total Fund Balance of Governmental Funds

Amounts reported for governmental activities in the statement of net position are different because: (29,160)$

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of assets is $2,710,044 and accumulated depreciation/amortization is $2,125,932. 584,112

Long-term liabilities are not due and payable in the current period and, therefore, are not reported as liabilities in governmental funds. Amounts reported for governmental activities in the statement of net position are different because:

Lease Liability (584,617) Compensated Absences (488,132)

Total Net Position of Governmental Activities (517,797)$

June 30, 2023

Reconciliation of the Balance Sheet of Governmental Lycoming-Clinton Joinder Board

Funds to the Statement of Net Position

Lycoming-Clinton Mental

Health/Intellectual Disabilities Program

Lycoming Children and

Youth Services HealthChoices

Other Governmental

Funds

Total Governmental

Funds Revenues:

Commonwealth of Pennsylvania $ 11,178,113 $ 7,975,804 $ 61,952,522 $ 114,423 $ 81,220,862 County Funds:

Lycoming County 494,096 1,496,451 - - 1,990,547 Clinton County 175,261 - - - 175,261

Interest 47,229 14,438 689,572 984 752,223 Rental Income 23,664 12,850 1,436 - 37,950 Other 65,555 109,998 25,902 - 201,455

Total Revenues 11,983,918 9,609,541 62,669,432 115,407 84,378,298

Expenditures:

Mental health/intellectual disabilities/ early intervention 11,983,115 - - - 11,983,115 Children and Youth - 9,609,541 - - 9,609,541 HealthChoices - - 62,669,432 - 62,669,432 Other - - - 136,553 136,553

Total Expenditures 11,983,115 9,609,541 62,669,432 136,553 84,398,641

(Deficiency) of Revenues Over Expenditures 803 - - (21,146) (20,343)

Other Financing Sources (Uses):

Lease Financing - - - 21,396 21,396

Total Other Financing Sources (Uses) - - - 21,396 21,396

Net Change in Fund Balance 803 - - 250 1,053

Fund Balance:

Beginning of year (37,316) - - 7,103 (30,213) End of year (36,513)$ -$ -$ 7,353$ (29,160)$

Year Ended June 30, 2023

Statement of Revenues, Expenditures, and Changes in Lycoming-Clinton Joinder Board

Fund Balance - Governmental Funds

Net Change in Fund Balance - Total Governmental Funds

Amounts reported for governmental activities in the statement of activities are different because: 1,053$

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 and reported as depreciation expense. This is the amount by which depreciation/amortization expense exceeded capital outlays and disposals in the period. (524,387)

In governmental funds, expenditures are not recognized for transactions not normally paid with expendable available resources. However, in the statement of activities expenses and liabilities are reported regardless of when financial resources are available. The adjustment in the net changes of the following balances:

Lease Proceeds (21,396) Compensated Absences (62,985)

Repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position.

Repayments of Lease Principal 484,502

Change in Net Position of Governmental Activities (123,213)$

Year Ended June 30, 2023

Reconciliation of The Statement of Revenues, Lycoming-Clinton Joinder Board

Of Governmental Funds to the Statement of Activities Expenditures, and Changes in Fund Balance

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Nature of Operations

The Lycoming-Clinton Joinder Board (the “Joinder”) administers and coordinates the Lycoming-Clinton Mental Health and Intellectual Disabilities Program to provide for the treatment, care, and vocational and social rehabilitation of mentally ill residents of Lycoming and Clinton Counties. The Joinder administers the Housing Enhancement Revolving Loan Account to help secure housing for mental health clients upon re-entry into the community. The Joinder has been designated as the administering agency for disbursement of Lycoming County funding of the Human Services Development Fund. Such funding represents payments from the Commonwealth of Pennsylvania Department of Human Services (DHS) to Lycoming County for use in meeting its service requirements. Eligibility for Human Services Development Fund service is determined in accordance with guidelines established by the DHS. The Joinder also has been designated as the administering agency for Lycoming County’s Children and Youth Services to provide treatment for and prevention of child abuse, neglect and exploitation, including services to help overcome problems that result in dependency and delinquency for residents of Lycoming County. Lycoming County provides and covers all expenditures necessary to carry on the work and legally mandated responsibilities of Lycoming Children and Youth Services. Lycoming County has also agreed to indemnify Clinton County for any responsibility which may flow from the Board as a result of the direct operation of Lycoming Children and Youth Services for Lycoming County.

B. Reporting Entity

The Joinder has been determined to be a joint venture between Lycoming and Clinton Counties. Commitments for future funding by the Lycoming and Clinton County Mental Health and Intellectual Disabilities program and the Lycoming County Children and Youth program are made on an annual basis. Reductions or loss of this funding could have a significant effect on the Joinder’s programs and activities.

C. Measurement Focus, Basis of Accounting

The basic financial statements of the Joinder are comprised of the following:

· Government-wide financial statements

· Fund financial statements

· Notes to the financial statements

1. Government-wide Financial Statements

Government-wide financial statements (i.e. the statement of net position and the statement of activities) report on all the nonfiduciary activities of the Joinder. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities which are supported by grant revenues are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Joinder has no business-type activities.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

C. Measurement Focus, Basis of Accounting (Continued)

1. Government-wide Financial Statements (Continued)

Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, which incorporates noncurrent assets as well as long term debt and obligations.

Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues.

Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customer or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment.

Amounts expended to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as an expenditure.

Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the Joinder are reported as a reduction of the related liability, rather than an expenditure.

2. Fund Financial Statements

The operations of the Joinder are organized and are recorded in individual funds. Each fund is a separate accounting entity, with self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures or expenses, as appropriate.

Governmental Funds

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Joinder considers revenues to be available if they are collected within one year of the end of the current fiscal period. In determining when to recognize intergovernmental revenues (grants and entitlements), the legal and contractual requirements of the individual programs are used as guidance. Revenues are recognized when the eligibility requirements have been met. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

D. Measurement Focus and Basis of Accounting (Continued)

2. Fund Financial Statements (Continued)

Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental funds operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets, including entering into contracts giving the Joinder the right to use leased assets, are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is made.

E. Basis of Presentation

The following are the Joinder’s major funds:

Governmental Fund Types

· The Lycoming-Clinton Mental Health and Intellectual Disabilities Program is used to account for specific revenue sources related to the provisions of Mental Health and Intellectual Disabilities services that are restricted to expenditures for those specified purposes.

· The Lycoming Children and Youth Services fund is used to account for the specific revenue sources related to the provisions of Child and Youth programs that are restricted to expenditures for those specified purposes.

· The HealthChoices Fund is used to account for the specific revenue sources related to the provisions of the HealthChoices program that are restricted to expenditures for those specific purposes.

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

F. Assets, Liabilities, Net Position or Fund Balance

1. Cash and Cash Equivalents

Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

2. Receivables

Receivables are reported at amounts management expects to collect on balances outstanding at year-end. Accounts are charged to bad debt expense when deemed uncollectible based upon a periodic review of individual accounts.

3. Interfund Receivables and Payables

Activity between funds that are representative of lending/borrowing arrangements outstanding for goods or services rendered at the end of the fiscal year are referred to as "due to/from other funds."

4. Capital Assets

Capital assets, which include property, plant, and equipment, are reported in the governmental or business-type activity column in the government-wide and the proprietary fund financial statements. The Joinder defines capital assets with an initial, individual cost of more than: $5,000 and an estimated useful life in excess of one year. Capital assets are recorded at historical cost or estimated historical costs if purchased or constructed (except for intangible right-to-use lease assets, the measurement of which is discussed in note 1.F.8 below). Donated capital assets are recorded at acquisition value.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are completed.

Capital assets of the Joinder are depreciated using the straight line method over the following intended useful lives:

Description Estimated Useful Lives

Improvements 20 years Furniture and Equipment 2-5 years Vehicles 5 years

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

F. Assets, Liabilities, Net Position or Fund Balance (Continued)

5. Claims Liability

The HealthChoices Fund accrues an estimate of its health care cost liability at the end of each accounting period. The estimate is developed using a process that accounts for the lag between the point in time that the payment is made for a service and the point in time that the managed care organization becomes liable for the service. Subsequent payments are reviewed to confirm the reasonableness of the estimate. The estimate for the claims liability is recorded as part of accounts payable on the balance sheet.

6. Unearned Revenue/ Unapplied Allocations

The unearned revenue and unapplied allocations will be recognized as revenue in the fiscal year in which they are earned in accordance with the modified accrual basis of accounting. The amounts have been allocated to the Joinder but the associated expenses have not yet been incurred.

7. Compensated Absences

Compensated absences are those for which employees receive pay. A liability is recorded through the use of estimates, which apply historical data to current factors. The Joinder maintains records of unused absences and applies current and/or contracted compensation rates to the various types of compensated absences using the termination method.

8. Leases

The Joinder is a lessee for noncancellable leases of buildings and vehicles. The Joinder recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide financial statements. The Joinder recognizes lease liabilities with an initial, individual value of $5,000 or more.

At the commencement of a lease, the Joinder initially measures the lease liability at the present value of payments expected to be made during the lease term.

Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured at the initial amount of the lease liability, adjusted for lease payments made at or before the commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

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

· The Joinder users the interest rate charged the lessor as the discount rate.

When the discount rate charged by the lessor is not provided, the Joinder generally uses its estimated incremental borrowing rate as the discount rate for leases.

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

F. Assets, Liabilities, Net Position or Fund Balance (Continued)

8. Leases (Continued)

· The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the Joinder is reasonably certain to exercise.

The Joinder monitors changes in circumstance that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position.

9. Fund Balance

The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the Joinder is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:

· Nonspendable fund balance – This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. The Joinder has classified Loan Repayment Income in the Housing Enhancement Loan Fund as being nonspendable.

· Restricted fund balance – This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.

· Unassigned fund balance – This classification represents amounts that are available for any purpose.

In circumstances where an expenditure is to be made for a purpose for which amounts are available in multiple fund balance classifications, the order in which resources will be expended is as follows: restricted fund balance, followed by committed fund balance, assigned fund balance and lastly unassigned fund balance.

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

F. Assets, Liabilities, Net Position or Fund Balance (Continued)

10. Net Position

The government-wide utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted.

· Net Investment in capital assets – This category groups all capital assets into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

· Restricted Net Position – This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

· Unrestricted Net Position – This category represents net position of the Joinder, not restricted for any project or other purpose.

When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the Joinder’s policy is to apply restricted net position first.

11. Accounting 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 certain reported amounts and disclosures.

Accordingly, actual amounts may differ from those estimates.

G. Adoption of Governmental Accounting Standards Board (GASB) Statements

The Joinder adopted the provisions of GASB Statement No. 91, “Conduit Debt Obligations”, Statement No. 94, “Public-Private and Public-Public Partnerships and Availability Payment Arrangements”, Statement No. 96, “Subscription-Based Information Technology Arrangements”, and part of Statement No. 99, “Omnibus 2022”. The adoption of these statements did not result in modification of previously reported amounts.

H. Pending Changes in Accounting Principles

In June 2022, the GASB issued Statement No. 99, “Omnibus 2022”. The provisions of this statement are effective as follows:

· The requirements related to financial guarantees and the reporting of derivative instruments are effective for the Joinder’s fiscal year 2024 financial statements.

JUNE 30, 2023

NOTE 1: NATURE OF ENTITY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

H. Pending Changes in Accounting Principles (Continued)

In June 2022, the GASB issued Statement No. 100, “Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62”. The Joinder is required to adopt the provisions of Statement No. 100 for its fiscal year 2024 financial statements.

In June 2022, the GASB issued Statement No. 101, “Compensated Absences”.

The Joinder is required to adopt the provisions of Statement No. 101 for its fiscal year 2025 financial statements.

In December 2023, the GASB issued Statement No. 102, “Certain Risk Disclosures”. The Joinder is required to adopt the provisions of Statement No. 102 for its fiscal year 2025 financial statements.

The Joinder has not yet completed the various analysis required to estimate the financial statement impact of these new pronouncements.

NOTE 2: BUDGETS AND BUDGETARY ACCOUNTING

The budget is adopted on a basis consistent with generally accepted accounting principles.

These tentative allocations assume successful passage of the state budget. The Joinder also prepares and submits a proposed budget for each program. After the state budget is approved by the state legislature, notification of primary allocations is received. At this time, the operating budgets of the Lycoming-Clinton Mental Health and Intellectual Disabilities Program and HealthChoices Program are presented to the Board for approval and the operating budget of Lycoming Children and Youth Services and Human Services Development Fund is presented to the Children and Youth Services and the Human Services Development Fund Standing Committee (Lycoming County Commissioners) for recommendation and final approval. Any changes in the budget throughout the year must be approved by the Board or Standing Committee and DHS.

NOTE 3: DEPOSIT AND INVESTMENT RISK

In accordance with the DHS, the Joinder is allowed to invest in certain “approved investment securities”. As of June 30, 2023 the Joinder has no investments.

Custodial Credit Risk – For deposits, custodial credit risk is the risk that in the event of the failure of the counterparty, the Joinder will not be able to recover the value of its deposits or collateral securities that are in the possession of an outside party. As of June 30, 2023, the Joinder’s cash balances for its governmental activities was $16,422,116 and its bank balances were $17,124,983. Of these bank balances, $16,874,983 were exposed to custodial credit risk and they were collateralized by the pledging of pooled assets held by the pledging financial institutions and uninsured. The Joinder does not have a written policy to limit its exposure to custodial credit risk.

JUNE 30, 2023

NOTE 4: CAPITAL ASSETS

A summary of Capital Asset transactions for the year ended June 30, 2023 is as follows:

Balance July 1, 2022 Additions Deletions

Balance June 30, 2023

Governmental Activities:

Capital Assets Being Depreciated/ Amortized:

Improvements $ 663,433 $ - $ - $ 663,433 Furniture and Equipment 300,864 18,014 - 318,878 Vehicles 144,304 - - 144,304 Right-to-Use Lease Equipment Right-to-Use Lease Vehicles

42,404 118,400

21,396

63,800 118,400

Right-to-Use Lease Buildings 1,401,229 - - 1,401,229 Total Capital Assets Being Depreciated/Amortized 2,670,634 39,410 - 2,710,044

Less Accumulated Depreciation/ Amortization for:

Improvements (616,296) (31,426) - (647,722) Furniture and Equipment (274,471) (21,769) - (296,240) Vehicles (134,848) (7,086) - (141,934) Right-to-Use Lease Equipment Right-to-Use Lease Vehicles

(33,923) (35,521)

(12,760) (23,680)

(46,683) (59,201)

Right-to-Use Lease Buildings (467,076) (467,076) - (943,152) Total Accumulated Depreciation (1,562,135) (563,797) - (2,125,932)

Governmental Capital Assets, Net $ 1,108,499 $ (524,387) $ - $ 584,112

Depreciation/Amortization expense was charged to functions/programs of the primary government as follows:

Governmental Activities:

Mental Health/Intellectual Disabilities/Early Intervention $ 326,547 Children and Youth 221,713 HealthChoices 15,337 Total Depreciation $ 563,797

NOTE 5: INTERFUND BALANCES

Interfund balances are primarily for the reimbursement of expenditures and undistributed cash receipts. As of June 30, 2023, interfund balances were as follows:

Due From Other Funds

Due To Other Funds

Lycoming-Clinton Mental Health/ Intellectual Disabilities Program $ 350,207 $ 186,715 Lycoming Children and Youth Services 194 511,126 HealthChoices 5 16,535 Other Governmental Funds 372,152 8,182

$ 722,558 $ 722,558

JUNE 30, 2023

NOTE 6: COMPENSATED ABSENCES

The Joinder’s Personnel Policies specify the sick leave and vacation leave policies for employees. Sick leave, although accumulated up to a maximum of thirty-days, is not payable upon termination. Vacation leave is available to all employees and is earned in the year in which service is performed. Employees are entitled to accrue an annual designated number of days, which carry over from year to year. Upon termination, vacation leave is paid at the employee’s current rate of pay and sick leave is not compensated. The change in the Joinder’s compensated absences during the year ended June 30, 2023 are as follows:

NOTE 7: PENSION PLAN

The Tax Deferred Annuity Plan of the Lycoming-Clinton Joinder Board is a defined contribution plan established and administered by the Joinder to provide benefits at retirement to its employees. The Joinder’s contributions are discretionary, currently 7% of each eligible employee’s salary. Employees are allowed to make contributions. However, combined Joinder and employee contributions may not exceed 20% of the employees’ annual compensation. Plan provisions and contribution requirements are established and may be amended by the Board. The total Joinder expense related to the purchase of annuities for the year ended June 30, 2023 amounted to $626,332. Joinder employees contributed $439,956.

NOTE 8: RISK MANAGEMENT

The Joinder is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; inquiries to employees; and natural disasters.

The Joinder purchases commercial insurance to cover risks of loss including general liability, excess liability, workers’ compensation, property insurance, and life and accident insurance. Settled claims have not exceeded the commercial coverage insurance in any of the past three fiscal years, and there have been no significant changes in insurance coverage in those years.

NOTE 9: CONTINGENT LIABILITIES

The Joinder participates in both state and federally assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. The Joinder is potentially liable for any expenditures which may be disallowed pursuant to the terms of these grant programs. Management is not aware of any material items on noncompliance which would result in the disallowance of program expenditures.

NOTE 10: LINE OF CREDIT

The Joinder has a line of credit with a local bank where the Joinder can draw up to $2,500,000 at an interest rate equal to the prime rate discounted 25%. As of June 30, 2023, the balance on the line of credit was $1,218,000 and the interest rate was 6.375%.

The line of credit is collateralized by revenue earned by the Children and Youth Fund.

Beginning Balance $ 425,147 Increases 62,985 Decreases - Ending Balance $ 488,132

JUNE 30, 2023

NOTE 10: LINE OF CREDIT (CONTINUED)

The Joinder has a line of credit with a local bank where the Joinder can draw up to $2,000,000 at an interest rate equal to the prime rate discounted 25%. As of June 30, 2023, there was no balance on the line of credit and the interest rate was 6.375%. The line of credit is collateralized by revenue earned by the Mental Health, Intellectual Disabilities, Early Intervention, and Human Services Development Fund.

NOTE 11: LEASES

The Joinder has entered into a long-term lease agreement for the use of office space in the Sharewell Building with an initial lease liability of $1,401,289. The Joinder is required to make monthly principal and interest payments of $41,012 through July 31, 2024.

Additional renewal periods have not been included in the lease term as the Joinder is not reasonably certain of exercising the option and is considering alternative plans for office space. The lease has an interest rate based on the Department of Labor, Bureau of Labor Statistics Consumer Price Index. The right-of-use lease building is amortized over a estimated useful life equal to the lease term. As of June 30, 2023, the outstanding lease liability under this agreement is $519,054.

In 2021 the Joinder entered into five-year lease agreements for the use of vehicles with an initial lease liability balance of $118,400. The Joinder is required to make monthly principal and interest payments ranging from $323 to $385. The interest rate implicit in the lease based on the fair market value of the asset is 1.1%. The vehicles have an estimated useful life of five years. As of June 30, 2023, the outstanding lease liability under these agreements is $52,038.

In 2023 the Joinder entered into a three-year lease agreement for the use of computers with an initial lease liability balance of $21,396. The Joinder is required to make monthly principal and interest payments of $656 through March 1, 2025. The interest rate implicit in the lease based on the fair market value of the asset is 6.5%. The computers have an estimated useful life of five years. As of June 30, 2023, the outstanding lease liability under this agreement is $13,525.

The future principal and interest on the lease payments as of June 30, 2023, are as follows:

Year Ended: Principal Interest Total 2024 $ 508,290 $ 15,813 $ 524,103 2025 72,118 857 72,975 2026 4,209 - 4,209 Total $ 584,617 $ 16,670 $ 601,287

The Joinder has entered into a long-term rental agreement with an external party to provide office space for their Lock Haven location. This agreement does not meet the criteria of a lease under GASB 87 as the terms and conditions specify that either party can terminate with 90 days’ notice. Since the terms do not specify a noncancellable period, the Joinder has not recorded a liability in the financial statements for this agreement in accordance with GASB 87.

The Joinder has entered into a short-term sublease agreement to provide office space to an external party in the Sharewell Building. As the maximum term of this agreement is twelve months, no receivable has been recorded in the financial statements in accordance with GASB 87.

JUNE 30, 2023

NOTE 12: EXCESS OF EXPENDITURES OVER APPROPRIATIONS IN MAJOR FUND

The following major fund had an excess of actual expenditures over budget for the year ended June 30, 2023.

Appropriations Expenditures

Percent of Excess Expenditures Over

Appropriations HealthChoices $ 61,775,216 $ 62,669,432 1.4%

The excess expenditures over appropriations in the HealthChoices fund was funded by increased grant revenues.

Information Supplementary

Required

Budgetary Comparison Schedule

Lycoming-Clinton Mental Health and Intellectual Disabilities Fund Year Ended June 30, 2023

Variance with Final Budget

Actual Positive Original Final Amounts (Negative)

Commonwealth of Pennsylvania 7,930,597$ 7,930,597$ 11,178,113$ 3,247,516$ County Funds:

Lycoming County 326,399 326,399 494,096 167,697 Clinton County 108,800 108,800 175,261 66,461

Interest 1,691 1,691 47,229 45,538 Other 4,094,956 4,094,956 65,555 (4,029,401) Rental - - 23,664 23,664

Total Revenues 12,462,443 12,462,443 11,983,918 (478,525)

Community Residential Living Arrangements 1,408,628 1,408,628 1,686,129 (277,501) Inpatient and Outpatient Services 16,000 16,000 183,758 (167,758) Psychiatric Rehabilitation 148,367 148,367 116,209 32,158 Community Employment 5,100 5,100 3,312 1,788 Crisis Intervention 760,199 760,199 458,987 301,212 Case Management 5,388,607 5,388,607 4,241,801 1,146,806 Administration 1,409,166 1,409,166 2,150,789 (741,623) Partial Hospitalization 10,000 10,000 - 10,000 Emergency Services 198,636 198,636 153,311 45,325 Community Services 1,051,562 1,051,562 915,974 135,588 Family Support Services 190,346 190,346 223,100 (32,754) Early Intervention 634,600 634,600 792,146 (157,546) Housing 329,630 329,630 299,154 30,476 Transitional Community Integration Services 764,448 764,448 758,445 6,003 Other 147,154 147,154 - 147,154

Total Expenditures 12,462,443 12,462,443 11,983,115 479,328

Net Change in Fund Balance - - 803 803

Beginning of Year - - (37,316) 37,316 End of Year -$ -$ (36,513)$ 38,119$

Revenues:

Budget Amounts

Expenditures:

Fund Balance:

Lycoming-Clinton Children and Youth Services Fund Year Ended June 30, 2023

Variance with Final Budget

Actual Positive Original Final Amounts (Negative)

Commonwealth of Pennsylvania 9,943,801$ 9,943,801$ 7,975,804$ (1,967,997)$ County Funds:

Lycoming County 1,625,000 1,625,000 1,496,451 (128,549) Interest 16,400 16,400 14,438 (1,962) Other 126,500 126,500 109,998 (16,502) Rental - - 12,850 12,850

Total Revenues 11,711,701 11,711,701 9,609,541 (2,102,160)

Administration 206,040 206,040 165,358 40,682 Foster Family Care 1,643,950 1,643,950 986,557 657,393 Child Abuse 609,370 609,370 732,323 (122,953) Subsidized Permanent Legal Custodianship 216,280 216,280 196,776 19,504 Protective - General 1,850,065 1,850,065 1,657,021…