$631,298.25 ELVERTA JOINT ELEMENTARY SCHOOL DISTRICT

Transcription

NEW ISSUE
DTC BOOK-ENTRY ONLY
Insured S&P Rating: “AA-”
Underlying S&P Rating: “A+”
See “RATINGS” herein
In the opinion of Meyers, Nave, Riback, Silver & Wilson, A Professional Law Corporation, Bond Counsel to the District, based
upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of
certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal
income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and is exempt from State of
California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item
for purposes of the federal individual and corporate alternative minimum taxes, although Bond Counsel observes that such
interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. The Bonds
are "qualified tax-exempt obligations" under section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Bond
Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or
receipt of interest on, the Bonds. See “LEGAL MATTERS – Tax Matters” herein.
$631,298.25
ELVERTA JOINT ELEMENTARY SCHOOL DISTRICT
(SACRAMENTO AND PLACER COUNTIES, CALIFORNIA)
GENERAL OBLIGATION BONDS, ELECTION OF 2002, SERIES 2013
(BANK QUALIFIED)
DATED: Date of Delivery
DUE: As shown on the inside cover
The Elverta Joint Elementary School District (Sacramento and Placer Counties, California) General Obligation Bonds, Election
of 2002, Series 2013 (the “Bonds”) are issued by the Elverta Joint Elementary School District (the “District”) to (i) finance the
acquisition, construction, modernization and equipping of District facilities, and (ii) pay costs of issuance of the Bonds. See
“THE BONDS—Sources and Uses of Funds” herein.
The Bonds are payable from the proceeds of ad valorem property taxes which the Board of Supervisors of Sacramento County
and the Board of Supervisors of Placer County are obligated to levy and collect on behalf of the District without limitation as to
rate or amount on all taxable property in the District (except for certain personal property which is taxable at limited rates) for
the payment of the Bonds. See "SECURITY AND SOURCE OF PAYMENT " herein.
The Bonds are being issued as fully registered bonds, without coupons, and when delivered will be registered in the name of
Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities
depository for the Bonds. Individual purchases of the Bonds will be made in book-entry-only form and only in authorized
denominations, as described in this Official Statement. So long as Cede & Co. is the registered owner of the Bonds, payments of
principal of and interest on the Bonds will be made by Zions First National Bank (the “Paying Agent”) to DTC for subsequent
disbursement to DTC Participants who will remit such payments to the Beneficial Owners of the Bonds. See “THE BONDS—
DTC Book-Entry Only” herein.
The Bonds are issued as capital appreciation bonds. The Bonds accrete interest from their date of delivery, compounded
semiannually on June 1 and December 1 of each year, commencing June 1, 2014. The Bonds are subject to redemption prior to
maturity. See “THE BONDS—Redemption Provisions.”
The scheduled payment of principal of (or, in the case of Capital Appreciation Bonds, the accreted value) and
interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with
the delivery of the Bonds by ASSURED GUARANTY MUNICIPAL CORP.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT INTENDED TO BE A
SUMMARY OF ALL INFORMATION RELEVANT TO AN INVESTMENT IN THE BONDS. INVESTORS SHOULD READ THE
ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT
DECISION. CAPITALIZED TERMS USED ON THIS COVER PAGE NOT OTHERWISE DEFINED WILL HAVE THE MEANINGS
SET FORTH HEREIN.
MATURITY SCHEDULE
See Inside Cover
The Bonds will be offered when, as and if executed and delivered and received by E. J. De La Rosa & Co., Inc., as underwriter
for the Bonds, subject to the approval as to their legality by Meyers, Nave, Riback, Silver & Wilson, A Professional Law
Corporation, San Francisco, California, Bond Counsel. It is anticipated that the Bonds, in definitive form, will be available for
delivery through the facilities of DTC in New York, New York on or about December 18, 2013.
This Official Statement is dated December 4, 2013
$631,298.25
Maturity Date
June 1
Initial
Principal Amount
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
$70,230.40
68,848.30
67,379.40
65,798.90
64,048.00
62,057.10
60,489.00
58,771.90
57,057.60
56,617.65
Accretion Rate
5.400%
5.570
5.710
5.830
5.940
6.050
6.110
6.170
6.220
6.250
Yield
5.400%
5.570
5.710
5.830
5.940
6.050
6.110
6.170
6.220
6.250
Maturity Value
$ 160,000.00
170,000.00
180,000.00
190,000.00
200,000.00
210,000.00
220,000.00
230,000.00
240,000.00
255,000.00
CUSIP+
290392BA6
290392BB4
290392BC2
290392BD0
290392BE8
290392BF5
290392BG3
290392BH1
290392BJ7
290392BK4
+ CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global
Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is
not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the District nor
the Underwriter is responsible for the selection or correctness of the CUSIP numbers set forth herein.
ii
THIS OFFICIAL STATEMENT IS SUBMITTED WITH RESPECT TO THE SALE OF THE BONDS REFERRED TO HEREIN
AND MAY NOT BE REPRODUCED OR USED, IN WHOLE OR IN PART, FOR ANY OTHER PURPOSE. THIS OFFICIAL
STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE BONDS.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR THE
SECURITIES EXCHANGE ACT OF 1934 AS AMENDED IN RELIANCE UPON EXCEPTIONS THEREIN FOR THE ISSUANCE
AND SALE OF MUNICIPAL SECURITIES. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES LAW OF ANY STATE.
THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL NOR THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THE BONDS BY A PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE AN OFFER, SOLICITATION OR SALE.
NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE DISTRICT TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED HEREIN, AND IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DISTRICT.
THE INFORMATION SET FORTH HEREIN HAS BEEN FURNISHED BY THE DISTRICT AND OTHER SOURCES THAT ARE
BELIEVED TO BE RELIABLE, BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS. THE INFORMATION
AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE AND NEITHER DELIVERY OF
THIS OFFICIAL STATEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE DISTRICT SINCE THE DATE HEREOF.
ALL SUMMARIES OF THE DOCUMENTS REFERRED TO IN THIS OFFICIAL STATEMENT ARE QUALIFIED BY THE
PROVISIONS OF THE RESPECTIVE DOCUMENTS SUMMARIZED AND DO NOT PURPORT TO BE COMPLETE
STATEMENTS OF ANY OR ALL OF SUCH PROVISIONS.
THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH,
AND AS PART OF, ITS RESPONSIBILITIES UNDER FEDERAL SECURITIES LAWS, AS APPLIED TO THE FACTS AND
CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTEE THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION.
CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS OFFICIAL STATEMENT
CONSTITUTE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE UNITED STATES PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, SECTION 21E OF THE UNITED STATES SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, AND SECTION 27A OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. SUCH
STATEMENTS ARE GENERALLY IDENTIFIABLE BY TERMINOLOGY USED SUCH AS “PLAN,” EXPECT,” “ESTIMATE,”
“PROJECT,” “BUDGET” OR SIMILAR WORDS. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS
CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVES KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE
ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS OR
EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED CHANGE.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS,
INSTITUTIONAL INVESTORS, BANKS OR OTHERS AT PRICES LOWER OR HIGHER THAN THE PUBLIC OFFERING
PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM
TIME TO TIME BY THE UNDERWRITER.
THE DISTRICT MAINTAINS AN INTERNET WEBSITE, BUT THE INFORMATION ON THE WEBSITE IS NOT
INCORPORATED IN THIS OFFICIAL STATEMENT.
ASSURED GUARANTY MUNICIPAL CORP. (“AGM”) MAKES NO REPRESENTATION REGARDING THE BONDS OR THE
ADVISABILITY OF INVESTING IN THE BONDS. IN ADDITION, AGM HAS NOT INDEPENDENTLY VERIFIED, MAKES NO
REPRESENTATION REGARDING, AND DOES NOT ACCEPT ANY RESPONSIBILITY FOR THE ACCURACY OR
COMPLETENESS OF THIS OFFICIAL STATEMENT OR ANY INFORMATION OR DISCLOSURE CONTAINED HEREIN, OR
OMITTED HEREFROM, OTHER THAN WITH RESPECT TO THE ACCURACY OF THE INFORMATION REGARDING AGM
SUPPLIED BY AGM AND PRESENTED UNDER THE HEADING “BOND INSURANCE” AND “APPENDIX F—SPECIMEN
MUNICIPAL BOND INSURANCE POLICY”.
iii
$631,298.25
BOARD OF TRUSTEES
Ray Lippincott, Jr., President
Sandee Felley, Vice President
Richard Currier, Clerk
Rhonda Klarcyk, Member
Brenda L. Brent, Member
ADMINISTRATION
Michael Borgaard, Ed.D., Superintendent
Katie Lippincott, Business Manager
7900 Eloise Avenue
Elverta, California 95626
(916) 991-2244
FINANCIAL ADVISOR
Government Financial Strategies inc.
1228 N Street, Suite 13
Sacramento, California 95814
(916) 444-5100
BOND COUNSEL
Meyers, Nave, Riback, Silver & Wilson, A Professional Law Corporation
575 Market Street, Suite 2600 San Francisco, California 94105
(415) 421-3711
PAYING AGENT
Zions First National Bank
550 South Hope Street, Suite 2650
Los Angeles, California 90071
(213) 593-3152
iv
$631,298.25
TABLE OF CONTENTS
Page #
INTRODUCTORY STATEMENT ...................................................................................................................................................... 1 General ............................................................................................................................................................................................ 1 The District ..................................................................................................................................................................................... 1 Authority for Issuance .................................................................................................................................................................... 1 Purpose of Issue .............................................................................................................................................................................. 2 Source of Payment for the Bonds ................................................................................................................................................... 2 Description of the Bonds ................................................................................................................................................................ 2 Bank Qualified Obligations ............................................................................................................................................................ 2 Bond Insurance ............................................................................................................................................................................... 2 Continuing Disclosure .................................................................................................................................................................... 2 Professionals Involved .................................................................................................................................................................... 2 Other Information ........................................................................................................................................................................... 3 THE BONDS ........................................................................................................................................................................................ 3 General Obligation Bond Election of 2002 .................................................................................................................................... 3 Purpose of Issue .............................................................................................................................................................................. 4 Form and Registration .................................................................................................................................................................... 4 Payment of Principal and Interest ................................................................................................................................................... 4 Redemption Provisions ................................................................................................................................................................... 4 DTC Book-Entry Only ................................................................................................................................................................... 5 Registration, Transfer and Exchange .............................................................................................................................................. 7 Defeasance ...................................................................................................................................................................................... 7 Unclaimed Moneys ......................................................................................................................................................................... 8 Application and Investment of Bond Proceeds .............................................................................................................................. 8 Sources and Uses of Funds ............................................................................................................................................................. 8 Debt Service Schedules .................................................................................................................................................................. 9 SECURITY AND SOURCE OF PAYMENT .................................................................................................................................... 10 General .......................................................................................................................................................................................... 10 Property Taxation System............................................................................................................................................................. 11 Assessed Valuation of Property Within the District ..................................................................................................................... 11 Largest Taxpayers in District........................................................................................................................................................ 14 Tax Rate ........................................................................................................................................................................................ 15 Alternative Method of Tax Apportionment .................................................................................................................................. 16 Tax Collections and Delinquencies .............................................................................................................................................. 17 Direct and Overlapping Bonded Debt .......................................................................................................................................... 17 BOND INSURANCE ......................................................................................................................................................................... 19 Bond Insurance Policy .................................................................................................................................................................. 19 Assured Guaranty Municipal Corp. .............................................................................................................................................. 19 COUNTY POOLED INVESTMENT FUND .................................................................................................................................... 20 COUNTY ECONOMIC PROFILE .................................................................................................................................................... 21 General Information...................................................................................................................................................................... 21 Population ..................................................................................................................................................................................... 22 Unemployment ............................................................................................................................................................................. 22 Major Private Employers .............................................................................................................................................................. 23 Taxable Sales ................................................................................................................................................................................ 23 v
THE DISTRICT ................................................................................................................................................................................. 23 General Information...................................................................................................................................................................... 24 The Board of Trustees and Key Administrative Personnel .......................................................................................................... 24 Average Daily Attendance ............................................................................................................................................................ 24 Charter Schools ............................................................................................................................................................................. 25 Pupil-Teacher Ratios .................................................................................................................................................................... 25 Employee Relations ...................................................................................................................................................................... 25 Pension Plans ................................................................................................................................................................................ 26 Other Post-Employment Benefits ................................................................................................................................................. 26 DISTRICT FINANCIAL INFORMATION....................................................................................................................................... 27 Accounting Practices .................................................................................................................................................................... 27 Budget and Financial Reporting Process ...................................................................................................................................... 27 Financial Statements ..................................................................................................................................................................... 29 Revenues ....................................................................................................................................................................................... 32 Expenditures ................................................................................................................................................................................. 32 Short-Term Borrowings ................................................................................................................................................................ 32 Capitalized Lease Obligations ...................................................................................................................................................... 33 Long-Term Indebtedness .............................................................................................................................................................. 33 STATE FUNDING OF PUBLIC EDUCATION ............................................................................................................................... 33 Sources of Revenues for Public Education ................................................................................................................................... 33 Distribution of Revenues for Public Education ............................................................................................................................ 34 State IOUs and Deferrals .............................................................................................................................................................. 35 The 2012-13 State Budget ............................................................................................................................................................ 35 The 2013-14 State Budget ............................................................................................................................................................ 37 Future Budgets .............................................................................................................................................................................. 39 CONSTITUTIONAL & STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES & EXPENDITURES ................. 39 LEGAL MATTERS ........................................................................................................................................................................... 42 No Litigation ................................................................................................................................................................................. 42 Legal Opinion ............................................................................................................................................................................... 42 Tax Matters ................................................................................................................................................................................... 42 Legality for Investment................................................................................................................................................................. 43 RATINGS ........................................................................................................................................................................................... 44 FINANCIAL ADVISOR .................................................................................................................................................................... 44 INDEPENDENT AUDITOR ............................................................................................................................................................. 44 UNDERWRITING AND INITIAL OFFERING PRICE ................................................................................................................... 44 CONTINUING DISCLOSURE ......................................................................................................................................................... 44 ADDITIONAL INFORMATION ...................................................................................................................................................... 45 APPENDIX A—THE FINANCIAL STATEMENTS OF THE DISTRICT AS OF AND FOR THE YEAR ENDING
JUNE 30, 2012
APPENDIX B—FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX C—PROPOSED FORM OF BOND COUNSEL OPINION
APPENDIX D—SACRAMENTO COUNTY INVESTMENT POLICY
APPENDIX E—ACCRETED VALUES TABLE
APPENDIX F—SPECIMEN MUNICIPAL BOND INSURANCE POLICY
vi
OFFICIAL STATEMENT
$631,298.25
INTRODUCTORY STATEMENT
General
The purpose of this Official Statement is to provide certain information concerning the sale and delivery of an issue of bonds
designated as the Elverta Joint Elementary School District (Sacramento and Placer Counties, California) General Obligation
Bonds, Election of 2002, Series 2013 (the “Bonds”).
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to this Official Statement
and is qualified by more complete and detailed information contained in this entire Official Statement, which includes the cover
page, inside cover page and appendices hereto, and the documents summarized or described herein. A full review should be made
of this entire Official Statement by persons interested in investing in the Bonds. The offering of the Bonds to potential investors is
made only by means of this entire Official Statement.
The District
Elverta Joint Elementary School District (the “District”), a political subdivision of the State of California (the “State”),
encompasses an area of approximately 34 square miles in the northern portion of Sacramento County (the “County”) and a small
portion of Placer County. The District educates approximately 300 students at an elementary school, two middle schools, and a
newly opened charter high school. The District is governed by a five-member Board of Trustees (the “Board”). See “THE
DISTRICT” and “DISTRICT FINANCIAL INFORMATION” herein.
Authority for Issuance
The Bonds are issued by the District under and pursuant to the provisions of Article 4.5 (commencing with Section 53506) of
Chapter 3, Part 1, Division 1, Title 1 of the State Government Code, and all laws amendatory thereof or supplemental thereto, and
pursuant to the provisions of Resolution No. 13-455 (the “Resolution”) adopted by the Board on November 12, 2013, and a paying
agent agreement (the “Paying Agent Agreement”) dated as of December 1, 2013, between the District and Zions First National
Bank (the “Paying Agent”).
The Bonds represent the second series of bonds authorized at an election held in the District on November 5, 2002 (the “2002
Election”), whereby a 55% majority of the votes cast by voters in the District authorized the issuance of not-to-exceed $10.5
million aggregate principal amount of general obligation bonds for authorized school purposes. See “THE BONDS—General
Obligation Bond Election of 2002” herein.
-1-
Purpose of Issue
Proceeds of the Bonds will be applied (i) to finance the acquisition, construction, modernization and equipping of District
facilities as authorized by the 2002 Election, and (ii) to pay costs of issuance of the Bonds. See “THE BONDS—Purpose of
Issue” herein.
Source of Payment for the Bonds
The Board of Supervisors of Sacramento County (“the County Board”) and the Board of Supervisors of Placer County are
empowered and obligated to annually levy and collect ad valorem property taxes, without limitation as to rate or amount, on all
taxable property in the District (except for certain personal property which is taxable at limited rates) for the payment of principal
of and interest on the Bonds. See “SECURITY AND SOURCE OF PAYMENT” herein.
Description of the Bonds
The Bonds will be dated their date of delivery and will be issued as fully registered bonds, without coupons, in book-entry form
only. The Bonds will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company,
New York, New York (“DTC”). Payments of the principal of and interest on the Bonds will be made by the Paying Agent to DTC
for subsequent disbursement to the beneficial owners of the Bonds (the “Beneficial Owners”). See “THE BONDS – DTC BookEntry Only” herein.
The Bonds are issued as capital appreciation bonds in denominations of $5,000 maturity value or any integral multiple thereof.
The Bonds mature on the dates and in the amounts set forth on the inside cover hereof. The Bonds accrete interest from their date
of delivery, compounded semiannually on June 1 and December 1 of each year, commencing June 1, 2014. Interest on the Bonds
is computed on the basis of a 360-day year consisting of twelve 30-day months. See “THE BONDS” herein.
The Bonds are subject to redemption prior to maturity. See “THE BONDS—Redemption Provisions.”
Bank Qualified Obligations
The Board has designated the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal
Revenue Code of 1986, as amended.
Bond Insurance
The scheduled payment of principal of (or, in the case of Capital Appreciation Bonds, the accreted value) and interest on the Bonds
when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by ASSURED
GUARANTY MUNICIPAL CORP. See “BOND INSURANCE” and “APPENDIX F—SPECIMEN MUNICIPAL BOND
INSURANCE POLICY” herein.
Continuing Disclosure
The District will covenant for the benefit of holders and Beneficial Owners to make available certain financial information and
operating data relating to the District and to provide notices of the occurrence of certain enumerated events in compliance with
S.E.C. Rule 15c2-12(b)(5). The specific nature of the information to be made available and of the notices are set forth in
“APPENDIX B – FORM OF CONTINUING DISCLOSURE CERTIFICATE.” See also “CONTINUING DISCLOSURE” herein.
Professionals Involved
Government Financial Strategies inc., Sacramento, California has acted as financial advisor (the “Financial Advisor”) with respect
to the issuance, sale and delivery of the Bonds. See “FINANCIAL ADVISOR” herein. All proceedings in connection with the
issuance of the Bonds are subject to the approving legal opinion of Meyers, Nave, Riback, Silver & Wilson, A Professional Law
-2-
Corporation, San Francisco, California (“Bond Counsel”). Zions First National Bank acts as Paying Agent for the Bonds. Bond
Counsel and Paying Agent will receive compensation from the District contingent upon the sale and delivery of the Bonds.
Other Information
This Official Statement may be considered current only as of its date on the cover page hereof, and the information contained
herein is subject to change. Descriptions of the Bonds and the District, together with descriptions of certain provisions of the
Resolution and Paying Agent Agreement, are included in this Official Statement. The descriptions herein do not purport to be
comprehensive or definitive. All references herein to the Bonds, the Resolution and the Paying Agent Agreement are qualified in
their entirety by reference to the complete texts of such documents.
Interested parties may obtain copies of the Resolution, the Paying Agent Agreement, audited financial statements, annual budgets,
or any other information which is generally made available to the public by contacting the District through the Superintendent, or
by contacting Government Financial Strategies inc., Financial Advisor, at the respective address and telephone number set forth on
page “iv” of this Official Statement. Charges may be made for the duplication and mailing of documents.
THE BONDS
General Obligation Bond Election of 2002
Pursuant to provisions of the State Education Code and the State Elections Code (collectively, the “Law”), the Board adopted a
resolution calling for an election to authorize the issuance of $10.5 million in aggregate principal amount of general obligation
bonds for authorized school purposes. On November 5, 2002, at an election duly held pursuant to the Law, more than 55% of the
qualified voters within the boundaries of the District voted to approve “Measure L” as follows:
“To improve the quality of education, modernize classrooms, make health and safety improvements, upgrade electrical
systems to improve student access to modern technology, construct and expand student support facilities, upgrade
plumbing, heating, ventilation, and air conditioning, construct classrooms, and qualify the District for $1,000,000 in
State-matching funds, shall the Elverta Joint Elementary School District issue $10,500,000 in bonds, within maximum
legal interest rates, requiring a citizens' oversight committee and annual financial audits?”
The County of Sacramento Registrar of Voters certified the results of the election as follows:
Results of November 5, 2002 Election
Elverta Joint Elementary School District
Yes Votes
Placer County
Sacramento County
Total
64
448
512 (59.5%)
No Votes
76
273
349 (40.5%)
On June 3, 2002, the District issued $1,217,904.40 principal amount of Elverta Joint Elementary School District (Sacramento and
Placer Counties, California) General Obligation Bonds Election of 2002, Series 2003A (the “Series 2003A Bonds”).
The Bonds represent the second series of general obligation bonds to be issued under Measure L. Upon the issuance of the Bonds,
the District will have approximately $8.7 million of unissued authorization remaining under the 2002 Election.
-3-
Purpose of Issue
Proceeds of the Bonds will be applied (i) to finance the acquisition, construction, modernization and equipping of District facilities
as authorized by the 2002 Election, and (ii) to pay costs of issuance of the Bonds. The District intends to use the Bond proceeds to
renovate the Elverta Elementary School, including courtyard repavement and roof replacement.
Form and Registration
The Bonds will be dated their date of delivery and will be issued as fully registered bonds, without coupons, in book-entry form
only. Pursuant to the Paying Agent Agreement, the Paying Agent will keep and maintain for and on behalf of the District at the
Paying Agent’s corporate trust office, books (the "Bond Register") for recording the owners of the Bonds (the “Registered
Owners”), the transfer, exchange, and replacement of the Bonds, and the payment of the principal of and interest on the Bonds to
the Registered Owners. All transfers, exchanges, and replacement of the Bonds will be noted in the Bond Register.
The Bonds will be initially issued and registered in the name of Cede & Co. as nominee of DTC. Purchases of Bonds under the
DTC book-entry system must be made by or through a DTC participant, and ownership interests in Bonds will be recorded as
entries on the books of said participants. Except in the event that use of this book-entry system is discontinued for the Bonds,
Beneficial Owners will not receive physical certificates representing their ownership interests in the Bonds. See “THE BONDS—
DTC Book-Entry Only” herein.
So long as the Bonds are registered in the name of Cede & Co., as nominee for DTC, references in this Official Statement to
the Registered Owners shall mean Cede & Co., and shall not mean the purchasers or beneficial owners of the Bonds.
Payment of Principal and Interest
The Bonds are issued as capital appreciation bonds in denominations of $5,000 maturity value or any integral multiple thereof.
The Bonds mature on the dates and in the amounts set forth on the inside cover hereof.
The Bonds accrete interest from their date of delivery at the rates per annum (the “Accretion Rate”) set forth on the inside cover
hereof, compounded semiannually on June 1 and December 1 of each year, commencing June 1, 2014. The accreted value (the
“Accreted Value”) of a Bond is the initial principal amount on the date of delivery plus the interest accrued thereon, compounded
semiannually at the Accretion Rate, to the date for which its value is calculated. The Accreted Value of a Bond on its maturity
date is its “Maturity Value.” See “APPENDIX E—ACCRETED VALUES TABLE” herein. Interest on the Bonds is computed on
the basis of a 360-day year consisting of twelve 30-day months.
The Accreted Value of the Bonds shall be payable in lawful money of the United States of America by wire transfer on each
principal and redemption payment date to Cede & Co., so long as Cede & Co. is the sole Registered Owner, or if the book-entry
system is no longer in use, to the Registered Owner thereof upon surrender thereof at the office of the Paying Agent.
Redemption Provisions
Optional Redemption. The Bonds are subject to redemption prior to their respective stated maturity dates, at the option of the
District (by such maturities as may be specified by the District and by lot within a maturity), from any source of available funds, as
a whole or in part on any date on or after June 1, 2023, at a redemption price equal to 100% of the Accreted Value thereof to be
redeemed (without premium).
Selection of Bonds for Redemption. If less than all the outstanding Bonds of any maturity are to be redeemed, not more than 60
days prior to the redemption date, the District shall select the particular Bonds to be redeemed from the outstanding Bonds of such
maturity that have not previously been called for redemption by lot in any manner that the District in its sole discretion shall deem
appropriate and fair.
Notice of Redemption. The Paying Agent shall mail a notice of redemption not fewer than 30 nor more than 60 days prior to the
redemption date by first-class mail, postage prepaid, to the respective Registered Owners of any Bonds designated for redemption
at their addresses appearing on the Bond Register.
-4-
Each notice of redemption shall state (a) the date of such notice, (b) the series designation of the bonds, (c) the date of issue, (d) the
redemption date, (e) the redemption price, (f) the place or places of redemption (including the name and appropriate address or
addresses of the Paying Agent), (g) the CUSIP number (if any) of the maturity or maturities, and (h) if less than all of any such
maturity, the distinctive numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part
only, the respective portions of the Bonds to be redeemed.
Each such notice shall also (a) state that on said date there will become due and payable on each of said Bonds the redemption
price thereof, or of said specified portion of the thereof in the case of a Bond to be redeemed in part only, together with interest
accrued thereon to the date fixed for redemption, (b) state that from and after such redemption date interest thereon shall cease to
accrue, and (c) require that such Bonds be then surrendered at the address or addresses of the Paying Agent specified in the
redemption notice. Neither the District nor the Paying Agent shall have any responsibility for any defect in the CUSIP number that
appears on any bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to
the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the
District nor the Paying Agent shall be liable for any inaccuracy in such numbers.
Failure by the Paying Agent to give notice to the information service or securities depositories or failure of any Registered Owner
to receive notice or any defect in any such notice shall not affect the sufficiency of the proceedings for redemption. Failure by the
Paying Agent to mail notice to any one or more of the respective Registered Owners of any Bonds designated for redemption shall
not affect the sufficiency of the proceedings for redemption with respect to the Registered Owner or Registered Owners to whom
such notice was mailed.
Effect of Redemption. Notice of redemption having been duly given as aforesaid and moneys for payment of the redemption price
of the Bonds so to be redeemed being held by the Paying Agent, then on the redemption date designated in such notice (a) the
Bonds so to be redeemed shall become due and payable at the redemption price specified in such notice, (b) interest on such shall
cease to accrue or accrete, (c) such Bonds shall cease to be entitled to any benefit or security under the Paying Agent Agreement,
and (d) the Registered Owners of such Bonds shall have no rights in respect thereof except to receive payment of said redemption
price. Upon surrender of any such Bonds for redemption in accordance with said notice, such Bonds shall be paid by Paying
Agent at the redemption price.
Right to Rescind Notice. The District may rescind any optional redemption and notice thereof for any reason on any date prior to
the date fixed for redemption by causing written notice of the rescission to be given to the owners of the Bonds so called for
redemption. Any optional redemption and notice thereof will be rescinded if for any reason on the date fixed for redemption
monies are not available in a redemption fund established with the Paying Agent, or otherwise held in trust for such purpose in an
amount sufficient to pay in full on said date the principal of, interest, and any premium due on the Bonds called for
redemption. Notice of rescission of redemption will be given in the same manner in which notice of redemption was originally
given. The actual receipt by the owner of any Bond of notice of such rescission will not be a condition precedent to rescission, and
failure to receive such notice or any defect in such notice shall not affect the validity of the rescission.
DTC Book-Entry Only
The information below has been provided by DTC for use in securities offering documents, and the District does not take
responsibility for the accuracy or completeness thereof. The District can not and does not give any assurances that DTC, DTC
Participants or DTC Indirect Participants will distribute to the Beneficial Owners either (a) payments of interest, principal or
premium, if any, with respect to the Bonds, or (b) certificates representing ownership interest in or other confirmation of
ownership interest in the Bonds, or that they will so do in a timely basis or that DTC, DTC Direct Participants or DTC Indirect
Participants will act in the manner described in this Official Statement.
The following description is of DTC, its procedures and record-keeping with respect to beneficial ownership interests in the Bonds,
payment of principal and interest, other payments with respect to the Bonds registered in the name of DTC to Direct Participants
or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Bonds, notices to Beneficial Owners and
other related transactions by and between DTC, the participants, and the Beneficial Owners. However, DTC, the participants, and
the Beneficial Owners should not rely on the following information with respect to such matters, but should instead confirm the
same with DTC or the Direct Participants, as the case may be.
Neither the District nor the Paying Agent takes any responsibility for the information contained in this section.
-5-
DTC, New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities
registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully-registered Bond certificate will be issued for the Bonds, in the aggregate principal amount of
such issue, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a
“banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing
corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100
countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among
Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry
transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
(“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing
Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
(“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file
with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the
Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be
recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of
their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct
and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all the Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s
partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of
the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions,
tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to
ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In
the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices
be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to
determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a
Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the
District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those
Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as
may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s
-6-
receipt of funds and corresponding detail information from the District or Paying Agent, on payable date in accordance with their
respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in
“street name,” and will be the responsibility of such Participant and not of DTC, Paying Agent, or the District, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and
dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the
District or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are
required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities
depository). In that event, Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the District
believes to be reliable, but the District takes no responsibility for the accuracy thereof.
Registration, Transfer and Exchange
If the book-entry system as described above is no longer used with respect to the Bonds, the provisions in the Paying Agent
Agreement summarized below will govern the registration, transfer, and exchange of the Bonds.
The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Bonds, which will at all
times be open to inspection by the District upon reasonable notice.
The Bonds may be transferred by the person in whose name it is registered, in person or by the duly authorized attorney of such
person, upon surrender of the Bonds to the Paying Agent for cancellation, accompanied by delivery of a duly executed written
instrument of transfer in a form approved by the Paying Agent.
Every Bond surrendered to the Paying Agent for transfer or exchange shall have been duly endorsed or be accompanied by a
written instrument of transfer, the signature on which has been guaranteed by an eligible guarantor institution, in form satisfactory
to the Paying Agent, duly executed by either the Registered Owner thereof or his authorized agent in writing. The Paying Agent
may request any supporting documentation it determines is necessary to affect a registration, transfer or exchange of the Bonds.
Defeasance
The Bonds may be paid and discharged (a) by paying or causing to be paid the Accreted Value of all Bonds outstanding as and
when the same become due and payable; (b) by depositing with the Paying Agent, in trust, at or before maturity, cash which
together with the amounts then on deposit in the debt service fund for the payment of the Bonds (the “Debt Service Fund”)
together with the interest to accrue thereon without the need for further investment, is fully sufficient to pay all Bonds outstanding
at maturity thereof, including any premium and all interest thereon, notwithstanding that any Bonds shall not have been
surrendered for payment; or (c) by depositing with an institution to act as escrow agent selected by the District and which meets
the requirements of serving as Paying Agent, in trust, lawful money or non-callable direct obligations issued by the United States
Treasury or obligations which are unconditionally guaranteed by the United States of America, in such amount as will, together
with the interest to accrue thereon without the need for further investment, be fully sufficient to pay and discharge all Bonds
outstanding at maturity thereof, including any premium and all interest thereon, notwithstanding that any Bonds shall not have
been surrendered for payment.
All obligations of the County, Placer County, the District and the Paying Agent with respect to all outstanding Bonds shall cease
and terminate after all Bonds have been paid and discharged, except only the obligation of the Paying Agent to pay or cause to be
paid to the Registered Owners of the Bonds all sums due thereon, and the obligation of the District to pay to the Paying Agent
amounts owing to the Paying Agent.
-7-
Unclaimed Moneys
Any money held for the payment on the Bonds and remaining unclaimed for two years after all of the Bonds have become due and
payable shall be transferred to the Debt Service Fund of the District as provided and permitted by law.
Application and Investment of Bond Proceeds
A portion of the proceeds from the sale of the Bonds (exclusive of any premium) will be transferred to the Sacramento County
Director of Finance (the “Director of Finance”) for deposit in the District’s project fund (the “Project Fund”). The net premium, if
any, received by the District from the sale of the Bonds will be transferred to the Director of Finance for deposit in the Debt
Service Fund to be used only for payments of principal of and interest on general obligation bonds of the District.
A portion of the proceeds will be retained by the Paying Agent in a costs of issuance fund (the “Costs of Issuance Fund”) and used
to pay costs associated with the issuance of the Bonds. Any proceeds not needed to pay the costs of issuance of the Bonds will be
transferred by the Paying Agent to the Director of Finance for deposit in the Debt Service Fund.
Moneys in the Project Fund and the Debt Service Fund will be invested by the Director of Finance in any lawful investment
permitted by sections 16429.1 and 53601 of the State Government Code, including but not limited to the County’s investment pool
(the “County Pool”; see “COUNTY POOLED INVESTMENT FUND” and “APPENDIX D — SACRAMENTO COUNTY
INVESTMENT POLICY” herein) and in shares in a California common law trust established pursuant to Title 1, Division 7,
Chapter 5 of the State Government Code which invests exclusively in investments permitted by Section 53635 of the State
Government Code as it may be amended, such as the California Asset Management Program (“CAMP”). Moneys will be applied
solely to the purposes authorized by the Law and Measure L.
Sources and Uses of Funds
The sources and uses of funds in connection with the sale and delivery of the Bonds are set forth in the following table.
Sources and Uses of Funds
General Obligation Bonds, Election of 2002, Series 2013
SOURCES OF FUNDS
Par Amount of Bonds
$631,298.25
TOTAL SOURCES OF FUNDS
$631,298.25
USES OF FUNDS
Project Fund
Cost of Issuance Fund 1
Underwriter's Discount 2
$486,610.65
112,500.00
32,187.60
TOTAL USES OF FUNDS
$631,298.25
1
The Costs of Issuance Fund will be used to pay costs of issuance including fees and expenses of Bond Counsel, the Financial
Advisor, the Paying Agent, the ratings fee and all other expenses related to the issuance of the Bonds.
2
Underwriter’s Discount includes the premium for bond insurance to be paid by the underwriter.
-8-
Debt Service Schedules
Scheduled debt service on the Bonds (without regard to optional redemption) is set forth on the following table.
Debt Service Schedule
General Obligation Bonds, Election of 2002, Series 2013
Date
June 1, 2029
June 1, 2030
June 1, 2031
June 1, 2032
June 1, 2033
June 1, 2034
June 1, 2035
June 1, 2036
June 1, 2037
June 1, 2038
Original
Principal
$ 70,230.40
68,848.30
67,379.40
65,798.90
64,048.00
62,057.10
60,489.00
58,771.90
57,057.60
56,617.65
$631,298.25
Accreted
Interest
$ 89,769.60
101,151.70
112,620.60
124,201.10
135,952.00
147,942.90
159,511.00
171,228.10
182,942.40
198,382.35
$1,423,701.75
Maturity
Value
$ 160,000.00
170,000.00
180,000.00
190,000.00
200,000.00
210,000.00
220,000.00
230,000.00
240,000.00
255,000.00
$2,055,000.00
[The remainder of this page intentionally left blank.]
-9-
Upon issuance of the Bonds, scheduled debt service (without regard to optional redemption) on the District’s outstanding general
obligation bond debt will be as shown in the following table. See “DISTRICT FINANCIAL INFORMATION – Long-Term
Indebtedness” for more information on the District’s outstanding bonded debt.
Outstanding General Obligation Bond Debt Service
Fiscal Year
Ending June 30
Series 2003A
Bonds
The Bonds
Total General
Obligation Bonds
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
$
70,000.00
80,000.00
85,000.00
95,000.00
100,000.00
110,000.00
120,000.00
130,000.00
140,000.00
155,000.00
165,000.00
180,000.00
191,500.00
208,953.13
473,885.43
-----------
---------------$ 160,000.00
170,000.00
180,000.00
190,000.00
200,000.00
210,000.00
220,000.00
230,000.00
240,000.00
255,000.00
$
70,000.00
80,000.00
85,000.00
95,000.00
100,000.00
110,000.00
120,000.00
130,000.00
140,000.00
155,000.00
165,000.00
180,000.00
191,500.00
208,953.13
473,885.43
160,000.00
170,000.00
180,000.00
190,000.00
200,000.00
210,000.00
220,000.00
230,000.00
240,000.00
255,000.00
Total
$2,304,338.56
$2,055,000.00
$4,359,338.56
SECURITY AND SOURCE OF PAYMENT
General
In order to provide sufficient funds for repayment of principal of and interest on the Bonds when due, the County Board and the
Board of Supervisors of Placer County are empowered and obligated to levy ad valorem taxes upon all property subject to taxation
by the District, without limitation as to rate or amount (except as to certain personal property which is taxable at limited rates).
Such taxes are in addition to other taxes levied upon property within the District. When collected, the tax revenues will be
deposited by the Director of Finance in the District’s Debt Service Fund, which is required to be maintained by the County and to
be used solely for the payment of bonds of the District.
- 10 -
Property Taxation System
Property tax revenues result from the application of the appropriate tax rate to the total assessed value of taxable property in the
District. School districts levy property taxes for payment of voter-approved bonds and receive property taxes for general operating
purposes as well.
Local property taxation is the responsibility of various county officers. For each school district, the county assessor computes the
value of locally assessed taxable property. Based on the assessed value of property and the scheduled debt service on outstanding
bonds in each year, the county auditor-controller computes the rate of tax necessary to pay such debt service, and presents the tax
rolls (including rates of tax for all taxing jurisdictions in the county) to the county board of supervisors for approval. The
treasurer-tax collector prepares and mails tax bills to taxpayers and collects the taxes. In addition, the treasurer-tax collector, as ex
officio treasurer of each school district, holds and invests school district funds, including taxes collected for payment of school
bonds, and is charged with payment of principal and interest on such bonds when due. Taxes on property in a school district
whose boundaries extend into more than one county are administered separately by the county in which the property is located (the
District is located in both Sacramento County and Placer County). The State Board of Equalization also assesses certain special
classes of property, as described later in this section.
In Sacramento County, the Director of Finance is responsible for the offices of the auditor-controller, tax collector and treasurer.
Assessed Valuation of Property Within the District
All property (real, personal and intangible) is taxable unless an exemption is granted by the State Constitution or United States law.
Under the State Constitution, exempt classes of property include household and personal effects, intangible personal property (such
as bank accounts, stocks and bonds), business inventories, and property used for religious, hospital, scientific and charitable
purposes. The State Legislature may create additional exemptions for personal property, but not for real property. Although most
taxable property is assessed by the assessor of the county in which the property is located, some special classes of property are
assessed by the State Board of Equalization, as described below under the heading “State-Assessed Property.”
Under Proposition 13, an amendment to the State Constitution adopted in 1978, the county assessor’s valuation of real property is
established as shown on the fiscal year 1975-76 tax bill, or, thereafter, as the appraised value of real property when purchased,
newly constructed, or a change in ownership has occurred. Assessed value of property may be increased annually to reflect
inflation at a rate not to exceed 2% per year, or reduced to reflect a reduction in the consumer price index or comparable data for
the area under taxing jurisdiction or in the event of declining property value caused by substantial damage, destruction, market
forces or other factors. As a result of these rules, real property that has been owned by the same taxpayer for many years can have
an assessed value that is much lower than the market value of the property and of similar properties more recently sold. Likewise,
changes in ownership of property and reassessment of such property to market value commonly lead to increases in aggregate
assessed value even when the rate of inflation or consumer price index would not permit the full 2% increase on any property that
has not changed ownership. See “CONSTITUTIONAL & STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES
& EXPENDITURES.”
Economic and other factors beyond the District’s control, such as a general market decline in land values, reclassification of
property to a class exempt from taxation, whether by ownership or use, or the complete or partial destruction of taxable property
caused by natural or manmade disaster, such as earthquake, flood, fire, toxic dumping, etc., could cause a significant reduction in
the net assessed value of taxable property within the District, and there could be substantial delinquencies in the payment of ad
valorem taxes within the District, as a result.
Appeals of Assessed Valuation. State law affords an appeal procedure to taxpayers who disagree with the assessed value of their
taxable property. Taxpayers may request a reduction in assessment directly from the county assessor, who may grant or refuse the
request, and may appeal an assessment directly to the county board of equalization, which rules on appealed assessments whether
or not settled by the county assessor. The county assessor is also authorized to reduce the assessed value of any taxable property
upon a determination that the market value has declined below the then-current assessment, whether or not appealed by the
taxpayer.
The District can make no predictions as to the changes in assessed values that might result from pending or future appeals by
taxpayers. Any reduction in aggregate District assessed valuation due to appeals, as with any reduction in assessed valuation due
to other causes, will cause the tax rate levied to repay the Bonds to increase accordingly, so that the fixed debt service on the
Bonds (and other outstanding bonds) may be paid. Any refund of paid taxes triggered by a successful assessment appeal will be
- 11 -
debited by the respective county treasurer/tax collector against all taxing agencies who received tax revenues, including the
District.
State-Assessed Property. Under the State Constitution, the State Board of Equalization assesses property of State-regulated
transportation and communications utilities, including railways, telephone and telegraph companies, and companies transmitting or
selling gas or electricity. The State Board of Equalization also is required to assess pipelines, flumes, canals and aqueducts lying
within two or more counties. The value of property assessed by the State Board of Equalization is allocated by a formula to local
jurisdictions in the county, including school districts, and taxed by the local county tax officials in the same manner as for locally
assessed property. Taxes on privately owned railway cars, however, are levied and collected directly by the State Board of
Equalization. Property used in the generation of electricity by a company that does not also transmit or sell that electricity is taxed
locally instead of by the State Board of Equalization. Thus, the reorganization of regulated utilities and the transfer of electricitygenerating property to non-utility companies, as often occurred under electric power deregulation in the State, affects how those
assets are assessed, and which local agencies benefit from the property taxes derived. In general, the transfer of State-assessed
property located in the District to non-utility companies will increase the assessed value of property in the District, since the
property’s value will no longer be divided among all taxing jurisdictions in each county. The transfer of property located and
taxed in the District to a State-assessed utility will have the opposite effect: generally reducing the assessed value in the District,
as the value is shared among the other jurisdictions in each county. The District is unable to predict future transfers of Stateassessed property in the District and each county, the impact of such transfers on its utility property tax revenues, or whether future
legislation or litigation may affect ownership of utility assets, the State’s methods of assessing utility property, or the method by
which tax revenues of utility property is allocated to local taxing agencies, including the District.
Locally taxed property is classified either as “secured” or “unsecured,” and is listed accordingly on separate parts of the assessment
roll. The “secured roll” is that part of the assessment roll containing State-assessed property and property (real or personal) for
which there is a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. All other
property is “unsecured”, and is assessed on the “unsecured roll.” Property assessed by the State Board of Equalization is
commonly identified for taxation purposes as “utility” property.
The greater the assessed value of taxable property in the District, the lower the tax rate necessary to generate taxes sufficient to pay
scheduled debt service on the Bonds.
Set forth in the table below are 10 years of the District’s historical assessed valuation. Total secured assessed values include net
local secured, secured homeowner exemption and utility values. Total unsecured assessed values include net local unsecured and
unsecured homeowner exemption values.
Historical Total Secured and Unsecured Assessed Valuation
Fiscal
Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-
05
06
07
08
09
10
11
12
13
14
Total Secured
Assessed Value
Total Unsecured
Assessed Value
Total
Assessed Value
$184,801,476
$218,022,477
$274,452,633
$327,644,287
$338,288,302
$322,651,030
$278,461,580
$260,658,316
$254,365,058
$266,695,282
$2,259,033
2,893,149
3,178,230
3,461,956
3,722,012
2,967,704
2,197,265
2,475,368
2,526,348
6,019,391
$187,060,509
220,915,626
277,630,863
331,106,243
342,010,314
325,618,734
280,658,845
263,133,684
256,891,406
272,714,673
Source: Sacramento County Department of Finance and Placer County Auditor-Controller's Office.
- 12 -
Rate of
Change
12.78%
18.10%
25.67%
19.26%
3.29%
-4.79%
-13.81%
-6.24%
-2.37%
6.16%
Set forth in the following table is the historical assessed valuation by county for the District.
Historical Total Assessed Valuation by County
Fiscal
Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-
Sacramento County
Assessed Value
05
06
07
08
09
10
11
12
13
14
$142,365,161
172,197,502
221,418,749
265,353,469
270,590,888
258,395,504
215,350,882
203,812,712
200,878,521
209,538,599
Percent
of Total
76.11%
77.95%
79.75%
80.14%
79.12%
79.36%
76.73%
77.46%
78.20%
76.83%
Placer County
Assessed Value
Percent
of Total
Total
Assessed Value
$44,695,348
48,718,124
56,212,114
65,752,774
71,419,426
67,223,230
65,307,963
59,320,972
56,012,885
63,176,074
23.89%
22.05%
20.25%
19.86%
20.88%
20.64%
23.27%
22.54%
21.80%
23.17%
$187,060,509
220,915,626
277,630,863
331,106,243
342,010,314
325,618,734
280,658,845
263,133,684
256,891,406
272,714,673
Source: Sacramento County Department of Finance and Placer County Auditor-Controller's Office.
The District may not issue bonds in excess of 1.25% of the assessed valuation of taxable property within its boundaries. The
District’s gross bonding capacity in fiscal year 2013-14 is approximately $3.4 million. Upon issuance of the Bonds, the District
will have remaining bonding capacity of approximately $1.7 million.
- 13 -
Shown in the following table is a distribution of taxable real property located in the District by principal purpose for which the land
is used along with the local secured assessed valuation (excludes “utility” property) and number of parcels for each use for fiscal
year 2013-14.
Assessed Valuation and Parcels by Land Use
2013-14
Assessed Valuation 1
% of
Total
No. of
Parcels
$67,262,945
3,097,486
9,195
860,404
653,408
836,400
546,148
4,775
$73,270,761
25.23%
1.16
0.00
0.32
0.25
0.31
0.20
0.00
27.48%
102
9
4
5
11
1
43
10
185
7.42%
0.65
0.29
0.36
0.80
0.07
3.13
0.73
13.45%
RESIDENTIAL
Single Family Residence
Mobile Home
2+ Residential Units
Miscellaneous Residential
Vacant Residential
Subtotal Residential
$153,513,798
8,822,027
9,026,828
1,557,668
20,446,765
$193,367,086
57.57%
3.31
3.39
0.58
7.67
72.52%
842
79
34
7
228
1,190
61.24%
5.75
2.47
0.51
16.58
86.55%
TOTAL
$266,637,847
100.00%
1,375
100.00%
NON-RESIDENTIAL
Agricultural/Rural
Commercial/Office
Vacant Commercial
Industrial
Vacant Industrial
Recreational
Government/Social/Institutional
Miscellaneous
Subtotal Non-Residential
% of
Total
1
Local secured assessed valuation; excluding tax-exempt property.
Source: California Municipal Statistics, Inc.
Largest Taxpayers in District
The 20 taxpayers in the District with the greatest combined assessed valuation of taxable property on the 2013-14 tax roll own
property that comprises 22.5% of the total assessed valuation of secured property in the District. These taxpayers, ranked by
aggregate assessed value of taxable property as shown on the 2013-14 secured tax roll, and the amount of each owner’s assessed
valuation for all taxing jurisdictions within the District are shown below.
The more property (by assessed value) owned by a single taxpayer, the more tax collections are exposed to weakness in the
taxpayer’s financial situation, and their ability or willingness to pay property taxes. In 2013-14, no single taxpayer owned more
than 2.7% of the total taxable property in the District.
- 14 -
Each taxpayer listed is a unique name on the tax rolls. The District cannot determine from assessment records whether individual
persons, corporations or other organizations are liable for tax payments with respect to multiple properties held in various names
that in aggregate may be larger than is suggested by the table.
Largest Taxpayers
Property Owner
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Primary Land Use
2013-14
Assessed Valuation
% of
Total 1
OSE Land No. 3
Agricultural
Mosini LLC
Agricultural
Placer University Project LLC
Agricultural
Warren and Warren Chang
Agricultural
De Wit Farms LLC
Agricultural
John M. Bianchi
Agricultural
Haesun Koo
Agricultural
South Sutter LLC
Vacant Residential
Lechan Land Corp.
Agricultural
Donald H. and Ann C. Frazer Living Trust
Agricultural
Elsie Land Corporation
Agricultural
C&L Brewer LLC
Agricultural
Saca Family Trust
Agricultural
Elverta Owners Group LLC
Vacant Residential
Placer University Community Property LLC Agricultural
Placer 2780
Agricultural
Deer Creek Preserve LLC
Agricultural
Odysseus Farms
Agricultural
Lennar Winncrest LLC
Vacant Residential
William F. Callejo
Agricultural
$ 7,206,917
5,928,221
4,708,800
4,567,118
3,366,336
3,123,574
2,885,550
2,883,150
2,864,812
2,835,000
2,835,000
2,780,799
2,490,295
2,481,610
2,076,000
1,811,527
1,463,000
1,442,172
1,183,500
1,076,629
2.70%
2.22
1.77
1.71
1.26
1.17
1.08
1.08
1.07
1.06
1.06
1.04
0.93
0.93
0.78
0.68
0.55
0.54
0.44
0.40
TOTAL
$60,010,010
22.51%
1
2013-14 local secured assessed valuation, excluding tax-exempt property: $266,637,847
Tax Rate
The State Constitution permits the levy of an ad valorem tax on taxable property not to exceed 1% of the full cash value of the
property, and State law requires the full 1% tax to be levied. The levy of special ad valorem property taxes in excess of the 1%
levy is permitted as necessary to provide for debt service payments on school bonds and other voter-approved indebtedness.
The rate of tax necessary to pay fixed debt service on the Bonds in a given year depends on the net assessed value of taxable
property in that year. (Unsecured property is taxed at the secured property tax rate from the prior year.) Economic and other
factors beyond the District’s control, such as a general market decline in land values, reclassification of property to a class exempt
from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used
for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property
caused by natural or manmade disaster, such as earthquake, flood, fire, toxic dumping, etc., could cause a reduction in the assessed
value of taxable property within the District and necessitate a corresponding increase in the annual tax rate to be levied to pay the
principal of and interest on the Bonds. Issuance of additional authorized bonds in the future might also cause the tax rate to
increase.
- 15 -
One factor in the ability of taxpayers to pay additional taxes for general obligation bonds is the cumulative rate of tax. The
following table shows ad valorem property tax rates per $100 of assessed value for the last several years in a typical tax rate areas
of the District, TRA 93-001. TRA 93-001 comprises approximately 13.9% of the total assessed value of taxable property in the
District in fiscal year 2013-14.
Total Tax Rates
TRA 93-001
2009-10
2010-11
2011-12
2012-13
2013-14
General
Los Rios Community College District
Grant Joint Union High School District
1.0000
.0124
.0727
.0158
1.0000
.0090
.0633
.0219
1.0000
.0192
.0589
.0288
1.0000
.0193
.0823
.0298
1.0000
.0171
.0728
.0271
Total
1.1009
1.0942
1.1069
1.1314
1.1180
Alternative Method of Tax Apportionment
The County Board and the Placer County Board of Supervisors have approved implementation of the Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) pursuant to sections 4701 through 4717 of
the State Revenue & Taxation Code. The Teeter Plan guarantees distribution of all ad valorem taxes levied to the taxing entities
within a county, with such county retaining all penalties and interest affixed upon delinquent properties and redemptions of
subsequent collections.
Each county’s cash position is protected by a special fund, known as the “Tax Loss Reserve Fund,” which accumulates moneys
from interest and penalty collections. Amounts required to be maintained in the tax loss reserve fund may be drawn on to the
extent of the amount of uncollected taxes credited to each agency in advance of receipt. The State Revenue & Taxation Code
provides that, whenever in any year the amount of the Tax Loss Reserve Fund has reached an amount equivalent to 1% of the total
of all taxes and assessments levied on the secured roll for that year for participating entities in a county, the amounts authorized to
be credited to the Tax Loss Reserve Fund may, for the remainder of that year, be credited to that county’s general fund.
The Teeter Plan is to remain in effect unless the respective county board of supervisors orders its discontinuance or unless, prior to
the commencement of any fiscal year of the county (July 1), the county board of supervisors receives a petition for its
discontinuance from two-thirds of the participating districts in its county. The county board of supervisors may also, after holding
a public hearing on the matter, discontinue the procedures with respect to any tax levying agency or assessment levying agency in
its county if the rate of secured tax delinquency in that agency in any year exceeds 3% of the total of all taxes and assessments
levied on the secured rolls in that agency. Neither the County Board nor the Placer County Board of Supervisors has ordered the
discontinuance of the Teeter Plan, nor have they received a petition for its discontinuance from two-thirds of the participating
districts in the respective county.
If the Teeter Plan were discontinued in the County or Placer County, only those secured property taxes actually collected would be
allocated to political subdivisions in such County, including the District. Further, the District’s tax revenues would be subject to
taxpayer delinquencies, and the District would realize the benefit of interest and penalties collected from delinquent taxpayers,
pursuant to law.
- 16 -
Tax Collections and Delinquencies
A school district’s share of the 1% countywide tax is based on the actual allocation of property tax revenues to each taxing
jurisdiction in the county in fiscal year 1978-79, as adjusted according to a complex web of statutory modifications enacted since
that time. Revenues derived from special ad valorem taxes for voter-approved indebtedness, including the Bonds, are reserved to
the taxing jurisdiction that approved and issued the debt, and may only be used to repay that debt.
The treasurer-tax collector of a county prepares the property tax bills. Property taxes on the regular secured assessment roll are due
in two equal installments: the first installment is due on November 1 and on February 1. In the County, if the first installment is
not paid by 5:00 p.m. December 10, a 10% penalty attaches. If the second installment is not paid by 5:00 p.m. April 10, a 10%
penalty and a $10 cost attach. If taxes remain unpaid by June 30, the tax is deemed to be in default. The property owner has the
right to redeem the property by paying the taxes, accrued penalties, and costs within five years of the date the property went into
default. If the property is not redeemed within five years, it is subject to sale at a public auction by the treasurer-tax collector.
Annual bills for property taxes on the unsecured roll are generally issued in July, are due in a single payment within 30 days, and
become delinquent after August 31. In the County, if taxes are not paid by the delinquency date, as stated on the bill, lien(s) is/are
recorded against the assessed owner of the property, which can and will adversely affect assessee's credit.
To collect unpaid taxes, a county treasurer-tax collector may obtain a judgment lien upon and cause the sale of all property owned
by the taxpayer in the county, and may seize and sell personal property, improvements and possessory interests of the taxpayer.
The treasurer-tax collector may also bring a civil suit against the taxpayer for payment.
The following table shows a recent history of real property tax collections and delinquencies for bond debt service levy of the
portion of the District within the County.
Secured Tax Charges and Delinquencies
Fiscal Year
Secured Tax Charge1
2008-09
2009-10
2010-11
2011-12
2012-13
Amount Delinquent
as of June 30
$61,124.08
47,630.30
58,582.42
74,008.62
74,261.78
$5,904.37
2,605.54
2,306.42
3,126.83
3,316.27
Percent Delinquent
as of June 30
9.66%
5.47
3.94
4.22
4.47
1
General obligation bond debt service levy only.
As long as the Teeter Plan remains in effect in the County, the District will be credited with the full amount of the tax levy no
matter the delinquency rate within the District.
Direct and Overlapping Bonded Debt
The District’s statement of direct and overlapping bonded debt relating to the District, which is set forth on the following page,
was prepared by California Municipal Statistics, Inc. It has been included for general information purposes only. The District has
not reviewed the statement for completeness or accuracy and makes no representations in connection with the statement.
Contained within the District's boundaries are several overlapping local entities providing public services. These local entities may
have outstanding bonds issued in the form of general obligation, lease revenue and special assessment bonds. The first column in
the table below names the public agencies that have outstanding debt as of the date of the report and whose boundaries overlap the
District. The second column in the table shows the percentage of each overlapping entity’s assessed value located within the
boundaries of the District. This percentage, multiplied by the total outstanding debt of each overlapping entity (which is not shown
- 17 -
in the table) produces the amount shown in the third column, the corresponding portion of each overlapping entity’s existing debt
allocable to taxable property within the District.
The table generally includes long-term obligations sold in the public credit markets by the public agencies listed. Such long-term
obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations
secured by land within the District. In many cases, long-term obligations issued by a public agency are payable only from the
general fund or other revenues of such public agency.
In addition, property owners within the District may be subject to other special taxes and assessments levied by other taxing
authorities that provide services within the District. Such non-ad valorem special taxes and assessments (which are not levied to
fund debt service) are not represented in the statement of direct and overlapping bonded debt.
Statement of Direct and Overlapping Bonded Debt (As of November 1, 2013)
2013-14 Assessed Valuation: $272,714,673
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
% Applicable
Los Rios Community College District
0.185%
Twin Rivers Unified School District (former Grant Joint Union High School District Bonds) 2.567
100.000
Sacramento Area Flood Control District Consolidated Capital Assessment District
0.074
Sacramento Area Flood Control District Operations and Maintenance Assessment District
0.345
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:
Sacramento County General Fund Obligations
Sacramento County Pension Obligations
Sacramento County Board of Education Certificates of Participation
Placer County Certificates of Participation
Placer County Office of Education Certificates of Participation
Los Rios Community College District Certificates of Participation
Twin Rivers Unified School District
(former Grant Joint Union High School District) Certificates of Participation
Sacramento Metropolitan Fire District Pension Obligations
Placer County Mosquito and Vector Control District Certificates of Participation
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
Less: Sacramento County supported obligations
TOTAL NET OVERLAPPING GENERAL FUND DEBT
Debt 11/1/2013
$ 685,000
4,686,155
1,065,712 1
142,531
10,988
$6,590,386
0.173%
0.173
0.173
0.115
0.115
0.185
$ 540,488
1,713,232
15,120
49,968
2,266
10,897
2.567
0.309
0.115
3,332,608
189,522
4,727
$5,858,828
11,167
$5,847,661
$12,449,214 2
$12,438,047
GROSS COMBINED TOTAL DEBT
NET COMBINED TOTAL DEBT
Ratios to 2013-14 Assessed Valuation:
Combined Direct Debt ($1,065,712)…..………………….0.39%
Total Direct and Overlapping Tax and Assessment Debt…2.42%
Gross Combined Total Debt………………………………4.56%
Net Combined Total Debt…………………………………4.56%
1
Excludes general obligation bonds to be sold.
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
2
- 18 -
BOND INSURANCE
The following information has been furnished by Assured Guaranty Municipal Corp. for use in this Official Statement. No
representation is made by the District or the Underwriter as to the accuracy, completeness or adequacy of such information, or as
to the absence of material adverse changes to the condition of Assured Guaranty Municipal Corp. subsequent to the date hereof,
including but not limited to a downgrade of the credits ratings of Assured Guaranty Municipal Corp.
Bond Insurance Policy
Concurrently with the issuance of the Bonds, Assured Guaranty Municipal Corp. ("AGM") will issue its Municipal Bond Insurance
Policy for the Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of (or, in the case of Capital
Appreciation Bonds, the accreted value) and interest on the Bonds when due as set forth in the form of the Policy included as
APPENDIX F to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or
Florida insurance law.
Assured Guaranty Municipal Corp.
AGM is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd.
(“AGL”), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange
under the symbol “AGO”. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global
public finance, infrastructure and structured finance markets. Neither AGL nor any of its shareholders or affiliates, other than
AGM, is obligated to pay any debts of AGM or any claims under any insurance policy issued by AGM.
AGM’s financial strength is rated “AA-” (stable outlook) by Standard and Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business (“S&P”) and “A2” (stable outlook) by Moody’s Investors Service, Inc. (“Moody’s”). Each rating of AGM
should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable
rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision
or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In
addition, the rating agencies may at any time change AGM’s long-term rating outlooks or place such ratings on a watch list for
possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a
negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market
price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by
the issuer of bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable
(subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity
of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn.
Current Financial Strength Ratings. On June 12, 2013, S&P published a report in which it affirmed AGM’s “AA-“ (stable
outlook) financial strength rating. AGM can give no assurance as to any further ratings action that S&P may take.
On January 17, 2013, Moody’s issued a press release stating that it had downgraded AGM’s insurance financial strength rating to
“A2” (stable outlook) from “Aa3”. AGM can give no assurance as to any further ratings action that Moody’s may take.
For more information regarding AGM’s financial strength ratings and the risks relating thereto, see AGL’s Annual Report on Form
10-K for the fiscal year ended December 31, 2012.
Capitalization of AGM. At September 30, 2013, AGM’s consolidated policyholders’ surplus and contingency reserves were
$3,458,464,281 and its total net unearned premium reserve was $1,902,038,053, in each case, in accordance with statutory
accounting principles.
- 19 -
Incorporation of Certain Documents by Reference. Portions of the following documents filed by AGL with the SEC that relate to
AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof:
(i)
(ii)
(iii)
(iv)
the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (filed by AGL with the SEC on
March 1, 2013);
the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013 (filed by AGL with the SEC
on May 10, 2013);
the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 (filed by AGL with the SEC on
August 9, 2013); and
the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (filed by AGL with the
SEC on November 12, 2013).
All consolidated financial statements of AGM and all other information relating to AGM included in, or as exhibits to, documents
filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding
Current Reports or portions thereof “furnished” under Item 2.02 or Item 7.01 of Form 8-K, after the filing of the last document
referred to above and before the termination of the offering of the Bonds shall be deemed incorporated by reference into this
Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by
reference are available over the internet at the SEC’s website at http://www.sec.gov, at AGL’s website at
http://www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp.: 31 West 52nd Street,
New York, New York 10019, Attention: Communications Department (telephone (212) 974-0100). Except for the information
referred to above, no information available on or through AGL’s website shall be deemed to be part of or incorporated in this
Official Statement.
Any information regarding AGM included herein under the caption “BOND INSURANCE—Assured Guaranty Municipal Corp.”
or included in a document incorporated by reference herein (collectively, the “AGM Information”) shall be modified or superseded
to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or
supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a
part of this Official Statement, except as so modified or superseded.
Miscellaneous Matters. AGM or one of its affiliates may purchase a portion of the Bonds or any uninsured bonds offered under
this Official Statement and such purchases may constitute a significant proportion of the bonds offered. AGM or such affiliate
may hold such Bonds or uninsured bonds for investment or may sell or otherwise dispose of such Bonds or uninsured bonds at any
time or from time to time.
AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not
independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness
of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the
accuracy of the information regarding AGM supplied by AGM and presented under the heading “BOND INSURANCE.”
COUNTY POOLED INVESTMENT FUND
This section provides a general description of the County's investment policy and current portfolio holdings. The information set
forth under this section relating to the County Pool has been obtained from the County Department of Finance and is believed to
be reliable but is not guaranteed as to accuracy or completeness. The District makes no representation as to the accuracy or
completeness of such information. Further information may be obtained by contacting the County of Sacramento, Office of the
County Director of Finance, 700 H Street, Suite 1710, Sacramento, California 95814, Telephone (916) 874-6744.
Most of the District’s funds, including the Debt Service Fund, are held and invested by the Director of Finance in the County Pool.
The County Pool consists primarily of operating funds of the County and local agencies, including other school districts, cities and
special districts. State law requires that all moneys of the county, school districts, and certain special districts be held by the
respective county’s treasurer.
The governing board of each school district and special district within the County may allow certain withdrawals of non-operating
funds for purposes of investing outside the County Pool. Some districts have from time to time authorized the Director of Finance
to purchase specified investments for certain district funds to mature on predetermined future dates when cash would be required
for disbursements.
- 20 -
Funds held in the County Pool are invested by the Director of Finance in accordance with State law and the County's investment
policy, which is prepared by the Director of Finance and approved by the County Board. A copy of the investment policy is
attached hereto as “APPENDIX D—SACRAMENTO COUNTY INVESTMENT POLICY.” The Director of Finance neither
monitors investments for arbitrage compliance, nor does it perform arbitrage calculations. The District will maintain or cause to be
maintained detailed records with respect to the applicable proceeds.
The County Pool is invested in order to earn a reasonable return while awaiting application for governmental purposes. The
specific objectives for the County Pool are, ranked in order of importance, safety of principal, liquidity, public trust, and maximum
rate of return. The gross earned interest yield of the County Pool for the quarter ended September 30, 2013 was 0.407%, with
weighted average maturity of 349 days.
A summary description of the composition of the County Pool from the quarterly investment report is provided in the following
table.
Sacramento County Pooled Investment Fund
As of September 30, 2013
Type
Interest
Rate
Trading
Yield
Par Value
Variable Rates (Muni)
FFCB Bonds
FHLB
FNMA Notes
FHLMC Discount Notes
Commercial Paper (Discount)
Certificates of Deposits/Thrift Notes
CD-ACT Over 365/366
Passbook Accounts
0.425%
0.700%
1.413%
1.607%
1.619%
0.129%
0.180%
0.357%
0.271%
0.425%
0.344%
0.702%
0.814%
0.601%
0.129%
0.154%
0.357%
0.271%
32,883,011
129,925,000
165,000,000
305,000,000
435,000,000
447,000,000
400,100,000
15,000,000
50,000,000
County Pool Total
0.857%
0.418%
1,979,908,010
Market Value
Portfolio %
of Market
Value
32,883,011
131,258,032
168,108,835
312,693,313
445,065,697
446,849,206
400,139,808
15,000,000
50,000,000
32,883,011
130,580,004
166,201,950
309,584,950
439,766,250
446,851,009
400,158,096
15,000,000
50,000,000
1.652%
6.558%
8.348%
15.549%
22.087%
22.443%
20.098%
0.753%
2.511%
2,001,997,902
1,991,025,269
100.000%
Book Value
Source: Sacramento County Department of Finance.
COUNTY ECONOMIC PROFILE
The information in this section concerning the County’s economy is provided as supplementary information only, and is not
intended to be an indication of security for the Bonds. The Bonds are payable from the proceeds of an ad valorem tax, approved
by the voters of the District pursuant to applicable laws and State Constitutional requirements, and required to be levied by the
County on all taxable property in the District in an amount sufficient for the timely payment of principal of and interest on the
Bonds. See “SECURITY AND SOURCE OF PAYMENT” herein.
General Information
Based on data complied by DataQuick Information Systems, the median sale price of a single-family home in the County was
$240,000 in September 2013, an increase of approximately 41.2% from $170,000 in September 2012. The median sale price of a
single-family home in the City of Elverta was $193,750 in September 2013, an increase of approximately 84.5% from $105,000 in
September 2012.
- 21 -
Population
The following table displays population data from the 2010 census along with estimated population data as of January 1st for the
past three years for the County.
Historical Population
Sacramento County
Sacramento County
2010
2011
2012
2013
1,418,788
1,427,961
1,433,525
1,445,806
Source: California Department of Finance
Unemployment
The following table contains a summary of the County’s unemployment data seasonally unadjusted.
Historical Unemployment
Sacramento County
Total Labor Force
# Employed
# Unemployed
Unemployment Rate
Annual
2009
Annual
2010
Annual
2011
Annual
2012
August
20131
681,600
604,900
76,700
682,600
595,700
86,900
678,400
596,500
81,900
680,200
608,400
71,800
678,600
618,500
60,100
12.7%
12.1%
11.3%
1
Preliminary
Source: California Employment Development Department.
- 22 -
10.6%
8.9%
Major Private Employers
The following table provides a listing of 10 major private employers in Sacramento County.
Major Private Employers
Sacramento County
Number of
Employees
Employer
1
2
3
4
5
6
7
8
9
10
Kaiser Permanente
Sutter / California Health Services
CHW / Mercy Health Care
Intel Corporation
Hewlett-Packard
Wells Fargo & Co.
Health Net of California
Cache Creek Casino Resort
Pacific Gas and Electric Co.
Thunder Valley Casino Resort
% of Total
County
Employment
9,932
9,609
7,107
6,147
3,500
2,986
2,440
2,376
2,060
2,025
1.67%
1.62
1.20
1.03
0.59
0.50
0.41
0.40
0.35
0.34
48,182
8.11%
Source: County of Sacramento, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012
Taxable Sales
Total taxable sales reported during calendar year 2011 in the County were reported to be $18,003,765,000, a 6.5% increase from
the total taxable sales of 16,904,528,000 reported during calendar year 2010. Data for calendar year 2012 is not yet available.
The number of establishments selling merchandise subject to sales tax and the valuation of taxable transactions in the County is
presented in the following table.
Taxable Retail Sales
Sacramento County
Sales Tax Permits
Taxable Sales (000’s)
2007
35,023
$20,560,510
2008
35,547
$19,331,847
2009
31,644
$16,563,853
2010
32,789
$16,904,528
2011
31,682
$18,003,765
Source: California State Board of Equalization
THE DISTRICT
The information in this section concerning the operations of the District and the District’s finances are provided as supplementary
information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of
or interest on the Bonds is payable from the General Fund of the District. The Bonds are payable from the proceeds of an ad
valorem tax, approved by the voters of the District pursuant to applicable laws and State Constitutional requirements, and
required to be levied by the County and Placer County on all taxable property in the District in an amount sufficient for the timely
payment of principal of and interest on the Bonds. See “SECURITY AND SOURCE OF PAYMENT” herein.
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General Information
The District encompasses an area of approximately 34 square miles in the northern portion of the County and a small portion of
Placer County. The District educates approximately 300 students at an elementary school, two middle schools, and a newly
opened charter high school. The District is governed by a five-member Board.
The Board of Trustees and Key Administrative Personnel
The Board governs all activities related to public education within the jurisdiction of the District. The Board has decision-making
authority, the power to designate management, and the responsibility to significantly influence operations, and is accountable for
all fiscal matters relating to the District.
The Board consists of five members. Each Board member is elected by the public for a four-year term of office. Elections for the
Board are held every two years, alternating between two and three positions available. A president of the Board is elected by
members each year.
The current members of the Board, together with their office and the date their term expires, are set forth below.
Board of Trustees
Name
Title
Term Expires
Ray Lippincott, Jr.
Sandee Felley
Richard Currier
Rhonda Klarcyk
Brenda L. Brent
President
Vice President
Clerk
Member
Member
November 2016
November 2014
November 2014
November 2016
November 2014
The Superintendent of the District is appointed by the Board and reports to the Board. The Superintendent is responsible for
managing the District’s day-to-day operations and supervising the work of other key administrators. Key members of the District’s
staff are set forth on page ‘iv’ of this Official Statement.
Average Daily Attendance
Student enrollment determines to a large extent the amount of funding a California public school district receives for program,
facilities and staff needs. Average daily attendance (“ADA”) is a measurement of the enrollment of the District. The purpose of
attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of State funds are made to school
districts. See “STATE FUNDING OF PUBLIC EDUCATION” herein.
Enrollment can fluctuate due to factors such as population growth, competition from private, parochial, and public charter schools,
inter-district transfers in or out, and other causes. Losses in enrollment will cause a school district to lose operating revenues,
without necessarily permitting the school district to make adjustments in fixed operating costs.
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Set forth in the following exhibit is the actual historical and budgeted ADA for the District as of the second period report (“P-2”),
the last day of the last full attendance month concluding prior to April 15. P-2 ADA is used by the State as the basis for State
apportionments.
P-2 Average Daily Attendance
P-2 ADA
*
2009-10
2010-11
2011-12
2012-13
2013-14*
263
262
260
301
301
Budgeted.
Charter Schools
The District operates one fiscally dependent charter school: Alpha Charter School serving grade 9 (grades 10 through 12 are
expected to be added in subsequent school years). Alpha Charter School began providing education in fiscal year 2013-14. The
financial activities of Alpha Charter School will be included in the District’s financial reporting.
To the extent independent charter schools draw students from school district schools and reduce school district
enrollment, independent charter schools can adversely affect school district revenues. However, there are no independent charter
schools operating in the District's boundaries. The charter school in the District is a dependent charter operated by the
District. Consequently, the District receives full funding for those charter school students. Pursuant to Proposition 39, school
districts are required to provide facilities comparable to those provided to regular district students for charter schools having a
projected average daily attendance of at least 80 or more students from that district.
Pupil-Teacher Ratios
Set forth below are the pupil-to-teacher ratios for the District for fiscal year 2012-13.
Pupil-to-Teacher Ratios
Level
Staffing Ratio
Kindergarten – Third Grade
Grades Four – Six
Grades Seven – Eight
20 : 1
31 : 1
21 : 1
Employee Relations
State law provides that employees of public school districts of the State are to be divided into appropriate bargaining units which
then are to be represented by an exclusive bargaining agent.
The District has two recognized bargaining agents for its employees. The California Teachers Association represents all nonmanagement certificated staff, and the California School Employees Association represents non-management classified employees.
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Set forth in the following table are the District’s bargaining units, number of full-time equivalent (“FTEs”) budgeted for fiscal year
2013-14, and contract expiration date.
Bargaining Units, Number of Employees and Contract Status
Bargaining Unit
California Teachers Association
California School Employees Association
Full-Time Equivalents
Contract
Expiration Date
14.7
June 30, 2016
9.0
June 30, 2014
The District employs an additional 4.0 management and confidential FTEs not represented by a bargaining unit.
Pension Plans
All full-time employees of the District are eligible to participate under defined benefit retirement plans maintained by agencies of
the State. Certificated employees are eligible to participate in the cost-sharing multiple-employer State Teachers’ Retirement
System (“STRS”). Classified employees are eligible to participate in the agent multiple-employer Public Employees’ Retirement
Fund of the Public Employees’ Retirement System (“PERS”), which acts as a common investment and administrative agent for
participating public entities within the State.
STRS operates under the State Education Code sections commonly known as the State Teachers’ Retirement Law. Membership is
mandatory for all certificated employees of State public schools meeting the eligibility requirements. STRS provides retirement,
disability and death benefits based on an employee’s years of service, age and final compensation. Employees vest after five years
of service and may receive retirement benefits at age 55. Except as required for employees hired after January 1, 2013, STRS
contribution rates are established by the State legislature. The current contribution requirement for active plan members with an
enrollment date prior to January 1, 2013 is 8.0% of salary. For active plan members with an enrollment date on or after January 1,
2013, the contribution rate is at least 50% of the total annual normal cost of their pension benefit each year as determined by an
actuary. Because STRS contribution rates are established by statute, unlike typical defined benefit programs, the District’s
contribution rate does not vary annually to make up funding shortfalls or assess credits based on actuarial determinations. The
contribution requirement for the District was 8.25% of salary in fiscal year 2011-12. The District’s contribution to STRS was
$87,860 for fiscal year 2011-12 and $87,850 for fiscal year 2012-13 (unaudited). The District is unable to predict whether the
State legislature may act to require the District to pay a different contribution rate in the future.
All full-time classified employees of the District participate in PERS, which provides retirement, disability and death benefits
based on an employee’s years of service, age and final compensation. Employees vest after five years of service and may receive
retirement benefits at age 50. These benefit provisions and all other requirements are established by State statute and District
resolution. Active plan members with an enrollment date prior to January 1, 2013 are required to contribute 7.0% of their salary,
while active plan with an enrollment date on or after to January 1, 2013 are required to contribute 6.0% of their salary. The
District is required to contribute an actuarially determined rate (10.92% in fiscal year 2011-12). The District's contribution to
PERS was $34,960 for fiscal year 2011-12 and $41,655 for fiscal year 2012-13 (unaudited).
Both STRS and PERS have substantial State-wide unfunded liabilities. The amount of these liabilities will vary depending on
actuarial assumptions, returns on investment, salary scales and participant contributions. The District is unable to predict future
amount of State pension liabilities and amount of required District contributions. Pension plan, annual contribution requirements
and liabilities are more fully described in “APPENDIX A – THE FINANCIAL STATEMENTS OF THE DISTRICT AS OF AND
FOR THE YEAR ENDED JUNE 30, 2012.”
Other Post-Employment Benefits
In June 2004, the Governmental Accounting Standards Board (“GASB”) pronounced Statement No. 45, Accounting and Financial
Reporting by Employers for Post Employment Benefits Other Than Pensions. The pronouncement required public agency
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employers providing healthcare benefits to retirees to recognize and account for the costs for providing these other postemployment benefits (“OPEB”) on an accrual basis and provide footnote disclosure on the progress toward funding the benefits.
The District does not offer OPEB to its current employees. The District provides OPEB to one former employee.
DISTRICT FINANCIAL INFORMATION
The information in this section concerning the operations of the District and the District’s finances is provided as supplementary
information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of
or interest on the Bonds is payable from the General Fund of the District. The Bonds are payable from the proceeds of an ad
valorem tax, approved by the voters of the District pursuant to applicable laws and State Constitutional requirements, and
required to be levied by the County and Placer County on all taxable property in the District in an amount sufficient for the timely
payment of principal of and interest on the Bonds. See “SECURITY AND SOURCE OF PAYMENT” herein.
Accounting Practices
The District accounts for its financial transactions in accordance with the policies and procedures of the State Department of
Education’s California School Accounting Manual. The accounting policies of the District conform to accounting principles
generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board and the
American Institute of Certified Public Accountants.
The District’s financial statements consist of government-wide statements and fund-based financial statements. Government-wide
statements, consisting of a statement of net assets and a statement of activities, report all the assets, liabilities, revenue and
expenses of the District and are accounted for using the economic resources measurement focus and accrual basis of accounting.
The fund-based financial statements consist of a series of statements that provide information about the District’s major and nonmajor funds. Governmental funds, including the District’s General Fund, special revenues funds, capital project funds and debt
service funds, are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting,
revenues are recognized in the accounting period in which they become measurable and available, while expenditures are
recognized in the period in which the liability is incurred, if measurable. Proprietary funds and fiduciary funds are accounted for
using the economic resources measurement focus and accrual basis of accounting. See “NOTE 1” in “APPENDIX A—THE
FINANCIAL STATEMENTS OF THE DISTRICT AS OF AND FOR THE YEAR ENDING JUNE 30, 2012” herein for a further
discussion of applicable accounting policies.
The independent auditor for the District is Crowe Horwath LLP, Sacramento, California (the “Auditor”). The audited financial
statements of the District as of and for the year ended June 30, 2012, are set forth in “APPENDIX A—THE FINANCIAL
STATEMENTS OF THE DISTRICT AS OF AND FOR THE YEAR ENDING JUNE 30, 2012” attached hereto. The District has
not requested nor did the District obtain permission from the Auditor to include the audited financial statements as an appendix to
this Official Statement. The Auditor has not performed any subsequent events review or other procedures relative to these audited
financial statements since the date of its letter.
Budget and Financial Reporting Process
The District’s General Fund finances the legally authorized activities of the District for which restricted funds are not provided.
General Fund revenues are derived from such sources as federal and State school apportionments, taxes, use of money and
property, and aid from other governmental agencies.
The District is required by provisions of the State Education Code to maintain a balanced budget each year, where the sum of
expenditures plus the ending fund balance cannot exceed revenues plus the carry-over fund balance from the previous year. The
State Department of Education imposes a uniform budgeting format for school districts.
The fiscal year for all State school districts is July 1 to June 30. The same calendar applies to the budgets of county offices of
education, except that their budgets and reports are reviewed by the State Superintendent of Public Instruction. The State budget is
an extremely important input in State school district budget preparation since many school districts depend on State funding for a
substantial portion of their revenue. There is very close timing between final approval of the State budget (legally required by June
15), the associated school finance legislation, and the adoption of local school district budgets. In some years, the State budget is
- 27 -
not approved by the legal deadline, which forces school districts to begin the new fiscal year with only estimates of the amount of
funding they will actually receive.
The school district budgeting process involves continuous planning and evaluation. Within the deadlines, school districts
determine their own schedules for considering whether or not to hire or replace staff, negotiating contracts with all employees,
reviewing programs, and assessing the need to repair existing or acquire new facilities. Decisions depend on the critical estimates
of enrollment, fixed costs, commitments in contracts with employees as well as best guesses about how much money will be
available for elementary and secondary education.
The timing of some decisions is forced by legal deadlines. For example, preliminary layoff notices to teachers must be delivered in
March, with final notices in May. This necessitates projecting enrollments and determining staffing needs long before a school
district will know either its final financial positions for the current year or its income for the next year.
The governing board must submit a budget to the County Superintendent of Schools by July 1, and a publicized opportunity for
public participation in the budget process is required by law. There are two options for budget adoption. School districts may
adopt their budgets by July 1 and then revise and readopt them by September 8 after a public hearing. Alternatively, school
districts may decide, by the previous October 31, to hold public hearings before adopting their budgets by July 1. School districts
choosing this option revise their revenues and expenditures after the State budget act is adopted, without a second public hearing.
All school districts must perform a criteria and standards review before budget adoption. In addition, those school districts on the
alternative schedule for adoption must repeat the review before their revision only if the July 1 budget was disapproved.
Legislation requires criteria and standards for stringent review of school districts' finances, focusing primarily on predictions of
average daily attendance, operating deficit, and reserves. The legislation also dictates when and how outside committees, or an
appointed State trustee in emergency situations, must work with school districts. This oversight is part of an effort to reduce the
number of districts in financial trouble and to increase the responsible use of tax dollars.
The county superintendents monitor all school districts' budgets, ongoing financial obligations and multi-year contracts. They
have specific powers for recommending actions to revise budgets. They are not, however, authorized to abrogate existing
collective bargaining agreements. School districts must review their financial position for the periods ending October 31 and
January 31 in order to certify their abilities to meet commitments through the current fiscal year and following two years.
Each school district is required by the State Education Code to file these two interim reports each year, with the first interim report
for the period ending October 31 due by no later than December 15, and the second interim report for the period ending January 31
due by March 15. Each interim report shows fiscal year to date financial operations and the current budget, with any budget
amendments made in light of operations and conditions to that point, and financial projections for the following two years. The
county office of education must then, within 30 days, evaluate the interim reports and forward their comments to the State
Department of Education and the State Controller's Office.
Included in the report is a certification by the president of the governing board of each school district that classifies a school
district according to its ability to meet its financial obligations. The certifications are grouped into three categories: positive
certification, which designates that the District will be able to meet its financial obligations for the remainder of the fiscal year
(including a minimum required reserve for contingencies set by the State Board of Education) and the following two fiscal years; a
qualified certification, which means that a school district may not be able to meet its financial obligations for the remainder of the
current fiscal year and following two fiscal years if certain events occur; and a negative certification, which signifies that a school
district will not be able to meet its financial obligations for the remainder of the fiscal year or of the following year. A certification
by the governing board may be overridden by the county superintendent. If either the first or second interim report is not positive,
the county superintendent may require the district to provide a third interim report by June 1 covering the period ending April 30.
If not required, a third interim report is generally not prepared (though may be at the election of the district). The same calendar
applies to the budgets of county offices of education, except that their budgets and reports go to the State Superintendent of Public
Instruction for review.
The county superintendent must annually present a report to the governing board of the school district and the State Superintendent
of Public Instruction regarding the fiscal solvency of any school district with a disapproved budget, qualified interim certification,
or negative interim certification, or that is determined at any time to be in a position of fiscal uncertainty, pursuant to Education
Code Section 42127.6. Any school district with a qualified or negative certification must allow the county office of education at
least 10 working days to review and comment on any proposed agreement made between its bargaining units and the school
district before it is ratified by the board (or the state administrator). The county superintendent will notify the school district, the
county board of education, the governing board and the district superintendent (or the state administrator), and each parent and
teacher organization of the school district within those 10 days if, in his or her opinion, the agreement would endanger the fiscal
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well-being of the school district. Also, pursuant to Education Code Section 42133, a school district that has a qualified or negative
certification in any fiscal year may not issue, in that fiscal year or the next succeeding fiscal year, non-voter approved debt unless
the county superintendent of schools determines that the repayment of that debt by the school district is probable.
The filing status of the District’s interim reports for the past five years appears below.
Certifications of Interim Financial Reports
Fiscal Year
First Interim
Second Interim
2008-09
2009-10
2010-11
2011-12
2012-13
Positive
Positive
Positive
Positive
Positive
Positive
Positive
Positive
Positive
Positive
Financial Statements
Figures presented in summarized form herein have been gathered from the District’s financial statements. The audited financial
statements of the District for the fiscal year ending June 30, 2012, have been included in the appendix to this Official Statement.
See “APPENDIX A— THE FINANCIAL STATEMENTS OF THE DISTRICT AS OF AND FOR THE YEAR ENDING JUNE
30, 2012” herein. Audited financial statements and other financial reports for prior fiscal years are on file with the District and
available for public inspection during normal business hours. Copies of financial statements relating to any year are available to
prospective investors and or their representatives upon request by contacting the District at the address and telephone number set
forth on page “iv” of this Official Statement, or by contacting the Financial Advisor, Government Financial Strategies inc., 1228
“N” Street, Suite 13, Sacramento, California, 95814-5609, Tel. (916) 444-5100.
- 29 -
The following table summarizes the District’s audited general fund revenue, expenditures and fund balances from fiscal years
2008-09 through 2011-12.
Historical General Fund Activity
2008-09
Audited
2009-10
Audited
2010-11
Audited
2011-12
Audited
BEGINNING BALANCE
$565,393
$694,517
$665,873
$542,528
GASB 54 Adjustments1
RESTATED BEGINNING BALANCE
$565,393
$694,517
6,889
$672,762
$542,528
REVENUES
Revenue Limit Sources
Federal Revenue
Other State Revenues
Other Local Revenues
$1,639,892
248,059
400,038
190,723
$1,337,849
103,748
401,777
204,371
$1,330,994
99,955
421,578
186,928
$1,313,202
117,121
434,376
174,541
TOTAL REVENUES
$2,478,712
$2,047,745
$2,039,455
$2,039,240
EXPENDITURES
Certificated Salaries
Classified Salaries
Employee Benefits
Books and Supplies
Services and Other Operating Exp.
$1,115,749
386,225
356,077
137,230
346,251
$968,143
312,817
341,817
92,604
328,067
$977,908
313,039
382,842
104,671
371,791
$1,008,646
297,087
358,557
97,283
281,219
4,325
12,975
12,975
$2,047,773
$2,163,226
$2,055,767
Other Outgo
TOTAL EXPENDITURES
FINANCING SOURCES (USES)
NET INCREASE (DECREASE)
ENDING BALANCE
$2,341,532
(8,056)
129,124
$694,517
*
(28,616)
(6,463)
(5,227)
(28,644)
(130,234)
(21,754)
$665,873
$542,528
$520,774
The District implemented Government Accounting Standard Board Statement No. 54, Fund Balance Reporting and Government
Type Definitions ("GASB 54") in fiscal year 2010-11, the effect of which was to reclassify and restate the District’s Special
Reserve Fund for Other Than Capital Outlay within the General Fund.
- 30 -
The following table summarizes the District’s general fund revenue, expenditures and fund balances for fiscal years 2012-13
(unaudited) and 2013-14 (budgeted).
Historical and Budgeted General Fund Activity
2012-13
Unaudited
BEGINNING BALANCE
1
GASB 54 Adjustments
RESTATED BEGINNING BALANCE
2013-14
Budget
$520,774
$401,590
(6,950)
$513,825
$401,590
REVENUES
Revenue Limit Sources
Federal Revenue
Other State Revenues
Other Local Revenues
$1,534,500
92,286
481,321
169,745
$1,594,617
112,207
461,904
148,568
TOTAL REVENUES
$2,277,852
$2,317,296
EXPENDITURES
Certificated Salaries
Classified Salaries
Employee Benefits
Books and Supplies
Services and Other Operating Exp.
Other Outgo
$1,004,299
317,039
364,683
131,762
543,139
1,292
$1,112,278
312,297
349,431
145,444
464,358
4,984
TOTAL EXPENDITURES
$2,362,213
$2,388,792
FINANCING SOURCES (USES)
(27,873)
(45,755)
NET INCREASE (DECREASE)
(112,234)
(117,251)
ENDING BALANCE
$401,590
$284,339
*
The District implemented Government Accounting Standard Board Statement No. 54, Fund Balance Reporting and Government
Type Definitions ("GASB 54") in fiscal year 2010-11, the effect of which was to reclassify and restate the District’s Special
Reserve Fund for Other Than Capital Outlay within the General Fund. However, the District's unaudited results for fiscal year
2012-13 and budget for fiscal year 2013-14 do not reflect the implementation of GASB 54.
The District’s 2013-14 Budget
The District’s budget for fiscal year 2013-14 (the “District 2013-14 Adopted Budget”) was approved by the Board on June 11,
2013. However, the State budget for fiscal year 2013-14 (the “2013-14 State Budget”) overhauls the State’s system of K-12
education finance by, among other changes, consolidating most categorical programs within the existing revenue limit structure to
provide a new funding formula phased in over seven years, and implements supplemental and concentration grants to English
learners and economically disadvanted students. See “STATE FUNDING OF PUBLIC EDUCATION—Sources of Revenue for
Public Education” and “—The 2013-14 State Budget” herein. The District estimates that implementation of the new funding
formula will increase fiscal year 2013-14 revenues in the District 2013-14 Adopted Budget by approximately $100,000.
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Revenues
The District categorizes its General Fund revenues into four primary sources: revenue limit sources, federal revenues, other state
revenues and other local revenues.
Revenue Limit Sources. State school districts operate under general purpose revenue limits established by the State Legislature. In
general, the State revenue limit for a school district is calculated by multiplying a “base revenue limit” per student by the school
district’s student enrollment measured in units of ADA. The revenue limit calculations are adjusted annually in accordance with a
number of factors historically designated primarily to provide cost of living increases and to equalize revenues among all
California school districts of the same type. However, the 2013-14 State Budget replaced the existing revenue limit allocation
formula with a new formula, the “Local Control Funding Formula” or “LCFF”.
See “STATE FUNDING OF PUBLIC
EDUCATION—Sources of Revenue for Public Education” and “—The 2013-14 State Budget” herein.
Revenue limit sources were 64.4% of General Fund revenues in fiscal year 2011-12, were 67.4% of General Fund revenues in
fiscal year 2012-13 (unaudited), and are budgeted to be 68.8% of General Fund revenues in fiscal year 2013-14. Funding of the
District’s revenue limit is accomplished by a mix of a) local taxes (composed predominantly of property taxes, and including
miscellaneous taxes and community redevelopment funds, if any) and b) State apportionments of basic and equalization aid. The
majority of the District’s revenue limit funding comes from State apportionments.
Federal Revenues. The federal government provides funding for several District programs, including special education programs
and specialized programs such as the No Child Left Behind Act. These federal revenues, most of which historically have been
restricted, were 5.7% of General Fund revenues in fiscal year 2011-12, were 4.1% of General Fund revenues in fiscal year 2012-13
(unaudited), and are budgeted to be 4.8% of General Fund revenues in fiscal year 2013-14.
Other State Revenues. In addition to apportionment revenues, the State provides funding for several District programs. While the
majority of these other State revenues have historically been restricted, the State budget for fiscal year 2011-12 extended spending
flexibility through 2014-15 for a variety of categorical programs. These other State revenues were 21.3% of General Fund
revenues in fiscal year 2011-12, were 21.1% of General Fund revenues in fiscal year 2012-13 (unaudited), and are budgeted to be
19.9% of General Fund revenues in fiscal year 2013-14. Included in other State revenues are proceeds received from the State
lottery.
Other Local Revenues. Revenues from other local sources were 8.6% of General Fund revenues in fiscal year 2011-12, were 7.5%
of General Fund revenues in fiscal year 2012-13 (unaudited), and are budgeted to be 6.4% of General Fund revenues in fiscal year
2013-14.
Expenditures
The largest components of a school district’s general fund expenditures are certificated and classified salaries and employee
benefits. Changes in salary and benefit expenditures from year to year are generally based on changes in staffing levels, negotiated
salary increases, and the overall cost of employee benefits. Even with no negotiated salary increases or changes in staffing levels,
normal “step and column” advancements on the salary scale result in increased salary expenditures.
Employee salaries and benefits were 81.0% of General Fund expenditures in fiscal year 2011-12, were 71.4% of General Fund
expenditures in fiscal year 2012-13 (unaudited), and are budgeted to be 74.3% of General Fund expenditures in fiscal year 201314.
Short-Term Borrowings
The District has no short-term debt outstanding.
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Capitalized Lease Obligations
The District has no capitalized lease obligations outstanding.
Long-Term Indebtedness
The District received authorization at the 2002 Election to issue $10.5 million of general obligation bonds. On June 3, 2003, the
County issued the Series 2003A Bonds on behalf of the District in an aggregate principal amount of $1,217,904.40.
The table below summarizes the District’s outstanding long-term indebtedness.
Outstanding General Obligation Debt
1
Authorization
Issue
Final Maturity
Principal
Amount Issued
Principal Outstanding
as of December 1, 2013 1
Debt Service in
Fiscal Year 2013-14
2002 Election
2009 Series A
June 1, 2028
$1,217,904
$1,065,712
$70,000
Excludes accreted value of capital appreciation bonds.
All long-term indebtedness of the District as of June 30, 2012, is set forth in “APPENDIX A – THE FINANCIAL STATEMENTS
OF THE DISTRICT AS OF AND FOR THE YEAR ENDING JUNE 30, 2012” attached hereto.
The District has never defaulted on any of its long-term indebtedness.
STATE FUNDING OF PUBLIC EDUCATION
The information in this section concerning State funding of public education is provided as supplementary information only, and it
should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds
is payable from State revenues. The Bonds are payable from the proceeds of an ad valorem tax, approved by the voters of the
District pursuant to applicable laws and State Constitutional requirements, and required to be levied by the County on all taxable
property in the District in an amount sufficient for the timely payment of principal of and interest on the Bonds.
Sources of Revenues for Public Education
Sources of Revenues. Most school districts in the State receive a significant portion of their funding from State appropriations.
The availability of State funds for public education is a function of constitutional provisions affecting school district revenues and
expenditures (see “CONSTITUTIONAL & STATUTORY PROVISIONS AFFECTING SCHOOL DISTRICT REVENUES &
EXPENDITURES”). As a result, changes in State revenues may affect appropriations made by the State to school districts. The
State budget is required to be proposed by the Governor by January 10 and adopted by June 15 of each year (although the State
often is late adopting the budget). In fiscal year 2010-11, State revenues accounted for approximately 55% of school district
general fund revenues.
State revenue sources are supplemented with local property taxes, federal aid, local miscellaneous funds, and the California lottery.
Property taxes are limited by the State Constitution to one percent of the value of property; property taxes may only exceed this
limit to repay voter-approved debt. In fiscal year 2010-11, local property taxes accounted for approximately 22% of school district
general fund revenues.
The federal government provides funding for several school district programs, including special education programs and
specialized programs such as the No Child Left Behind Act and Drug Free Schools. In fiscal year 2010-11, federal revenues
accounted for approximately 14% of school district general fund revenues.
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Miscellaneous local revenue sources include items such as developer fees, parcel taxes, donations, lease revenues and interest
income. Developer fees are fees that school districts can levy on new residential or commercial development within their
boundaries to finance the construction or renovation of school facilities. A significant number of school districts have secured the
required two-thirds approval from local voters to levy special taxes on parcels or residences and/or have won voter approval, with
either a two-thirds vote or a 55% majority, to sell general obligation bonds or to establish special taxing districts for the
construction of schools. Use of such taxes is restricted by law. School districts that still have unused school buildings or sites can
lease or sell them for miscellaneous income as well. Many school districts also seek grants or contributions, sometimes channeled
through private foundations established to solicit donations from local families and businesses. In fiscal year 2010-11,
miscellaneous local sources accounted for approximately 8% of school district general fund revenues.
Approved by voters in late 1984, the State lottery generated approximately 1% of total school district general fund revenues in
fiscal year 2010-11. Every three months, the State Lottery Commission calculates 34% of lottery proceeds for all public education
institutions, the minimum according to the lottery law. Every K-14 school district receives the same amount of lottery funds per
pupil from the State, which may be spent for any instructional purpose, excluding capital projects.
No other source of general purpose revenues is currently permitted for schools. Proposition 13 eliminated the possibility of raising
additional ad valorem property taxes for general school support, and the courts have declared that fees may not be charged for
school-related activities other than for busing services.
The State Revenue Limit. The State Revenue Limit was first instituted in 1973-74 to provide a mechanism to calculate the amount
of general purpose revenue a school district, community college district or county board of education is entitled to receive from
State and local sources. Each school district has its own target amount of funding from State funds and local property taxes per
average daily attendance. This target is known as revenue limit, and the funding from this calculation forms the bulk of school
districts' income. The State Legislature usually grants annual cost-of-living adjustments (“COLAs”) to revenue limits. The exact
amount of the COLA depends on whether the school district is an elementary, high school or a unified school district.
The 2013-14 State Budget replaced the existing revenue limit allocation formula with a new formula, the “Local Control Funding
Formula” or “LCFF,” which consolidates revenue limits and almost all categorical programs into a single formula. Under the
LCFF, school districts receive:
• a base grant per unit of ADA in four grade spans;
• a supplemental grant for English learners, students from low-income families and foster youths;
• an additional concentration grant based on the number of English learners, students from low-income families and foster
youths that exceeds 55% of enrollment;
• add-on funding equal to the amount of State aid received in fiscal year 2012-13 for two existing categorical programs; and,
• an economic recovery component to transition school districts to at or above pre-recession funding by fiscal year 2020-12.
Apportionments for revenue limits are calculated three times a year for each school district, community college district and county
board of education. The first calculation is performed for the February 20th first principal apportionment (based on period 1 ADA
determined in December), the second calculation for the June 25th second principal apportionment (based on period 2 ADA
determined in April), and the final calculation for the end of the year annual apportionment (also based on period 2 ADA).
Calculations are reviewed by the county and submitted to the State Department of Education with respect to school districts and to
the Chancellor of the California Community Colleges with respect to community college districts, which, respectively, reviews the
calculations for accuracy, calculates the amount of state aid owed to such school district or community college district, as the case
may be, and notifies the State Controller of the amount, who then distributes the state aid.
School districts that receive their revenue limit income entirely from property taxes are called “basic aid” school districts. These
school districts are permitted to keep all their property tax money (even if it exceeds their revenue limit). As guaranteed in the
State Constitution, the State must apportion $120 per pupil to all school districts. However, the categorical aid (see below) that
basic aid school districts receive counts toward this requirement. The District is not a basic aid district.
Distribution of Revenues for Public Education
General Purpose. The largest part of each school district's revenue funds general operating expenses associated with providing
education, including salaries, benefits, supplies, textbooks and regular maintenance. As previously mentioned, the Revenue Limit
governs the amount each school district receives. Each school district also receives some State and federal money for special
programs, special costs, or categories of children with particular educational needs, called “categorical aid.”
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Categorical Aid. This special support goes into a school district's General Fund, but its expenditure is restricted to the purpose for
which it is granted. Historically, the complex allocation system has been adjusted somewhat by the State Legislature almost every
year, with unpredictable effects on individual school districts. Implementation of LCFF in fiscal year 2013-14 greatly reduces the
amount of categorical aid received from the State.
There are a number of major federal and State categorical aid programs. Some allocations come automatically to school districts,
while others require an application. Most of the federal funds flow through the California Department of Education, which retains
a certain percentage for administration.
In terms of dollars and the number of children served, the largest categorical aid program is special education. According to court
decisions and federal and California law, school districts are responsible for the appropriate education of each disabled child from
age 3 to 21 who lives within their boundaries. Historically, federal and State allocations have not covered the cost of educating
special education students. Consequently, school districts have been required to contribute general purpose funds for special
education; general fund contributions toward special education programs are known as “encroachment.”
School Facilities. Growing enrollments and/or aging facilities require school districts to build or make major renovations to school
buildings. The income from developer fees on residential or commercial property is insufficient to fund all facilities costs. General
obligation bond moneys issued by a two-thirds voter approval may only be used for purchase or improvement of real property;
general obligation bond moneys issued by 55% voter approval (pursuant to Proposition 39) can be used only for construction,
rehabilitation, equipping of school facilities, or the acquisition or lease of real property for school facilities. See
“CONSTITUTIONAL & STATUTORY PROVISIONS AFFECTING REVENUES & EXPENDITURES” herein. Mello-Roos
taxes can be used for this as well as for ongoing maintenance or purchase of needed equipment. A majority of voters has regularly
approved state bond measures for the construction or reconstruction of schools.
State IOUs and Deferrals
In recent years, fiscal stress and difficulties in achieving a balanced State budget have resulted in actions that include the State
issuing IOUs (defined below) to its creditors, and the deferral of school funding.
Commencing in fiscal year 2008-09, to manage its cash flow in light of declining revenues, the State enacted several statutes
deferring amounts owed to public schools, until a later date in the fiscal year, or even into the following fiscal year, in order to
more closely align the State’s revenues with its expenditures. This technique has been used several times through the enactment of
budget bills in fiscal years 2008-2009 through 2013-14. Some of these statutory deferrals were made permanent, and others were
implemented only for one fiscal year. For fiscal year 2013-14, enacted K-12 inter-year deferrals total $5.6 billion.
Fiscal stress and cash pressures currently facing the State may continue or become more difficult, and continuing declines in State
tax receipts or other results of the current economic recession may materially adversely affect the financial condition of the State.
The 2012-13 State Budget
The information in this section has been compiled from publicly available information through the State Department of Finance
and the State Legislative Analyst’s Office. Neither the District nor the Underwriter assumes any responsibility for the accuracy of
such information as set forth or incorporated by reference herein, although they believe that the information provided by the
above-listed sources is reliable.
Adopted Budget On June 27, 2012, the Governor signed the fiscal year 2012-13 State budget (the “2012-13 Budget”). The 2012-13
Budget closes a $15.7 billion budget gap and builds a reserve of nearly $1 billion with (i) $8.1 billion in expenditure reductions,
(ii) $6 billion in increased revenues (which assumed the approval by the voters of the Governor’s tax initiative, “The Schools and
Local Public Safety Protection Act”, at a November 2012 election) and (iii) $2.5 billion from certain loan and transfer measures.
The Schools and Local Public Safety Protection Act was approved by voters in November 2012, temporarily increasing the
personal income tax on the State’s wealthiest taxpayers for seven years and increasing the sales tax by 0.25% for four years.
The 2012-13 Budget contains the following spending reduction measures:
• Reformation of existing K-14 education mandates claim process by providing a block grant as an alternative. For non-school
mandates, provides a multiyear suspension of most mandates to provide greater flexibility to local governments. ($720 million
savings)
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•
•
Creation of framework to transfer cash assets previously held by redevelopment agencies to cities, counties, and special
districts to fund core public services. Assets transferred to schools will offset State general fund costs. ($1.5 billion savings)
Other adjustments including using a fiscal year 2011-12 over-appropriation of the minimum guarantee to prepay Proposition
98 funding required by a court settlement. ($1.9 million savings)
State general fund revenues (including transfers) are budgeted to be approximately $95.9 billion in fiscal year 2012-13, an increase
of 10.4% from a revised fiscal year 2011-12 State general fund revenues and transfers of $86.8 billion. State general fund
expenditures are budgeted to be $91.4 billion in fiscal year 2012-13, an increase of 5.0% from a revised $87.0 billion figure for
fiscal year 2011-12.
The following table identifies historical and budgeted State general fund revenues and expenditures.
State General Fund under the Adopted 2012-13 Budget
2011-12
Revised
(Millions)
2012-13
Budget
(Millions)
Prior-year Fund Balance
Revenues and Transfers
Total Resources Available
($2,685)
86,830
84,145
($2,882)
95,887
93,005
Expenditures
Ending Fund Balances
87,027
($2,882)
91,338
$1,667
Encumbrances
Reserve
719
(3,601)
719
948
Source: The California Department of Finance
K-12 Education. The 2012-13 Budget includes Proposition 98 funding of $53.6 billion, of which $36.8 billion is from the State
general fund. This funding level assumes passage of the Tax Initiative, which increases Proposition 98 funding by $2.9 billion in
fiscal year 2012-13.
Other significant K-12 funding adjustments include:
• Redevelopment Agency Asset Liquidation – An increase of $1.3 billion in local property taxes for fiscal year 2012-13 to reflect
the distribution of cash assets previously held by redevelopment agencies. The increase in local revenue reduces Proposition
98 State general fund contribution by an identical amount.
• Proposition 98 Adjustments – A decrease of approximately $630 million due to (i) eliminating the hold-harmless adjustment
provided to schools from the elimination of the sales tax gasoline in 2010-11, and (ii) using a consistent current value
methodology to rebench the guarantee for the exclusion of child care programs, the inclusion of special education mental
health services, as well as new and existing property tax shifts. Additionally, the 2012-13 Budget reduces current year
appropriations for a number of different programs by $220.1 million, backfilling them with one-time Proposition 98 general
fund, which achieves State general fund savings by an identical amount.
• Quality Education Investment Act – A decrease of $450 million State general fund for fiscal year 2012-13. The overappropriation in fiscal year 2011-12 will be used to repay the $450 million required to be provided on top of the minimum
guarantee in fiscal year 2012-13 pursuant to the California Teachers Association v. Schwarzenegger settlement agreement.
• Deferrals – An increase of $2.1 billion Proposition 98 State general fund to reduce K-12 inter-year deferrals to $7.4 billion.
• Charter Schools – An increase of $53.7 billion Proposition 98 State general fund for charter schools categorical programs to
fund growth in enrollment. Additionally, legislation expands the ability of school districts to convey surplus property to
charter schools, while also increasing financial assistance by allowing county treasurers to provide them with short-term cash
loans, and by authorizing charter schools to utilize temporary revenue anticipation note borrowings.
• Mandate Block Grant – An increase of $86.2 million over the fiscal year 2011-12 funding level to provide a total of $166.6
million for K-12 mandates through a new voluntary block grant.
• Child Care Costs – Savings of $294.3 million in non-Proposition 98 State general fund through various cost-reduction
measures, including reduction of provider contracts across the board and suspension of statutory COLA.
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The 2013-14 State Budget
The information in this section has been compiled from publicly available information through the State Department of Finance
and the State Legislative Analyst’s Office. Neither the District nor the Underwriter assumes any responsibility for the accuracy of
such information as set forth or incorporated by reference herein, although they believe that the information provided by the
above-listed sources is reliable.
On June 27, 2013, the Governor signed the 2013-14 State Budget which reflects a significant improvement in the State’s finances
due to the economic recovery, prior budgetary restraint, and voters’ approval of The Schools and Local Public Safety Protection
Act.
The following table identifies historical and budgeted State general fund revenues and expenditures.
State General Fund
2013-14 State Budget
2012-13
Revised
(Millions)
2013-14
Budget
(Millions)
($1,658)
98,195
$96,537
$872
97,098
$97,970
Expenditures
Ending Fund Balances
95,665
$872
96,281
$1,689
Encumbrances
Reserve
$618
$254
$618
$1,071
Prior-year Fund Balance
Revenues and Transfers
Total Resources Available
Source: The California Legislative Analyst’s Office.
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Funding for Education. The 2013-14 State Budget includes fiscal year 2013-14 Proposition 98 funding of $56.5 billion, an
increase of $2.9 billion from revised fiscal year 2012-13 levels. The following table identifies historical and budgeted Proposition
98 funding.
Proposition 98 Funding
2013-14 State Budget
2011-12
Actual
(Millions)
2012-13
Revised
(Millions)
2013-14
Budget
(Millions)
Preschool
$368
$481
$507
K-12 Education
General Fund
Local Property Tax Revenue
Subtotal
$29,317
12,125
$41,443
$36,195
13,760
$49,955
$34,693
13,036
$48,628
California Community Colleges
General Fund
Subtotal
$3,279
1,977
$5,256
$3,701
2,251
$5,951
$3,742
2,291
$6,033
Other Agencies
Unallocated
Total
$83
0
$47,149
$78
0
$56,465
$78
35
$55,281
General Fund
$33,047
14,102
$40,454
16,011
$39,055
16,226
Source: The California Legislative Analyst’s Office.
The 2013-14 State Budget replaces the existing revenue limit allocation formula with a new formula, the “Local Control Funding
Formula” or “LCFF”. The LCFF includes the following components:
• A base grant for each local education agency equivalent to $7,643 per unit of average daily attendance (ADA). This amount
includes an adjustment of 10.4 percent to the base grant to support lowering class sizes in grades K‑3, and an adjustment of
2.6% to reflect the cost of operating career technical education programs in high schools.
• A 20‑percent supplemental grant for English learners, students from low‑income families, and foster youth to reflect increased
costs associated with educating those students.
• An additional concentration grant of up to 22.5 percent of a local education agency’s base grant, based on the number of
English learners, students from low‑income families, and foster youth served by the local agency that comprise more than 55%
of enrollment.
• An economic recovery target to ensure that almost every local education agency receives at least their pre‑recession funding
level, adjusted for inflation, at full implementation of the LCFF in fiscal year 2020-21.
In addition to implementation of the LCFF, significant K-12 funding adjustments include:
• Common Core Implementation — An increase of $1.25 billion in one-time Proposition 98 funding to support the
implementation of Common Core – new standards for evaluating student achievement in English-language arts and math.
• Career Technical Education Pathways Grant Program — An increase of $250 million of Proposition 98 funding for one-time
competitive capacity-building grants for K-12 school districts and community college to support programs focused on workbased learning.
• K-12 Mandates Block Grant — An increase of $50 million in Proposition 98 funding to reflect the including of the graduation
requirements mandate within the block grant program.
• K-12 Deferrals — An increase of $1.6 billion million in Proposition 98 funding in fiscal year 2012-13 and an increase of
$242.3 million in Proposition 98 funding in fiscal year 2013-14 for the repayment of inter-year budgetary deferrals, reducing
inter-year deferrals to $5.6 billion by the end of fiscal year 2013-14.
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•
•
Energy Efficiency Investments — An increase of $381 million in Proposition 98 funding to support energy efficiency projects
in schools consistent with Proposition 39.
Special Education — The 2013-14 State Budget includes several consolidations for special education programs in an effort to
simplify special education finance and provide special education local plan areas with additional funding flexibility.
Future Budgets
The District can not predict what actions will be taken in the future by the State Legislature and the Governor to address changing
State revenues and expenditures or the impact such actions will have on State revenues available in the current or future years for
education. The State budget will be affected by national and State economic conditions and other factors over which the District
will have no control. Certain actions could result in a significant shortfall of revenue and cash, and could impair the State's ability
to fund schools as budgeted. Continued State budget shortfalls in future fiscal years could have an adverse financial impact on the
District.
For more information on the State Budget, please refer to the California Department of Finance’s website at www.dof.ca.gov and
to the Legislative Analyst’s Office’s website at www.lao.ca.gov. The information contained in these websites is not incorporated
by reference.
CONSTITUTIONAL & STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES & EXPENDITURES
Article XIIIA. In an election held on June 6, 1978, the voters of the State approved an initiative amendment to the State
Constitution. The amendment added Article XIIIA to the State Constitution, commonly known as Proposition 13, which limits the
taxing powers of State public agencies. Except as described in the following paragraph, Article XIIIA provides that the maximum
ad valorem tax on real property cannot exceed one percent of the “full cash value” which is defined as the “county assessor's
valuation of real property as shown on the 1975-76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment,” subject to
exceptions for certain circumstances of transfer or reconstruction. The “full cash value” is subject to annual adjustments to reflect
increases not to exceed two percent per year, or decreases in the consumer price index or comparable local data, or to reflect
reduction in property value caused by damage, destruction or other factors.
Article XIIIA requires a vote of two-thirds of the qualified electorate to impose special taxes, and except as described in the
following sentence, prohibits the imposition of any additional ad valorem, sales or transaction tax on real property. As amended
by Proposition 46, on June 3, 1986, Article XIIIA exempts from the one percent tax limitation ad valorem taxes required to pay
debt service on indebtedness approved by the voters prior to July 1, 1978, or on bonded indebtedness approved by two-thirds of
those voting thereon, after July 1, 1978, the proceeds of which are applied to the acquisition or improvement of real property.
Proposition 39: On November 7, 2000, voters within the State approved an amendment (commonly known as Proposition 39) to
the State Constitution. This amendment (1) allows school facilities bond measures to be approved by 55 percent (rather than twothirds) of the voters in local elections and permits property taxes to exceed the current 1 percent limit in order to repay the bonds,
and (2) changes existing statutory law regarding charter school facilities.
The local school jurisdictions affected by this
proposition are K-12 school districts, including the District, community college districts, and county offices of education. The 55
percent vote requirement would apply only if the local bond measure presented to the voters includes: (1) a requirement that the
bond funds can be used only for construction, rehabilitation, equipping of school facilities, or the acquisition or lease of real
property for school facilities; (2) a specific list of school projects to be funded and certification that the school board has evaluated
safety, class size reduction, and information technology needs in developing the list; and (3) a requirement that the school board
conduct annual, independent financial and performance audits until all bond funds have been spent to ensure that the bond funds
have been used only for the projects listed in the measure.
Legislation approved in June 2000 places certain limitations on local school bonds to be approved by 55 percent of the voters.
These provisions require that the tax rate levied as the result of any single election be no more than $60 (for a unified school
district), $30 (for a high school or elementary school district), or $25 (for a community college district), per $100,000 of taxable
property value. The Governor can change these limitations with a majority vote of both houses of the Legislature and approval;
unlike constitutional amendments, which may be changed only with another statewide vote of the people. The statutory provisions
could be changed by a majority vote of both houses of the Legislature and approval by the Governor, but only to further the
purposes of the proposition.
- 39 -
Finally, Article XIIIA requires the approval of two-thirds of all members of the State Legislature to change any State laws for the
purpose of increasing tax revenues.
Article XIIIB. In a special election held on November 6, 1979, the voters of the State approved an initiative constitutional
amendment. This amendment added Article XIIIB to the State Constitution. Article XIIIB limits the annual appropriations of the
State and of any city, county, school district, special district, authority or other political subdivision of the State to the level of
appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the
government entity. The “base year” for establishing such appropriation limit is the 1978-79 fiscal year and the limit is to be
adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these
public agencies.
Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by the State or by any other entity of local
government, exclusive of certain State subventions, refunds or taxes, benefit payments from retirement, unemployment insurance
and disability insurance funds but excludes taxes to pay voter approved bonds. “Proceeds of taxes” include, but are not limited to,
all tax revenues and the proceeds to an entity of government from (1) regulatory licenses, user charges, and user fees (but only to
the extent such proceeds exceed the cost of providing the service or regulation), and (2) the investment of tax revenues. Article
XIIIB includes a requirement that if an entity's revenues in any year exceed the amounts permitted to be spent, the excess would
have to be returned by revising tax rates or fee schedules over the subsequent two years. State law provides that in the event a
school district's appropriations will exceed its limit, the district may assume from the State a portion of the State's appropriations
limit.
Proposition 98/111: On November 8, 1988, voters of the State approved Proposition 98, a combined initiative constitutional
amendment and statute called the “Classroom Instructional Improvement and Accountability Act.” Proposition 98 changed State
funding of public education below the university level and the operation of the State’s appropriations limit, primarily by
guaranteeing K-14 schools a minimum share of General Fund revenues. Under Proposition 98 (as modified by Proposition 111,
which was enacted on June 5, 1990, hereinafter defined as “Proposition 98/111”), K-14 schools are guaranteed the greater of (a)
the percentage of General Fund revenues appropriated for school districts in Fiscal Year 1986-87 (“Test 1”); (b) the amount of
State and local proceeds of taxes appropriated to K-14 schools in the prior year, adjusted for changes in the cost of living
(measured as in Article XIII B by reference to State per capita personal income) and enrollment (“Test 2”); or (c) a third test,
which would replace Test 2 in any year in which the percentage growth in State per capita personal income is greater than the
percentage growth on per capita General Fund revenues plus one-half of one percent (“Test 3”).
Under Test 3, schools would receive the amount of State and local proceeds of taxes appropriated to K-14 schools in the prior year
adjusted for changes in enrollment and per capita General Fund revenues, plus an additional small adjustment factor. If Test 3 is
used in any year, the difference between Test 3 and Test 2 would become a “credit” to schools which would be the basis of
payments in future years when per capita General Fund revenue growth exceeds per capita personal income growth. Legislation
adopted prior to the end of the 1988-89 Fiscal Year, implementing Proposition 98, determined the K-14 schools' funding guarantee
under Test 1 to be 40.3% of the General Fund tax revenues, based on 1986-87 appropriations. However, that percentage has been
adjusted to 34% to account for a subsequent redirection of local property taxes, since such redirection directly affects the share of
General Fund revenues to schools.
Proposition 98/111 permits the Legislature by two-thirds vote of both houses, with the Governor's concurrence, to suspend the K14 schools' minimum funding formula for a one-year period. This guarantee was suspended in 2004-05, initially with the
agreement of the Education Coalition (an alliance of major education interest groups), and effectively reduced the amount schools
received by $2 billion. The Legislature ratified the suspension in Senate Bill 1101. However, the Education Coalition agreed to
the suspension under the terms that Proposition 98 funding would be reduced for only one year, the year of the State budget crisis,
by a maximum of $2 billion; and if the situation were to improve, funding would be restored. But when the State’s finances did
improve, funding was not restored to the same level it at which it would have been, had the suspension not occurred.
Subsequently, the State Superintendent of Public Instruction Jack O’Connell filed a lawsuit jointly with the California Teachers
Association against Governor Arnold Schwarzenegger over this loss in Proposition 98 funding. On May 10, 2006, the two sides
reached an agreement whereby, in effect, the State would repay all losses incurred due to the suspension, with payments to be
made annually through 2013-14.
Since Proposition 98/111 is unclear in some details, there can be no assurance that the Legislature or a court might not interpret it
to require a different percentage of General Fund revenues to be allocated to K-14 districts or to apply the relevant percentage to
the State's budget in a different way. Proposition 98/111 may place increasing pressure on the State's budget in future years,
- 40 -
potentially reducing resources available for other State programs, especially to the extent that the Article XIIIB spending limit
would restrain the State's ability to fund these other programs by raising taxes.
Proposition 98/111 also changes how tax revenues in excess of the State’s appropriations limit are distributed. Any excess State
tax revenues up to a specified amount would, instead of being returned to taxpayers, be transferred to K-14 districts. Such transfer
would be excluded from the appropriations limits for K-14 districts and the K-14 schools’ appropriations limits for the next year
would automatically be increased by the amount of such transfer. These additional moneys would enter the base funding
calculation for K-14 districts for subsequent years, creating further pressure on other portions of the State budget, particularly if
revenues decline in a year following an Article XIIIB surplus. The maximum amount of excess tax revenues which could be
transferred to schools is four percent of the minimum State spending for education mandated by Proposition 98/111, as described
above.
Proposition 1A. On November 2, 2004, California voters approved Proposition 1A amending the State Constitution to
significantly reduce the State’s authority over major local government revenue sources. Under Proposition 1A, the State may not
reduce any local sales tax rates or alter the method of allocation, shift property taxes from local governments to schools or
community colleges, make changes in how property taxes revenues are shared among local governments without two-thirds
approval of both house of the State Legislature, and decrease vehicle license fees without providing local governments with equal
replacement funding.
Under Proposition 1A, beginning in fiscal year 2008-09, the State may divert no more than eight percent of local property tax
revenues for State purposes (including but not limited to funding K-12 education) only if: (i) the Governor declares such action to
be necessary due to a State fiscal emergency, (ii) two-thirds approval of both houses of the State Legislature, (iii) the amount
diverted is required to be repaid within three years, and (iv) certain other conditions are met.
Article XIIIC and Article XIIID. On November 5, 1996, the voters of the State approved Proposition 218, the so-called “Right to
Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of
provisions affecting the ability of local agencies, including school districts, to levy and collect both existing and future taxes,
assessments, fees and charges. Among other things, Article XIIIC establishes that every tax is either a “general tax” (imposed for
general governmental purposes) or a “special tax” (imposed for specific purposes); prohibits special purpose government agencies
such as school districts from levying general taxes except as allowed by Article XIIIA; and prohibits any local agency from
imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote. Article XIIID
also provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles
XIII and XIIIA of the State Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4.
Article XIIIC also provides that the initiative power shall not be limited in matters of reducing or repealing local taxes,
assessments, fees and charges. The State Constitution and the laws of the State impose a duty on the county treasurer/tax collector
(of each county) to levy a property tax sufficient to pay debt service on general obligation bonds coming due in each year.
Legislation adopted in 1997 provides that Article XIIIC will not be construed to mean that any Registered Owner or Beneficial
Owner of a municipal security assumes the risk of or consents to any initiative measure, which would constitute an impairment of
contractual rights under the contracts clause of the U.S. Constitution.
Article XIIID deals with assessments and property-related fees and charges. Article XIIID explicitly provides that nothing in
Article XIIIC or XIIID shall be construed to affect existing laws relating to the imposition of fees or charges as a condition of
property development; however it is not clear whether the initiative power is therefore unavailable to repeal or reduce developer
and mitigation fees imposed by school districts.
The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the
matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination.
Possible Future Actions. Article XIIIA, Article XIIIB and Propositions 39, 46, 98, 111 and 218 and 1A were each adopted as
measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be
adopted, further affecting K-14 school districts' revenues or such districts' ability to expend revenues. There is no assurance that
the State electorate or Legislature will not at some future time approve additional limitations which could reduce property or other
tax revenues and adversely affect the revenues of school districts or require additional expenditures.
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LEGAL MATTERS
No Litigation
There is no action, suit or proceeding known to be pending or threatened restraining or enjoining the sale and delivery of the
Bonds, or in any way contesting or affecting the validity thereof or any proceeding of the District taken with respect to the issuance
or sale of the Bonds, or the pledge or application of moneys or security provided for the payment of the Bonds, or the authority of
the County or Placer County to levy property taxes to pay principal of and interest on the Bonds when due.
Legal Opinion
The legal opinion of Bond Counsel, approving the validity of the Bonds, will be supplied to the original purchasers of the Bonds
without cost. Copies of the proposed forms of such legal opinion is attached to this Official Statement as “APPENDIX C.”
Bond Counsel’s employment is limited to a review of the legal proceedings required for authorization of the Bonds and to
rendering the aforementioned opinion. Bond Counsel has not undertaken any responsibility for the accuracy, completeness, or
fairness of this Official Statement and the opinion of Bond Counsel will not extend to any documents, agreements, representations,
offering circulars, official statements or other material of any kind concerning the Bonds that are not referred to in the
aforementioned opinion. The fees of Bond Counsel are contingent upon the issuance and delivery of the Bonds.
Tax Matters
The following discussion of federal income tax matters written to support the promotion and marketing of the Bonds was not
intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding federal tax penalties that may be
imposed. Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
In the opinion of Meyers, Nave, Riback, Silver & Wilson, A Professional Law Corporation, Bond Counsel to the District (“Bond
Counsel”), based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters,
the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross
income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is
exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a
specific preference item for purposes of the federal individual and corporate alternative minimum taxes, although Bond Counsel
observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable
income. In addition, subject to the accuracy of certain representations and the District's compliance with certain covenants, in the
opinion of Bond Counsel, the Bonds are "qualified tax-exempt obligations" under the small issuer exception provided under
section 265(b)(3) of the Code, which affords banks and certain other financial institutions more favorable treatment of their
deduction for interest expense than would otherwise be allowed under section 265(b)(2) of the Code. Bond Counsel expects to
deliver at the time of issuance of the Bonds the opinion substantially in the form set forth in “APPENDIX C” hereto.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding
amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes “original issue
discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the
Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For
this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of
the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues
daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line
interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to
determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial
Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with
original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to
the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity
(or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No
- 42 -
deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is
excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a
Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to
such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper
treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions, and requirements relating to the exclusion from gross income for federal
income tax purposes of interest on obligations such as the Bonds. The District has made certain representations and covenanted to
comply with certain restrictions, conditions, and requirements designed to ensure that interest on the Bonds will not be included in
federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the
Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds.
The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel
has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not
occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect
the value of, or the tax status of interest on, the Bonds.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes
and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest
on, the Bonds may otherwise affect a Beneficial Owner’s federal, state, or local tax liability. The nature and extent of these other
tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income
or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Future legislative proposals, if enacted into law, clarification of the Code, or court decisions may cause interest on the Bonds to be
subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation or otherwise
prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment
of any such future legislative proposals, clarification of the Code, or court decisions may also affect the market price for, or
marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or
proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities,
and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding
on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or
assurance about the future activities of the District or about the effect of future changes in the Code, the applicable regulations, the
interpretation thereof or the enforcement thereof by the IRS. The District has covenanted, however, to comply with the
requirements of the Code.
Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond
Counsel is not obligated to defend the District or the Beneficial Owners regarding the tax-exempt status of the Bonds in the event
of an audit examination by the IRS. Under current procedures, parties (such as the Beneficial Owners) other than the District and
its appointed counsel would have little, if any, right to participate in the audit examination process. Moreover, because achieving
judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS
positions with which the District legitimately disagrees may not be practicable. Any action of the IRS, including but not limited to
selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect
the market price for, or the marketability of, the Bonds, and may cause the District or the Beneficial Owners to incur significant
expense.
Legality for Investment
Under provisions of the State Financial Code, the Bonds are legal investments for commercial banks in the State to the extent that
the Bonds, in the informed opinion of the investing bank, are prudent for the investment of funds of depositors. Under provisions
of the State Government Code, the Bonds are eligible to secure deposits of public moneys in the State.
- 43 -
RATINGS
Standard & Poor's Financial Services LLC ("S&P"), a subsidiary of The McGraw-Hill Companies, Inc., is expected to assign its
municipal bond rating of “AA-” (stable outlook) to the Bonds with the understanding that upon delivery of the Bonds, a municipal
bond insurance policy insuring the payment when due of the principal of (or in the case of Capital Appreciation Bonds, the
accreted value) and interest on the Bonds will be issued by AGM. S&P has assigned an underlying municipal bond rating of “A+”
to the Bonds. Such ratings reflect only the views of S&P and an explanation of the significance of such ratings may be obtained
from S&P at the following address: Standard & Poor's Financial Services LLC, 55 Water Street, New York, New York 10041.
There is no assurance that any such rating will continue for any given period of time or that it will not be revised downward or
withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant. Any such downward
revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
FINANCIAL ADVISOR
Government Financial Strategies inc. has been employed by the District to perform financial advisory services in relation to the
sale and delivery of the Bonds. Government Financial Strategies inc., in its capacity as financial advisor, has read and participated
in drafting certain portions of this Official Statement. Government Financial Strategies inc. has not, however, independently
verified nor confirmed all of the information contained within this Official Statement. Government Financial Strategies inc. will
not participate in the underwriting of the Bonds. Fees charged by Government Financial Strategies inc. are not contingent upon the
sale of the Bonds.
INDEPENDENT AUDITOR
The financial statements of the District as of and for the year ending June 30, 2012, have been audited by Crowe Horwath LLP,
Sacramento, California. The audited financial statements of the District as of and for the year ended June 30, 2012, are set forth in
“APPENDIX A – THE FINANCIAL STATEMENTS OF THE DISTRICT AS OF AND FOR THE YEAR ENDING JUNE 30,
2012” attached hereto. The District has not requested nor did the District obtain permission from the Auditor to include the
audited financial statements as an appendix to this Official Statement. The Auditor has not performed any subsequent events
review or other procedures relative to these audited financial statements since the date of its letter. Complete copies of all past and
current financial statements may be obtained from the District.
UNDERWRITING AND INITIAL OFFERING PRICE
The Bonds were sold to E.J. De La Rosa & Co., Inc. (the “Underwriter”) pursuant to a bond purchase agreement by and among the
District and the Underwriter for $599,110.65, an amount equal to the principal amount of the Bonds, less an underwriting discount
of $32,187.60 (which includes the cost of the premium for bond insurance), at a true interest cost (TIC%) to the District of
6.222530%.
The Underwriter has certified the initial offering prices or yields stated on the cover page to this Official Statement. The
Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts), dealer
banks, banks acting as agents and others at prices lower than said public offering prices. The reoffering prices may be changed
from time to time by the Underwriter.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of the holders and Beneficial Owners of the Bonds to provide certain financial
information and operating data relating to the District (the “Annual Report”) by not later than eight months after the end of each
fiscal year, commencing with the report for the 2012-13 fiscal year (which is due no later than February 28, 2014), and to provide
notices of the occurrence of certain enumerated events. The Annual Report and notices of certain enumerated events will be filed
- 44 -
by the District with the MSREB through its EMMA system. The specific nature of the information to be contained in the Annual
Report or the notices are set forth in “APPENDIX B—FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These
covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5) (the “Rule”).
Within the past five years, the District has not made all required disclosure filings in a timely manner. The District was late in
filing notices of significant events in connection with the rating downgrade of the municipal bond insurer on the District’s Series
2003A Bonds. Such notice was filed on November 18, 2013.
To ensure future filings are made in a timely manner, the District has retained Government Financial Strategies inc. as
dissemination agent for its prior undertakings with regard to the Rule. As of the date of this Official Statement, all required filings
have been made in connection with prior undertakings.
ADDITIONAL INFORMATION
Additional information concerning the District, the Bonds or any other matters concerning the sale and delivery of the Bonds may
be obtained by contacting the District through the Superintendent at the address and telephone number set forth on page “iv” of this
Official Statement, or by contacting Government Financial Strategies inc. at the address and telephone number set forth on page
“iv” of this Official Statement.
The execution and delivery of this Official Statement by the District has been duly authorized by its governing board.
By:
- 45 -
/s/ Michael Borgaard, Ed.D.
Superintendent
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX A
THE FINANCIAL STATEMENTS OF THE DISTRICT AS OF AND FOR THE YEAR ENDING JUNE 30, 2012
Elverta, California
FINANCIAL STATEMENTS
June 30,2012
ELVERTA J OINT ELEMENTARY SCHOOL DISTRICT
WITH SUPPLEMENTARY INFORMATION
For the Year Ended June 30,2012
TABLE OF CONTENTS
Page
Report of Independent Auditors
1-2
Management's Discussion and Analysis
3-7
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets
8
Statement of Activities
9
Fund Financial Statements:
Balance Sheet - Governmental Funds
10
Reconciliation of the Governmental Funds Balance Sheet to the
11
statement of Revenues, Expenditures and Change in Fund
Balances - Governmental Funds
12
Reconciliation of the Statement of Revenues, Expenditures and
Change in Fund Balances - Governmental Funds - to the
13
Statement of Fiduciary Net Assets - Agency Funds
14
Notes to Basic Financial Statements
15-27
Required Supplementary Information:
General Fund Budgetary Comparison Schedule
28
Deferred Maintenance Fund Budgetary Comparison Schedule
29
Note to Required Supplementary Information
30
Supplementary Information:
Combining Balance Sheet - All Non-Major Funds
31
Combining Statement of Revenues, Expenditures and Change in
Fund Balances - All Non-Major Funds
32
ELVERTA J OINT ELEMENTARY SCHOOL DISTRICT
WITH SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 201 2
TABLE OF CONTENTS
(Continued)
Page
Supplementary Information: (Continued)
Statement of Changes in Assets and Liabilities - Agency Fund
33
Organization
34
Schedule of Average Daily Attendance
35
Schedule of Instructional Time
36
Reconciliation of Unaudited Actual Financial Report with Audited
Financial Statements
37
Schedule of Financial Trends and Analysis - Unaudited
38
Schedule of Charter Schools
39
Notes to Supplementary Information
40
Independent Auditors' Report on Compliance with State Laws and
Regulations
41-43
Independent Auditors' 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
44-45
Findings and Recommendations:
Schedule of Audit Findings and QUestioned Costs
Status of Prior Year Findings and Recommendations
46-50
51
If.... Crowe Horwath.
Crowe Horwath LLP
Independent Member Crowe Horwath Intamatlonal
REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Elverta, California
We have audited the accompanying financial statements of the governmental activities, each major fund
and the aggregate remaining fund information of Elverta Joint Elementary School District, as of and for the
year ended June 30, 2012, which collectively comprise Elverta Joint Elementary School District's basic
financial statements as listed in the Table of Contents. These financial statements are the responsibility of
the District's management. Our responsibility is to express an opinions on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund and the aggregate remaining
fund information of Elverta Joint Elementary School District as of June 30, 2012, and the respective
changes in financial position for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Note 9 to the financial statements, the District restated its beginning net assets to correct
an error in the recognition of accreted interest on the capital appreciation General Obligation Bonds at July
1,2011.
In accordance with Government Auditing Standards, we have also issued our report dated December 11,
2011 on our consideration of Elverta Joint Elementary School District's internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on the internal control over financial reporting or on compliance. That report is an integral part
~~ ."ltG, Rr(fOrnM5i'br(is1!'''~rn~~\Wfi' ce1'f8in-provisloiis c5Ylaws,'-regulatio'ns, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis on pages 3 - 7 and the Required Supplementary Information, such as the
General Fund Budgetary Comparison Schedule and Deferred Maintenance Budgetary Comparison
Schedule on pages 28 - 29 be presented to supplement the financial statements, Such information,
although not a part of the financial statements, is required by the Governmental Accounting Standards
Board who considers it to be an essential part of the financial reporting for placing the financial statements
in an appropriate operational, economic or historical context. We have applied certain limited procedures
to the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for conSistency with management's responses to our inquiries,
the financial statements, and other knowledge we obtained during our audit of the financial statement. 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.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise Elverta Joint Elementary School District's basic financial statements. The other supplemental
information listed in the table of contents are presented for purposes of additional analysiS and are not a
required part of the financial statements. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the
financial statements. The other supplemental information listed in the table of contents, except for the
Schedule of Financial Trends and Analysis, have been subjected to the auditing procedures applied in the
audit of the 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 other
supplemental information listed in the table of contents, except for the Schedule of Financial Trends and
Analysis, are fairly stated in all material respects in relation to the financial statements as a whole. The
Schedule of Financial Trends and Analysis has not been subjected to the auditing procedures applied in
the audit of the financial statements, and accordingly, we do not express an opinion or provide any
assurance on it.
Crowe Horwath LLP
Sacramento, Califomia
December 11, 2011
2011-2012
Management's Discussion & Analysis
Management's Discussion and Analysis is management's view of Elverta Joint Elementary School District's (the
District) financial condition, and provides an opportunity to discuss important fiscal issues with the board and the
public. Accounting rules require this discussion and analysis, which makes reporting of finances similar to that of
private business.
Overview of the FinaDcial Statements
This annual report consists of three parts - management's discussion and analysis (this section), the basic fmancial
statements, and required supplementary information. The basic fmancial statements include two kinds of statements
that present different views of the District:
The first two statements are government-wide financial statements that provide both short-term and longterm information about the District's overall financial status.
The remaining statements are fund financial statements that focus on individual parts of the District
reporting the District's operation in more detail than the government-wide statements.
The governmental funds statements tell how basic services like regular and special education were financed
in the short term as well as what remains for future spending.
Fiduciary funds statements provide information about the financial relationships in which the District acts
solely as a trustee or agent for the benefit of others to whom the resources belong.
The basic financial statements also include notes that explain some of the information in the statements and provide
more detailed data. The statements are followed by a section of required supplementary information that further
explains and supports the fmancial statements with a comparison of the District's budget for the year. The chart
below summarizes the major features of the District's financial statements, including the portion of the District's
activities they cover and the types of information they contain. The remainder of this overview section of
management's discussion and analysis highlights the structure and contents of each of the statements.
Major Features of the District-Wide and Fund Financial Statements
Type of Statements
District-wide
Government Funds:
Statement
Fiduciary Funds:
Statement
Scope
Entire District, except fiduciary
activities
Required fmancial statements
·statement of net assets
·statement of activities
Accounting basis and
measurement focus
Accrual accounting and
economic resources focus
Instances in which the District
administers resources on behalf
of someone else, such as student
activity monies.
·statement of fiduciary net
assets
·statement of changes in
fiduciIIrJ net assets
Accrual accounting and
economic resources focus
Type of assetJliabi lity
information
All assets and liabilities, both
financial and capital, short-tenn
and long-term
Type of inflow/outflow
information
All revenues and expenses
during year, regardless of when
cash is received or paid
The activities of the District that
are not proprietary or fiduciary,
such as special education and
building maintenance
·balance sheet
·statement of revenues,
expenditures & changes in fund
balances
Modified accrual accounting
and current financial resources
focus
Only assets expected to be used
up and liabilities come due
during the year or soon
thereafter, no capital assets
included
Revenues for which cash is
received during or soon after the
end of the year, expenditures
when goods or services have
been received and payment is
due during the year or soon
thereafter
3
All assets and liabilities, both
short-term and long-term;
Standard's funds do not
currently contain nonfinancial
assets though they can
All revenues and expenses
during year, regardless of when
cash is received or paid
Government-wide Statements
The government-wide statements report information about the District as a whole using accounting methods similar
to those used by private-sector companies. The statement of net assets includes al/ of the District's assets and
liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless
of when cash is received or paid.
The two government-wide statements report the District's net assets and how they have changed. Net assets - the
difference between the District's assets and liabilities - is one way to measure the District's financial health or
position.
Over time, increases or decreases in the District's net assets are an indicator of whether its financial
position is improving or deteriorating, respectively.
To assess the overall health of the District you need to consider additional nonfinancial factors such as
changes in the District's property tax base and the condition of school buildings and other facilities.
In the government-wide fmancial statements the District's activities are divided into two categories:
Governmental activities - Most of the District's basic services are included here, such as regular and
special education, transportation, and administration. Property taxes and state formula aid finance most of
these activities.
Business-type activities - The District charges fees to help it cover the costs of certain services it provides.
The District does not have any business type or proprietary activities.
Fund Financial Statements
The fund financial statements provide more detailed information about the District's most significantjimcir - not the
District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and
spending on particular programs:
Some funds are required by State law and by bond covenants.
The District establishes other funds to control and manage money for particular purposes Oike repaying its
long-term debts) or to show that is properly using certain revenues Oike federal grants).
The District has two kinds of funds:
Governmentalfunds - Most of the District'S basic services are included in governmental funds, which
generally focus on (I) how cash and other financial assets that can readily be converted to cash flow in and
out and (2) the balances left at year-end that are available for spending. Consequently, the governmental
funds statements provide a detailed short-term view that helps determine whether there are more or fewer
financial resources that can be spent in the near future to finance the District's programs. Because this
information does not encompass the additional long-term focus of the District-wide statements, additional
information is provided at the bottom of the governmental funds statements explaining the relationship (or
differences) between them.
Fiduciary funds - The District is the trustee, or fiduciary, for assets that belong to others, such as student
activities funds. The District is responsible for ensuring that the assets reported in these funds are used
only for their intended purposes and by those to whom the assets belong. All of the District's fiduciary
activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary
net assets. These activities are excluded from the government-wide financial statements because the
District cannot use these assets to finance its operations.
4
Capital Assets
The District accounted for the value of capital assets and included these values as part of the government-wide
financial statements. A display of the value of all assets including buildings, land and equipment is included as well
as the depreciation. The table below summarizes the value of District assets.
Beginning Capital Assets
Change
Ending Capital Assets
$2,369,074.00
($175,381.00)
$2,193,693.00
Land is accounted for at original cost and is not depreciated. The value of the school buildings is the depreciated
cost. Both buildings are more than 25 years old. For modernized buildings, the value is the construction cost less
depreciation.
Current Assets
Cash and investments
Accounts receivable
Prepaid
Stores inventory
Capital assets net of accumulated depreciation
$
Total Assets
2010-201 I
688,342
402,233
0
693
2.369,074
2011-2012
$
$579,261
519,380
700
428
2,193,693
Change
(109,081)
117,147
700
(265)
075,381)
3,460,342
3,293.462
066,880)
101,070
43,724
128,556
9,892
27,486
(33,832)
7,935
235,690
237,279
Current Liabilities
Accounts payable
, Deferred revenue
Long-term liabilities
Due within one year
Due after one year
Total Liabilities
22,065
1,109,964
1,276,823
30,000
1,345,654
1,514,102
Net Assets
Invested in capital assets, net of related debt
Restricted
Unrestricted
1,237,045
422,329
524,145
818,039
461,133
500,188
Total Net Assets
$
5
2,183,519
$1,779,360
(419,006)
38,804
(23,957)
$
(404,159)
Program Revenues
Instruction
Instruction-related services
Pupil services
General administration
Plant services
Other
General revenue
Total Revenue
$
Expenses
Instruction
Instruction-related services
Pupil services
General administration
Plant services
Ancillary
Interest on long tenn debt
Other
Total Expenses
2010-2011
261,375
2,214
182,875
38,059
0
8,246
1,729,345
2.222,114
1,463,124
161,108
214,711
364,726
215,879
2,743
41,685
12,975
$
2,476,951
2011-2012
$
$242,651
1,223
253,042
37,537
486
6,250
1,715,721
2,256,910
1,472,823
168,013
263,433
248,797
181,571
3,813
76,628
12,975
$2,428,053
Change
(18,724)
(991)
70,167
(522)
486
(1,996)
(13,624}
34,796
9,699
6,905
48,722
(115,929)
(34,308)
1,070
34,943
0
$
(48,898)
Financial Condition of General Fund
Elverta Joint Elementary School District continues to maintain its solid financial condition. The following table
summarizes the General Fund financial statements:
Total Revenue
Total Expenditures
Other Financial Sources & Uses
Net Change
$2,039,240
2,055,767
15,227)
$(21,754)
This excellent financial condition is a result of good fiscal management by staff, in making reasonable and
significant budget cuts since student enrollment declined significantly and since state funding resources have also
declined. Future financial perfonnance will depend on management's ability to control expenses, as well as
maintaining and increasing revenues.
District Indebtedness
As of June 30, 2011 the District has incurred $1,375,654 of long-tenn liabilities through a General Obligation Bond
(Measure L) secured by property tax increases voted on by local residents. Modernization of the District's two
schools is complete.
6
Financial Issues
•
Per Pupil Funding: The state of California has experienced budget crises, causing a shortage in available
revenues at times. State school funding had begun to slow as state revenues weaken. The information
below relates to the District's history Revenue Limit Funding:
Year
Base
Revenue Limit
2001-02
2002-03
2003-04
2003-04*
2004-05
2004-05*
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
$4,426.50
$4,515.50
$4,600.50
$4,489.36
$4,732.06
$4,661.05
$5,280.63
$5,526.33
$5,781.18
$5,841.54
$6,091.54
$6,067.54
$6,204.54
ADA
329.26
360.02
358.91
358.91
306.08
306.08
311.44
314.94
314.51
302.88
281.67
263.45
260.29
Revenue
Limit
Increase
per ADA
$1,559,860.39
$1,638,531.31
$1,610,659.84
$167.00
$89.00
$85.00
$(26.14)
$131.56
$171.69
$619.58
$245.70
$254.85
$315.21
$250.00
($24.00)
$137.00
S I ,430,452.63
$1,644,599.41
$1,675,622.37
$1,749,809.10
$1,769,285.64
$1,715,804.07
$1,598,493 AI
$1,614,979.72
*Indicates adjustments due to deficit factors
•
Transportation Program: In 2011-12 revenue was $106,327 and expenses were $99,253.
•
It is anticipated that ADA will increase significantly in the 2012-2013 school year.
Contacting the District's Financial Management
If you have any questions regarding this report or need additional financial information, contact Michael Borgaard
Ed.D. at 916.991.2244.
7
BASIC FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS
June 30,201 2
Governmental
Activities
ASSETS
$
Cash and investments (Note 2)
Receivables
Stores inventory
Prepaid expenditures
Non~epreciable capital assets (Note 4)
Depreciable capital assets, net of accumulated
depreciation (Note 4)
579,261
519,380
428
700
26,074
2.167.619
3,293.462
Total assets
UABIUTIES
128,556
9,892
Accounts payable
Deferred revenue
Long-term liabilities (Note 5):
Due within one year
Due after one year
30,000
1,345,654
1,514,102
Total liabilities
NET ASSETS
818,039
461,133
500,188
Invested in capital assets, net of related debt
Restricted (Note 6)
Unrestricted
Total net assets
$
See accompanying notes to financial statements.
8
1,n9,360
STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2012
Charges
for
§lrvlel!
Exeenm
Govemmental activities (Note 4):
Instruction
Instruction-related services:
Supervision of Instruction
School site administration
Pupil services:
Home-ta-school transportation
Food services
All other pupil services
General administration:
Data processing
All other general administration
Plant services
Ancillary services
Interest on long-term lIabllllles
Other outgo
Total govemmental activities
$
1,472,823
17,800
$
Prszsrl!m Rev!n!!!s
Operating
Grants and
Csznlrllz I!SISZO!
$
2,540
165,473
131,541
120,173
11 ,719
11,092
237,705
181,571
3,813
76,628
12,975
$
2,428,053
Net (Expense)
RevenLl8tl and
Changes In
Net Ass!!!
224,851
Capital
Grants and
Contribution!
$
Govemmentsl
A!<I~ltles
$
1,223
(1,317)
(165,473)
14,481
91,311
105,881
41,369
(40,230)
189
29,650
2,998
64
34,539
422
(11,092)
(200,168)
(181,085)
(3,813)
(76,628)
(6,725)
§,250
$
35,343
$
505,846
(1,886,864)
$
General revenues:
Taxes and subventions:
Taxes levied for general purposes
Taxes levied for debt service
Federal and state aid not restricted to specific purposes
Interest and investment earnings
Miscellaneous
601,034
77,096
1,020,925
3,015
1~,651
Total general revenues
1,715,Z21
Change in net assets
(171,143)
Net assets, Juty 1, 2011 . as previously reported
2,183,519
Restatement (Note 9)
(233,016)
Net assets, Juty 1, 2011, as restated
Net assets, June 30, 2012
9
(1 ,230,172)
1,9§O,503
I
1,779,360
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2012
Deferred
Maintenance
Fund
General
E!!!l!!
Capital
Facilities
Fynd
All
Non-Major
Total
Governmental
EYl!!t!
f!!!!9!
ASSETS
Cash and investments:
Cash in County Treasury
Cash on hand and in banks
Cash in revolving fund
Receivables
Due from other funds
Stores inventory
Total assets
$
134,593
2,050
1,000
493,358
700
5,773
123,086
$
$
196,328
125
$
215
122,154
50
$
576,161
2,100
1,000
519,380
700
5,773
42§
25,682
428
$
637,474
~
$
106,850
$
1~3,211
~
196,54~
~
148,~14
~
1,105,542
$
$
~,850
3,586
5,773
42
110,436
5,773
9,892
11§ 7QO
~,401
12§,101
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
Due to other funds
Deferred revenue
Total liabilities
Fund balances:
Nonspendable
Restricted
Assigned
Unassigned
1,700
2,466
298,399
218,209
520,774
Total fund balances
Total liabilities and fund
balances
$
$
637,474
i
123,211
196,543
428
138,485
2,128
460,705
298,399
218,209
12~,211
196,54~
138,913
979,441
123,211
J
196,543
10
J
148,314
~
1,105,542
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2012
$
Total fund balances - Governmental Funds
979,441
Amounts reported for governmental activities in the statement of
net assets are different because:
Capital assets used for governmental activities are not financial
resources and, therefore, are not reported as assets in
governmental funds. The cost of the assets is $4,478,118
and the accumulated depreciation is $2,284,425 (Note 4).
2,193,693
Unmatured interest on long-term debt is not recognized until
the period in which it matures and is paid and is an additional
liability.
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported as liabilities in the
funds. Long-term liabilities at June 30, 2012 consisted of
Note 5):
General Obligation Bonds
Accreted interest on bonds
(18,120)
(1,109,964)
(265,690)
(1,375,654)
$
Total net assets - governmental activities
See accompanying notes to financial statements,
11
1,779,360
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGE IN FUND BALANCES
GOVERNMENTAL FUNDS
Deferred
Maintenance
Fund
General
EHru!
Revenues:
Revenue limit sources:
State apportionment
Local sources
$
712,128
§Q1,074
$
All
Non-Major
Funds
Capital
Facilities
Fund
$
$
Total
Governmental
Funds
$
1,~13,2Q2
l,31~,2Q2
Total revenue limit
Federal sourcas
Other state sources
Other local sources
Total revenues
Expenditures:
Certificated salaries
Classified salaries
Employee benefits
Books and supplies
Contract services and operating
expenditures
Other outgo
Debt service:
Principal
Interest
117,121
434,376
174,541
11,456
~13
2,039,240
11,869
2,258
103,124
8,951
91,468
220,245
454,783
268,680
2,258
203,543
2,256,910
38,981
13,525
49,803
1,008,646
336,068
372,082
147,086
1,008,646
297,087
358,557
97,283
281,219
12,975
2,055,767
Total expenditures
(Deficiency) excess of
revenues (under) over
expenditures
712,128
6Ql,Q74
17,968
299,187
12,975
30,000
35,282
30,000
35,282
185,559
2,~41,326
1Z,284
15,584
(5,773)
16,773
(16,773)
(16 fi27)
11,~6§}
Other financing sources (uses):
Operating transfers in
Operating transfers out
5,773
(11,OOO)
11,000
Total other sources (uses)
(5,227)
11,000
(21,754)
22,869
2,258
12,211
15,584
§42,528
100,342
194,285
j2§,ZQ2
~§3,857
Net change in fund balances
Fund balances, July 1, 2011
Fund balances, June 30, 2012
$
520,774
~
12~,211
2,25~
(5,Z13)
~
196,543
12
~
l3~,913
~
979,!l41
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
$
Net change in fund balances - Total Governmental Funds
15,584
Amounts reported for governmental activities in the statement of
activities are different because:
Depreciation of capital assets is an expense that is not
recorded in the governmental funds (Note 4).
$
Unmatured interest on long-term debt is not recognized until
the period in which it matures and is paid and is an additional
liability.
(175,381)
(737)
Repayments of long-term debt are reported as expenditures. In
the government-wide statements. repayments of long term
debt are reported as reductions of liabilities (Note 5).
30,000
Accreted interest is an expense that is not recorded in the
governmental funds (Note 5).
(40,609)
(186,727)
$
Change in net assets of governmental activities
13
(171.143)
STATEMENT OF FIDUCIARY NET ASSETS
AGENCY FUNDS
June 30, 2012
ASSETS
Cash on hand and in banks (Note 2)
$
18.019
$
18.019
LIABILITIES
Due to student groups
14
NOTES TO BASIC FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Elverta Joint Elementary School District (the "District") accounts for its financial
transactions in accordance with the policies and procedures of the California
Department of Education's California School Accounting Manual. The accounting
policies of the District conform to accounting principles generally accepted in the United
States of America as prescribed by the Governmental Accounting Standards Board.
The following is a summary of the more significant policies:
Reporting Entitv
The Board of Trustees is the level of government which has governance responsibilities
over all activities related to public elementary school education in the District.
Basis of Presentation - Financial Statements
The basic financial statements include a Management's Discussion and Analysis
(MD & A) section providing an analysis of the District's overall financial position and
results of operations, financial statements prepared using full accrual accounting for all
of the District's activities, including infrastructure, and a focus on the major funds.
Basis of Presentation - Government-Wide Financial Statements
The Statement of Net Assets and the Statement of Activities display information about
the reporting government as a whole. Fiduciary funds are not included in the
government-wide financial statements. Fiduciary funds are reported only in the
Statement of Fiduciary Net Assets at the fund financial statement level.
The Statement of Net Assets and the Statement of Activities are prepared using the
economic resources measurement focus and the accrual basis of accounting.
Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and
exchange-like transactions are recognized when the exchange takes place. Revenues,
expenses, gains, losses, assets and liabilities resulting from nonexchange transactions
are recognized in accordance with the requirements of Governmental Accounting
Standards Board Codification Section (GASB Cod. Sec.) NSO.11B-.121.
Program revenues: Program revenues included in the Statement of Activities derive
directly from the program itself or from parties outside the District's taxpayers or
citizenry, as a whole; program revenues reduce the cost of the function to be financed
from the District's general revenues.
Allocation of indirect expenses: The District reports all direct expenses by function in
the Statement of Activities. Direct expenses are those that are clearly identifiable with a
function. DepreCiation expense is specifically identified by function and is included in
the direct expense of each function.
Interest on general long-term liabilities is
considered an indirect expense and is reported separately on the Statement of
Activities.
15
(Continued)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Presentation - Fund Accounting
The accounts of the District are organized on the basis of funds or account groups, each
of which is considered a separate accounting entity. The operations of each fund are
accounted for with a separate set of self-balancing accounts that comprise its assets,
liabilities, fund balance, revenues and expenditures. District resources are allocated to
and accounted for in individual funds based upon the purpose for which they are to be
spent and the means by which spending activities are controlled. The District's
accounts are organized into two broad categories which, in aggregate, include five fund
types as follows:
A -
Governmental Fund Types
1 -
General Fund:
The General Fund is the general operating fund of the District and
accounts for all revenues and expenditures of the District not
encompassed within other funds. All general tax revenues and other
receipts that are not allocated by law or contractual agreement to some
other fund are accounted for in this fund. General operating and capital
improvement expenditures that are not paid through other funds are paid
from the General Fund. For financial reporting purposes, the current year
activity and year-end balances of the Special Reserve for Other than
Capital Outlay Fund is combined with the General Fund.
2 -
SpeCial Revenue Funds:
The Special Revenue Funds are used to account for the proceeds of
specifiC revenue sources that are legally restricted to expenditures for
specified purposes. This classification includes the Deferred Maintenance
and Cafeteria Funds.
3 -
Capital Projects Funds:
The Capital Projects Funds are used to account for resources used for
the acquisition of capital facilities by the District. This classification
includes the Capital Facilities and Special Reserve for Capital Outlay
Projects Funds.
4 -
Debt Service Funds:
The Bond Interest and Redemption Fund is used to account for the
accumulation of resources for, and the repayment of, General Obligation
Bond liabilities.
16
(Continued)
1.
Basis of Presentation - Fund Accounting (Continued)
B
-
Fiduciary Fund Types
1
- Agency Funds:
Agency Funds are used to account for the assets of others for which the
District acts as an agent. The District maintains one Agency Fund, the
Student Body Fund.
Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses are
recognized in the accounts and reported in the financial statements. Basis of
accounting relates to the timing of the measurement made, regardless of the
measurement focus applied.
Accrual
Governmental activities in the government-wide financial statements and fiduciary fund
financial statements are presented on the accrual basis of accounting. Revenues are
recognized when earned and expenses are recognized when incurred.
Modified Accrual
The governmental funds financial statements are presented on the modified accrual
basis of accounting. Under the modified accrual basis of accounting, revenues are
recorded when susceptible to accrual; Le., both measurable and available. "Available"
means collectible within the current period or within 60 days after year end.
Expenditures are generally recognized under the modified accrual basis of accounting
when the related liability is incurred. The exception to this general rule is that principal
and interest on general obligation long-term liabilities, if any, is recognized when due.
Budgets and Budgetary Accounting
By state law, the Board of Trustees must adopt a final budget by July 1. A public
hearing is conducted to receive comments prior to adoption. The Board of Trustees
satisfied these requirements.
Compensated Absences
The District has no compensated absences benefits that are recorded as a liability of the
District. The liability is for the earned but unused benefits.
17
(Continued)
1.
Accumulated Sick Leave
Sick leave benefits are not recognized as liabilities of the District. The District's policy
is to record sick leave as an operating expense in the period taken since such benefits
do not vest nor is payment probable; however, unused sick leave is added to the
creditable service period for calculation of retirement benefits when the employee
retires.
Stores Inventory
Inventory is valued at cost. Inventory in the Cafeteria Fund consists of expendable
supplies held for consumption. The cost is recorded as an expenditure at the time
individual inventory items are consumed.
Capital Assets
Capital assets purchased or acquired, with an original cost of $5,000 or more, are
recorded at historical cost or estimated historical cost. Contributed assets are reported
at fair market value as of the date received. Additions, improvements and other capital
outlay that significantly extend the useful life of an asset are capitalized. Other costs
incurred for repairs and maintenance are expensed as incurred. Capital assets are
depreCiated using the straight-line method over 4 - 30 years depending on asset types.
Deferred Revenue
Revenue from federal, state, and local special projects and programs is recognized
when qualified expenditures have been incurred. Funds received but not earned are
recorded as deferred revenue until earned.
Restricted Net Assets
Restrictions of the ending net assets indicate the portions of net assets not appropriable
for expenditure or amounts legally segregated for a specific future use. The restriction
for unspent categorical revenues represents the portion of net assets restricted to
specific program expenditures. The restriction for special revenue programs, capital
projects and debt service represents the portion of net assets restricted for special
revenue programs, capital projects and for the retirement of debt, respectively. It is the
District's policy to first use restricted net assets when allowable expenditures are
incurred.
18
(Continued)
1.
Fund Balance Classifications
Governmental Accounting Standards Board Codification Sections 1300 and 1800, Fund
Balance Reporting and Governmental Fund Type Definitions (GASB Cod. Sec. 1300
and 1800) implements a five-tier fund balance classification hierarchy that depicts the
extent to which a government is bound by spending constraints imposed on the use of
its resources.
The five classifications, discussed in more detail below, are
nonspendable, restricted, committed, assigned and unassigned.
A-
Nonspendable Fund Balance:
The nonspendable fund balance classification reflects amounts that are not in
spendable form, such as revolving fund cash, prepaid expenditures and stores
inventory.
B-
Restricted Fund Balance:
The restricted fund balance classification reflects amounts subject to externally
imposed and legally enforceable constraints. Such constraints may be imposed
by creditors, grantors, contributors, or laws or regulations of other governments,
or may be imposed by law through constitutional provisions or enabling
legislation. These are the same restrictions used to determine restricted net
assets as reported in the government-wide and fiduciary trust fund statements.
C-
Committed Fund Balance:
The committed fund balance classification reflects amounts subject to internal
constraints self-imposed by formal action of the Board of Trustees. The
constraints giving rise to committed fund balance must be imposed no later than
the end of the reporting period. The actual amounts may be determined
subsequent to that date but prior to the issuance of the financial statements.
Formal action by the Board of Trustees is required to remove any commitment
from any fund balance. At June 30, 2012, the District had no committed fund
balances.
D-
Assigned Fund Balance:
The assigned fund balance classification reflects amounts that the District's
Board of Trustees has approved to be used for speCific purposes, based on the
District's intent related to those specific purposes. The Board of Trustees can
designate personnel with the authority to assign fund balances, however, as of
June 30,2012, no such designation has occurred.
E-
Unassigned Fund Balance:
In the General Fund only, the unassigned fund balance classification reflects the
residual balance that has not been assigned to other funds and that is not
restricted, committed, or assigned to specific purposes.
19
(Continued)
1.
Fund Balance Classifications (Continued)
E-
Unassigned Fund Balance: (Continued)
In any fund other than the General Fund, a positive unassigned fund balance is
never reported because amounts in any other fund are assumed to have been
assigned, at least, to the purpose of that fund. However, deficits in any fund,
including the General Fund that cannot be eliminated by reducing or eliminating
amounts assigned to other purposes are reported as negative unassigned fund
balance.
Fund Balance Policy
The District has an expenditure policy relating to fund balances. For purposes of fund
balance classifications, expenditures are to be spent from restricted fund balances first,
followed in order by committed fund balances (if any), assigned fund balances and lastly
unassigned fund balances.
While GASB Cod. Sec. 1300 and 1800 do not require Districts to establish a minimum
fund balance policy or a stabilization arrangement, GASB Cod. Sec. 1300 and 1800 do
require the disclosure of a minimum fund balance policy and stabilization arrangements,
if they have been adopted by the Board of Trustees. At June 30, 2012, the District has
not established a minimum fund balance policy nor has it established a stabilization
arrangement.
Property Taxes
Secured property taxes are attached as an enforceable lien on property as of March 1.
Taxes are due in two installments on or before November 15 and March 15. Unsecured
property taxes are due in one installment on or before August 31. The Counties of
Sacramento and Placer bill and collect taxes for the District. Tax revenues are
recognized by the District when received.
Encumbrances
Encumbrance accounting is used in all budgeted funds to reserve portions of applicable
appropriations for which commitments have been made. Encumbrances are recorded
for purchase orders, contracts, and other commitments when they are written.
Encumbrances are liquidated when the commitments are paid. All encumbrances are
liquidated at June 30.
Eliminations and Reclassifications
In the process of aggregating data for the Statement of Net Assets and the Statement of
Activities, some amounts reported as interfund activity and balances in the funds were
eliminated or reclassified. Interfund receivables and payables were eliminated to
minimize the "grossing up" effect on assets and liabilities within the governmental
activities column.
20
(Continued)
1.
Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenditures
during the reporting period. Accordingly, actual results may differ from those estimates.
2.
CASH AND INVESTMENTS
Cash and investments at June 30, 2012 consisted of the following:
Governmental
Activities
Pooled Fund:
$
Deposits:
Revolving cash fund
Total
$
576,161
Fiduciary
Activities
$
2,100
1,000
18,019
579,261
=$===18==,0=:1=9
In accordance with Education Code Section 41001, the District maintains substantially
all of its cash in the Sacramento County Treasury, The County pools the funds with
those of other districts and agencies in the County and invests the cash, These pooled
funds are carried at cost which approximates fair value, Interest earned is deposited
monthly into participating funds. Any investment losses are proportionately shared by all
funds in the pool.
Because the District's depOSits are maintained in a recognized pooled investment fund
under the care of a third party and the District's share of the pool does not consist of
specific, identifiable investment securities owned by the District, no disclosure of the
individual depOSits and investments or related custodial credit risk classifications is
required,
In accordance with applicable state laws, the Sacramento County Treasurer may invest
in derivative securities. However, at June 30, 2012, the Sacramento County Treasurer
has represented that the Treasurer's pooled investment fund contained no derivatives or
other investments with similar risk profiles.
21
(Continued)
2.
CASH AND INVESTMENTS (Continued)
Deposits - Custodial Credit Risk
The District limits custodial credit risk by ensuring uninsured balances are collateralized
by the respective financial institution. Under Section 343 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, interest-bearing cash balances held in banks are
insured up to $250,000 and non-interest bearing cash balances held in banks are fully
insured by the Federal Deposit Insurance Corporation (FDIC) and are collateralized by
the respective financial institution. At June 30, 2012, the carrying amount of the
District's accounts was $21,119 and the bank balances were $20,964, all of which is
insured by the FDIC.
Interest Rate Risk
The District does not have a formal investment policy that limits cash and investment
maturities as a means of managing its exposure to fair value losses arising from
increasing interest rates. At June 30, 2012, the District had no significant interest rate
risk related to cash and investments held.
Credit Risk
The District does not have a formal investment policy that limits its investment choices
other than the limitations of state law.
Concentration of Credit Risk
The District does not place limits on the amount it may invest in any on issuer. At
June 30, 2012, the District had no concentration of credit risk.
3.
INTERFUND TRANSACTIONS
Interfund Activity
Transactions between funds of the District are recorded as interfund transfers. The
unpaid balances at year end, as a result of such transactions, are shown as due to and
due from other funds.
Interfund Receivables/Payables
Interfund receivable and payable balances at June 30,2012 were as follows:
Interfund
Payable
Interfund
Receivable
Fund
Major Fund:
General Fund
$
5,773
$
Non-Major Fund:
Cafeteria Fund
5.773
$
22
5,773
i
5,773
(Continued)
3.
INTERFUND TRANSACTIONS (Continued)
Interfund Transfers
Interfund transfers for the current fiscal year were as follows:
Transfer from the General Fund to the Deferred Maintenance
Fund to account for the current year allocation of deferred
maintenance funding.
Transfer from the Cafeteria Fund to the General Fund to
allocate indirect costs.
$
5.773
$
4.
11,000
16,773
CAPITAL ASSETS
A schedule of changes in capital assets for the year ended June 30, 2012 is shown
below:
Balance
July 1,
2011
Non-depreciable:
Land
Depreciable:
Improvement of sites
Buildings
Equipment
Totals, at cost
Less accumulated depreCiation:
Improvement of sites
Buildings
Equipment
Total accumulated
depreciation
Capital assets, net
26,074
$
$
Additions
$
Balance
June 30
2012
Deductions
$
$
26,074
163,706
3,716,673
57l,665
163,706
3,716,673
4,478,118
4,478,118
~71,665
(37,130)
(1,571,685)
(500,229)
(8,185)
(155,716)
(1l,480)
(45,315)
(1,727,401 )
(511,709)
(2,109,044)
(175,381)
(2,284,425)
2,369,074
$
(175381) $
$
2,193,693
Depreciation expense was charged to governmental activities as follows:
Instruction
Home-to-school transportation
Food services
Plant services
Total depreciation expense
23
$
163,901
7,273
425
3,782
i
175 , 3~ 1
(Continued)
6.
LONG·TERM LIABILITIES
General Obligations Bonds, Series A
On June 3, 2003, the District issued General Obligation Bonds in the amount of
$1,217,904 to fund the modernization and construction of classrooms, expand student
support facilities and renovate and improve certain facilities of the District. The General
Obligation Bonds are authorized pursuant to the special election of the registered voters
held on November 5, 2002, and are payable from the ad valorem taxes to be levied
annually upon all property subject to taxation by the District.
The Bonds mature serially in varying amounts during the succeeding years through
2029, with interest rates ranging from 1.75% to 5.10%. Future payments are scheduled
as follows:
Year Ended
June 30,
Principal
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2029
Interest
$
20,965
23,288
25,932
19,261
21,369
118,147
426,002
455.000
$
$
1,109.964
$
Total
$
66,339
73,678
85,836
88,946
97,483
624,855
853,799
473,886
1.254,858 $
2,364,822
45,374
50,390
59,904
69,685
76,114
506,708
427,797
18,886
Schedule of Changes in Long-Term Liabilities
A schedule of changes in long-term liabilities for the fiscal year ended June 30, 2012, is
shown below:
Balance
July 1,
2011,
It!! [!Il!!~g
General Obligation Bonda
Accreted interest
S
Totala
I
AddHions
1,132,029
233016
S
1,385,045
I
t2edy5iljsml
S
i
~O,OOO
Amounts
Due Within
ZQR
Qotlar
S
1,109,964
285690
S
20,965
9,035
i
1,3ZS,6M
I
~O,OOO
a~~
40,609
40,609
22,065
Balance
June 30.
Payments on the General Obligation Bonds are made from the Bond Interest and
Redemption Fund.
24
(Continued)
6.
NET ASSETS I FUND BALANCES
The restricted net assets consisted of the following at June 30,2012:
Governmental
Activities
Unspent categorical revenues
Special revenue programs
Capital projects
Debt service
$
2,466
151,461
252,564
54,642
$
461,133
Fund balances, by category, at June 30, 2012 consisted of the following:
Deferred
Maintenance
Fund
General
Fund
Nonspendable:
Revolving cash fund
Stores inventory
$
Subtotal nonspendable
EYnQ
Total
428
1,000
700
42§
428
2,128
196,543
56,021
27,822
54,642
2,466
252,564
151,033
54,642
1~6,543
1~!l,48§
46Q,7Q~
$
$
All
Non-Major
Funds
$
1,700
Restricted:
Unspent categorical
revenues
Capital projects
Special revenue programs
Debt service
$
2,466
123,211
2,46§
Subtotal restricted
Assigned:
Trigger cuts
Reserve for declining
enrollment
Reserve for budget cuts
Other aSSignments
Subtotal assigned
Unassigned:
Designated for economic
uncertainty
Undesignated
Subtotal unassigned
Total fund balances
1,000
700
Capital
Facilities
J
123,211
114,400
114,400
100,000
75,000
100,000
75,000
8,99~
8,99~
298,399
29~,399
206,100
12,109
206,100
12,109
21§,~09
218,2ill1
520,77~
J
123211
25
I
19§ 54~
i
138,~1~
J
f.!79,441
(Continued)
7.
EMPLOYEE RETIREMENT SYSTEMS
Qualified employees are covered under multiple-employer defined benefit pension plans
maintained by agencies of the State of California. Certificated employees are members
of the State Teachers' Retirement System (STRS), and classified employees are
members of the California Public Employees' Retirement System (CaIPERS).
Plan Description and Provisions
California Public Employees' Retirement System (CaIPERS)
Plan Description
The District contributes to the School Employer Pool under the California Public
Employees' Retirement System (CaIPERS), a cost-sharing multiple-employer public
employee retirement system defined benefit pension plan administered by CaIPERS.
The plan provides retirement and disability benefits, annual cost-of-living adjustments,
and death benefits to plan members and beneficiaries. Benefit provisions are
established by state statutes, as legislatively amended, within the Public Employees'
Retirement Law. CalPERS issues a separate comprehensive annual financial report
that includes financial statements and required supplementary information. Copies of
the CalPERS annual financial report may be obtained from the CalPERS Executive
Office, 400 Q Street, Sacramento, California 95811.
Funding Policy
Active plan members are required to contribute 7.0% of their salary, and the District is
required to contribute an actuarially determined rate. The actuarial methods and
assumptions used for determining the rate are those adopted by the CalPERS Board of
Administration. The required employer contribution rate for fiscal year 2011-2012 was
10.923% of annual payroll. The contribution requirements of the plan members are
established by state statute. The District's contributions to CalPERS for the fiscal years
ending June 30, 2010, 2011 and 2012 were $32,565, $31,958 and $34,960,
respectively, and equal 100% of the required contributions for each year.
State Teachers' Retirement System (STRS)
Plan Description
The District contributes to the State Teachers' Retirement System (STRS), a costsharing multiple-employer public employee retirement system defined benefit pension
plan administered by STRS. The plan provides retirement, disability and survivor
benefits to beneficiaries. Benefit provisions are established by state statutes, as
legislatively amended, within the State Teachers' Retirement Law. STRS issues a
separate comprehensive annual financial report that includes financial statements and
required supplementary information. Copies of the STRS annual financial report may be
obtained from the STRS Executive Office, 100 Waterfront Place, West Sacramento,
California 95605.
26
(Continued)
7.
EMPLOYEE RETIREMENT SYSTEMS (Continued)
Funding Policy
Active plan members are required to contribute 8.0% of their salary. The required
employer contribution rate for fiscal year 2011-2012 was 8.25% of annual payroll. The
contribution requirements of the plan members are established by state statute. The
District's contributions to STRS for the fiscal years ending June 30, 2010, 2011 and
2012 were $95,856, $75,577 and $87,860, respectively, and equal 100% of the required
contributions for each year.
8.
JOINT POWERS AGREEMENTS
Schools Insurance Authoritv
The District is a member of a Joint Powers Authority, Schools Insurance Authority (SIA),
for the operation of a common risk management and insurance program. The Authority
is governed by a Governing Board consisting of representatives of member districts.
The Governing Board controls the operations of SIA, including selections of
management and approval of operating budgets.
Condensed financial information for SIA for the year ended June 30,2012 is as follows:
Total assets
Total liabilities
Net assets
Total revenues
Total expenses
$ 105,752,954
$ 42,394,849
$ 63,358,105
$ 40,730,014
$ 36,225,931
The relationship between the District and the Joint Powers Authority is such that the
Joint Powers Authority is not a component unit of the District for financial reporting
purposes.
9.
RESTATEMENT
During the year ended June 30, 2012 District management determined that accreted
interest on the Capital Appreciation General Obligation Bonds had not been accrued
since the issuance of the related bonds, totaling $233,016 at June 30, 2011.
Accordingly, long-term liabilities were increased and net assets were decreased by this
amount as of July 1, 2011.
10.
CONTINGENCIES
The District is subject to legal proceedings and claims which arise in the ordinary course
of business. In the opinion of management, the amount of ultimate liability with respect
to these actions will not materially affect the financial position or results of operations of
the District.
Also, the District has received state and federal funds for specific purposes that are
subject to review or audit by the grantor agencies. Although such audits could generate
expenditure disallowances under terms of the grants, it is believed that any required
reimbursements will not be material.
27
REQUIRED SUPPLEMENTARY INFORMATION
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
Budget
OrigInal
Revenues:
Revenue limit sources:
State apportionment
Local sources
$
Total revenue limit
Federal sources
Other state sources
Other local sources
Total revenues
Expenditures:
Certificated salaries
Classified salaries
Employee benefits
Books and supplies
expenditures
Other outgo
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
662,098
665,810
FInal
$
712,128
601,074
Actual
$
712,128
601,074
1,327,9Q8
1,313,2Q2
1,313,202
114,834
405,133
1§~,504
117,121
434,376
174,541
117,121
434,376
lH,541
2,012,379
2,039,24Q
2,039,240
968,545
302,520
327,161
99,870
1,008,646
297,087
358,557
97,283
1,008,646
297,087
358,557
97,283
275,599
12,975
281,219
12,975
281,219
12,975
1 9~6,670
2055,767
2 Q55,767
25,70~
(16,527)
(16,527)
4,708
(11,000)
5,773
(11,000)
5,773
(11,000)
Total other financing (uses)
(6,292)
(5,227)
(5,227)
Net change in fund balance
19,417
(21,754)
(21,754)
Other financing sources (uses):
~~,~~~
Fund balance, July 1, 2011
Fund balance, June 30, 2012
$
561.!:145
520,774
~
28
$
~~,~~~
§42,~~~
i
Variance
Favorable
(Unfavorabl!l
520,774
i
=
DEFERRED MAINTENANCE FUND
BUDGETARY COMPARISON SCHEDULE
For the Year Ended June 3D, 2012
Buslget
Original
Revenues:
Other state sources
Other local sources
$
Total revenues
Actual
41~
11 ,456
413
1] 869
11,86!i!
(48,004)
11,869
11,869
11,000
:11,OQQ
11,QOO
(37,004)
22,869
22,869
100,342
100,342
1QO,342
$
11,996
Expenditures:
expenditures
11,456
$
$
§O,OOO
(Deficiency) excess of revenues
(under) over expenditures
Other financing sources:
Net change in fund balance
Fund balance, July 1, 2011
Fund balance, June 30, 2012
11,496
5QO
Final
Variance
Favorable
,Unfavo!!!zlel
$
63,338
!
123,211
i
29
1231211
!
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
1.
PURPOSE OF SCHEDULES
A
Budgetary Comparison Schedule
The District employs budget control by object codes and by individual
appropriation accounts. Budgets are prepared on the modified accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America as prescribed by the Governmental Accounting
Standards Board. The budgets are revised during the year by the Board of
Trustees to provide for revised priorities. Expenditures cannot legally exceed
appropriations by major object code. The originally adopted and final revised
budgets for the General Fund and Deferred Maintenance Fund are presented
as Required Supplementary Information. The basis of budgeting is the same
asGAAP.
30
SUPPLEMENTARY INFORMATION
ELVERTA JO.INT ELEMENTARY SCHOOL DISTRICT
COMBINING BALANCE SHEET
ALL NON-MAJOR FUNDS
June 30, 2012
Cafeteria
Fund
Special
Bond
Reserve for
Capital Outlay Interest and
Redemption
Projects
Fund
E.!!.w!
!2!!J
ASSETS
$
Receivables
Stores inventory
Total assets
11,663
50
25,468
428
$
$
37.609
$
$
3,586
5,773
$
55,960
$
122,154
50
25,682
428
$
148.314
$
42
3,586
5,773
42
42
9.401
153
61
56.021
$
54,531
$
54. 684
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
Due to other funds
Deferred revenue
Total liabilities
$
9.359
Fund balances:
Nonspendable
Restricted
Total fund balances
Total liabilities and fund
balances
$
31
428
27.822
56.021
54. 642
428
138.485
28.250
56.021
54.642
138.913
37.609
!
56.021
!
54.684
i
148.314
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES
ALL NON-MAJOR FUNDS
Cafeteria
Fund
Revenues:
Federal sources
Other state sources
Other local sources
$
Total revenues
Expenditures:
Classified salaries
Employee benefits
Books and supplies
expenditures
Debt service:
Principal
Interest
Special
Reserve for
Bond
Capital Outlay Interest and
Redemption
Projects
Fund
Fund
103,124 $
7,760
$
Excess (defiCiency) of
revenues over (under)
expenditures
15,~61
214
126,145
2:]4
77,184
Fund balances, July 1, 2011
Fund balances, June 30,2012
$
32
203,543
38,981
13,525
49,803
17,968
17,968
214
30,000
30,000
~5,2§2
~~,~
65,2§2
1~5,~59
11,902
17,984
(5,773)
Net change in fund balances
103,124
8,951
9:],468
38,981
13,525
49,803
5,868
Other financing uses:
$
1,191
75,993
12Q,277
Total expenditures
Ism!l
(5,773)
95
214
11,902
12,211
2§,155
55,807
42,740
126,702
28 125g
!
56 1021
!
541642
!
1~8,91~
STATEMENT OF CHANGES IN ASSETS AND U ABIUTIES
AGENCY FUND
Balance
J une 30,
Balance
July 1,
201 1
Additions
Assets:
$
16,222 $
Liabilities:
Due to student groups
!
J6.222
33
!
~
Deductions
1,797 $
$
18,019
!
i
1§.~J9
'.797
ORGANIZATION
June 30, 2012
Elverta Joint Elementary School District was established in approximately 1880 and is
comprised of an area of approximately 18 square miles located in Sacramento and Placer
Counties. There were no changes in the boundaries of the District during the current year. The
District is comprised of one elementary and one middle school.
BOARD OF TRUSTEES
Name
Office
Term Expires
Ms. Sandee C. Fe"ey
Mr. Raymond Lippincott
Mr. Richard Currier
Ms. Rhonda M. Klarcyk
President
Vice President
Clerk
Member
November 2014
November 2012
November 2012
November 2012
ADMINISTRATION
Michael Borgaard, Ed.D.
Superintendent
34
SCHEDULE OF AVERAGE DAILY ATTENDANCE
Second
Period
Report
Kindergarten
First through Third
Fourth through Sixth
Seventh and Eighth
Total
Annual
Report
28
28
83
83
92
92
57
57
260
260
See accompanying notes to supplementary information.
35
SCHEDULE OF INSTRUCTIONAL TIME
1986-87
Minutes
Require~
1982-83
Actual
Minutes
2011-12
Actual
Minutes
Kindergarten
36,000
34,125
Grade 1
50,400
Grade 2
Number
of Days
Traditional
Calendar
Status
56,550
180
In Compliance
44,125
58,725
180
In Compliance
50,400
44,125
58,725
180
In Compliance
Grade 3
50,400
44,125
58,725
180
In Compliance
Grade 4
54,000
51,625
58,725
180
In Compliance
Grade 5
54,000
51,625
58,725
180
In Compliance
Grade 6
54,000
51,625
61,290
180
In Compliance
Grade 7
54,000
58,940
61,290
180
In Compliance
Grade 8
54,000
58,940
61,290
180
In Compliance
Grade Level
36
RECONCILIATION OF UNAUDITED ACTUAL FINANCIAL REPORT
WITH AUDITED FINANCIAL STATEMENTS
Cafeteria
Fund
June 30, 2012 Unaudited Financial Report Ending Fund Balance
$
Adjustment to accrue for National School Lunch Program reimbursement
revenue.
June 30, 2012 Audited Financial Statements Ending Fund Balance
37
17,792
10.458
~
28,2~0
SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS
(UNAUDITED)
(Budgeted)
2013
2012
2011
2010
General Fund
Revenues and other
financing sources
$
1,~70,412
i
2,045,Q1~
i
2,043,992
i
2,Q52,471
Expenditures
Other uses and transfers out
2,040,364
11,000
2,055,767
11,000
2,163,226
11,000
2,047,773
33,275
Total outgo
2,Q~1,~64
2,066,767
2,17~,226
2,081,Q48
Change in fund balance
$
(180,952)
i
(21,754)
i
(130,234)
i
Ending fund balance
$
339,822
$
520,774
$
542,528
$
672,762
Available reserves
$
330,372
~
21~,2Q~
~
3~7,9~3
~
~17,134
Designated for economic
uncertainties
$
i
206,100
i
217,000
i
103,820
Undesignated fund balance
$
$
12,1Q9
$
120,943
$
113,314
Available reserves as a
percentage of total outgo
33Q,372
16.1%
15.5%
10.6%
(28,~77)
10.4%
Total Funds
Total long-term liabilities
$
Average daily attendance
at P-2
1,345,654
$
260
1,375,654
i
1,365,045
220
222
$
1,158,516
263
The General Fund, including the Special Reserve for Other Than Capital Outlay Projects Fund, fund
balance has decreased by $180,565 over the past three fiscal years. The fiscal year 2011-12 budget
projects a decrease of $180,952. For a district this size, the State of California recommends available
reserves of at least 4% of total General Fund expenditures, transfers out and other uses. For the year
ended June 30, 2012, the District met this requirement.
The undesignated fund balance consists of the fund balance of the General Fund and the Special
Reserve for Other Than Capital Outlay Projects Fund.
The District has incurred operating deficits in each of the past three years, and antiCipates a decrease in
fund balance during the 2012-13 fiscal year.
Total long-term liabilities have increased by $217,138 over the past two years and is expected to decrease
by $30,000 during the 2012-13 fiscal year.
Average daily attendance has decreased by 3 over the past two years. No change in ADA is anticipated
during the fiscal year ending June 30,2012.
38
SCHEDULE OF CHARTER SCHOOLS
Charter Schools Chartered By District
Included In District
Financial Statements, or
Separate Report
There are currently no charter schools in the District.
39
NOTES TO SUPPLEMENTARY INFORMATION
1.
PURPOSE OF SCHEDULES
A
Schedule of Average Daily Attendance
Average daily attendance is a measurement of the number of pupils attending
classes of the District. The purpose of attendance accounting from a fiscal
standpoint is to provide the basis on which apportionments of state funds are
made to school districts. This schedule provides information regarding the
attendance of students at various grade levels and in different programs.
B
Schedule of Instructional Time
The District has received incentive funding for increasing instructional time as
provided by the Incentives for Longer Instructional Day. This schedule
presents information on the amount of instructional time offered by the District,
and whether the District complied with the provisions of Education Code
Sections 46201 through 46206.
C
Reconciliation of Unaudited Actual Financial Report with Audited Financial
Statements
This schedule provides the information necessary to reconcile the Unaudited
Actual Financial Report to the audited financial statements.
D
Schedule of Financial Trends and Analysis - Unaudited
This schedule provides information on the District's financial condition over the
past three years and its antiCipated condition for the 2012-2013 fiscal year, as
required by the State Controller's Office. The information in this schedule has
been derived from audited information.
E
Schedule of Charter Schools
This schedule provides information for the California Department of Education
to monitor financial reporting by Charter Schools.
2.
EARLY RETIREMENT INCENTIVE PROGRAM
Education Code Section 14503 requires certain disclosure in the financial statements of
districts which adopt Early Retirement Incentive Programs pursuant to Education
Code Sections 22714 and 44929. For the fiscal year ended June 30, 2012, the District
did not adopt such a program.
40
If..... Crowe Horwath.
Crowe Horwath LLP
Independent Member Crowe Horwath Intemalional
INDEPENDENT AUDITORS' REPORT
ON COMPLIANCE WITH STATE LAWS AND REGULATIONS
Board of Trustees
Elverta, California
We have audited the compliance of Elverta Joint Elementary School District with the types of compliance
requirements described in the State of California's Standards and Procedures for Audits of California K-12
Local Educational Agencies (the "Audit Guide") to the state laws and regulations listed below for the year
ended June 3D, 2012. Compliance with the requirements of state laws and regulations is the responsibility
of Elverta Joint Elementary School Districfs management. Our responsibility is to express an opinion on
Elverta Joint Elementary School Districfs compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and the State of California's Standards
and Procedures for Audits of California K-12 Local Educational Agencies. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the
state laws and regulations listed below occurred. An audit includes examining, on a test basis, evidence
about Elverta Joint Elementary School District's compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal determination of Elverta Joint
Elementary School District's compliance with those requirements.
Description
Attendance Reporting
Teacher Certification and Misassignments
Kindergarten Continuance
Independent Study
Continuation Education
Instructional Time:
School Districts
County Offices of Education
Instructional Materials:
Instraaionarlime:-- __
School Districts
County Offices of Education
Instructional Materials:
General requirements
Ratio of Administrative Employees to Teachers
Classroom Teacher Salaries
Early Retirement Incentive Program
Gann Limit Calculation
School Accou ntability Report Card
Public Hearing Requirements - Receipt of Funds
Juvenile Court Schools
Exclusion of Pupils - Pertussis Immunization
Class Size Reduction Program:
Option one classes
Option two classes
Districts with only one school serving K-3
Audit Guide
Procedures
Procedures
Performed
6
Yes
Yes
Yes
No, see below
No, see below
3
3
23
10
6
3
Yes
No, see below
. ·-1
--- --'--.
0-
6
3
8
1
1
4
1
3
1
8
2
7
3
4
4
41
Yes
No, see below
Yes
Yes
Yes
No, see below
Yes
No, see below
Yes
No, see below
Yes
Yes
Yes
No, see below
Yes
Audit Guide
Procedures
Description
After School Education and Safety Program:
After school
Before school
Contemporaneous Records of Attendance, for charter schools
Mode of Instruction, for charter schools
Nonclassroom-Based Instruction/Independent Study,
for charter schools
Determination of Funding for Nonclassroom-Based
Instruction, for charter schools
Annual Instruction Minutes - Classroom-Based
for charter schools
Procedures
Performed
4
5
6
3
1
No,
No,
No,
No,
No,
15
No, see below
3
No, see below
4
No, see below
The ADA reported for Independent Study is below the level required for testing; therefore,
perform any testing of Independent Study ADA.
see below
see below
see below
see below
see below
we did not
We did not perform any procedures related to Continuation Education or Juvenile Court Schools because
the District does not offer this program.
We did not perform any procedures related to Instructional Time for County Offices of Education because
the District is not a County Office of Education.
The District did not offer an Early Retirement Incentive Program; therefore, we did not perform any
procedures related to the Eariy Retirement Incentive Program.
The 2011-2012 School Accountability Report Cards speCified by Education Code Section 33126 are not
required to be completed, nor were they completed, prior to the completion of our audit procedures for the
year ended June 30, 2012. Accordingly, we could not perform the portions of audit steps (a), (b) and (c) of
Section 19837 of the 2011-2012 Audit Guide relating to the comparison of tested data from the 2011-2012
fiscal year to the 2011-2012 School Accountability Report Cards.
The District does not operate Option Two Class programs for the Class Size Reduction Program;
therefore, we did not perform any testing of Option Two Classes for the Class Size Reduction Program.
We did not perform any procedures related to After School Education and Safety Program because the
District did not receive any After School Education and Safety Program funding in the current year.
We did not perform any procedures related to Contemporaneous Records of Attendance, for charter
schools, Mode of Instruction for charter schools, Nonclassroom-Based Instructionllndependent Study for
charter schools, Determination of Funding for Nonclassroom-Based Instruction for charter schools and
Annual Instruction Minutes - Classroom-Based for charter schools because the District does not have a
charter school.
In our opinion, Elverta Joint Elementary School District complied, in all material respects, with the state
laws and regulations referred to above for the year ended June 30, 2012. Further, based on our
examination, for items not tested, nothing came to our attention to indicate that Elverta Joint Elementary
School District had not complied with the state laws and regulations.
42
This report is intended solely for the information of the Board of Trustees, management, the State
Controller's Office, the California Department of Education and the California Department of Finance, and
is not intended to be and should not be used by anyone other than these specified parties.
Crowe Horwath LLP
Sacramento, California
December 11, 2011
43
~ Crowe Horwath.
Crowe Horwath LLP
Independent Member Crowe Horwath International
INDEPENDENT AUDITORS' 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
Board of Trustees
Elverta, California
We have audited the financial statements of Elverta Joint Elementary School District as of and for the year
ended June 30,2012, and have issued our report thereon dated December 11,2011 . We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of Elverta Joint Elementary School District is responsible for establishing and maintaining
effective internal control over financial reporting. In planning and performing our audit, we considered
Elverta Joint Elementary School District's internal control over financial reporting as a basis for designing
our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of Elverta Joint Elementary School District's
internal control over financial reporting. Accordingly, we do not express an opinion of the effectiveness of
Elverta Joint Elementary School District's internal control over financial reporting .
Our consideration of internal control over compliance was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control over financial
reporting that might be significant deficiencies or material weaknesses and therefore, there can be no
assurance that all deficiencies, Significant deficiencies, or material weaknesses have been identified.
However, as described in the accompanying Schedule of Audit Findings and Questioned Costs as
Findings 2012-01 and 2012-02, we identified certain deficiencies in internal control over financial reporting
that we consider to be material weaknesses. We also identified certain matters involving internal control
that we have communicated to management as identified in the accompanying Schedule of Audit Findings
and Questioned Costs as Finding 2012-03.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct ml'§st~tp-mp-nts nn a timelv n::ll!C:i!C: A m"'t.. ri"'I .. , ..."''' ......... ;.. ~ ....1_6:_,--_.. -- ___ L' _ _
_. ,_ ~""'_"""'UI '~\II "'U~ i:i3 r 01'-'9 LU rz.-\:J~·.
L· •
.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a defiCiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We
consider the deficiencies described in the accompanying Schedule of Audit Findings and Questioned
Costs as Findings 2012-01 and 2012-02 to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Elverta Joint Elementary School District's
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those proviSions was not an objective of our audit and, accordingly, we do not
express such an opinion. The results of our tests disclosed no instances of noncompliance or other
matters that are required to be reported under Government Auditing Standards.
44
Elverta Joint Elementary School District's responses to the findings identified in our audit are included in
the accompanying Schedule of Audit Findings and Questioned Costs. We did not audit the District's
responses and, accordingly, express no opinion on them.
This report is intended solely for the information of the Board of Trustees, management, the California
Department of Education, the California State Controller's Office and federal awarding agencies and passthrough entities, and is not intended to be and should not be used by anyone other than these specified
parties.
Crowe Horwath LLP
Sacramento, California
December 11, 2011
45
FINDINGS AND RECOMMENDATIONS
ELVERTA JOINT ELEMENTARY SCHOOL DIS"rRICT
SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2012
SECTION I - SUMMARY OF AUDITORS' RESULTS
Type of auditors' report issued:
Unqualified
Intemal control over financial reporting:
Material weakness(e's) identified?
Significant deficiency(dies) identified not considered
to be material weakness(e's)?
Noncompliance material to financial statements
noted?
_X_Yes
_ _ No
_ _ Yes
~
Yes
STATE AWARDS
Type of auditors' report issued on compliance for
state programs:
Unqualified
46
None reported
_X_No
(Continued)
Year Ended June 30,2012
SECTION" - FINANCIAL STATEMENT FINDINGS
2012-01 MATERIAL WEAKNESS - LONG-TERM LIABILITIES (30000)
Criteria
Acccounting principles generally accepted in the United States of America, as prescribed by the
Governmental Accounting Standards Board, require entities to establish and maintain effective intemal
control over financial reporting.
Condition
The District did not recognize accreted interest on outstanding capital appreciation General Obligation
Bonds.
The District's long-term liabilities were understated.
The District did not establish the requisite internal control procedures.
Fiscal Impact
While there is no impact on the District's ending fund balances, the District's long-term liabilities were
understated and beginning net assets at July 1,2011 were overstated by $233,016.
Recommendation
The District should establish the requisite internal control procedures to maintain adequate records
regarding accreted interest.
Corrective Action Plan
The District will establish procedures to ensure financial transactions completed by other parties on the
District's behalf are reviewed by District personnel. Further, the District will maintain supporting
documentation for all financial statement balances.
47
(Continued)
Year Ended June 30,2012
SECTION 11- FINANCIAL STATEMENT FINDINGS
(Continued)
2012-02 MATERIAL WEAKNESS - NATIONAL SCHOOL LUNCH PROGRAM REVENUE
(30000)
Criteria
Accounting principles generally accepted in the United States of America, as prescribed by the
Governmental Accounting Standards Board, require entities to establish and maintain effective internal
control over financial reporting.
Condition
The District did not report the California Department of Eudcation the total amount of free, reduced and
paid meals served for the month of June 2012, resulting an understatment of State and Federal National
School Lunch Program reimbursement revenue earned in the current year.
The District's revenue was understated by $10,458.
The District did not establish the requisite internal control procedures.
Fiscal Impact
The District's Federal and State revenue were understated by $9,617 and $841, respectively. In addition,
accounts receivable was understated by $10,458.
Recommendation
The District should establish the requisite internal control procedures to .ensure all eligible meals served
are accurately reported each month.
The District will establish procedures to ensure that each claims for reimbursement forms are reviewed by
an individual independent of the preparation process and submitted on a monthly basis.
48
(Continued)
SECTION"· FINANCIAL STATEMENT FINDINGS
(Continued)
2012·03 DEFICIENCY • INTERNAL CONTROL· ASSOCIATED STUDENT BODY (30000)
Criteria
Education Code Section 48930 (and California Department of Education's "Accounting Procedures for
Student Organizations Handbook") requires student body organizations to follow the regulations set by the
Governing Board of the school district.
Condition
Fundraising approval forms are not consistently being used to approve revenue-producing activities.
ASB funds could potentially be misappropriated.
Established internal controls have not been enforced.
Fiscal Impact
Not determinable.
Recommendation
Student council and school site administration should approve all fundraising events.
The District provides training on the Associated Student Body Handbook, which outlines the issues noted
by the auditors' recommendations, some at a greater level than what has been suggested. The District will
provide additional training focused on preparing required documentation for compliance and continue to
monitor timeliness of submission of reports.
49
(Continued)
Year Ended June 30, 201 2
SECTION III - STATE AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
50
STATUS OF PRIOR YEAR
FINDINGS AND RECOMMENDATIONS
STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS
Current Status
Finding/Recommendation
2011-01
Partially implemented.
Cash receipts books are not
consistently used during the initial
collection of cash during in the
office.
Fundraising approval forms are
not consistently being used to
approve
revenue-producing
activities.
Reconciliations were not being
performed or evidence indicating
that
reconciliations
being
performed in a timely manner
could not be obtained.
We recommend the following:
Receipts should be issued for aU
monies tumed into the office.
Student council and school site
administration should approve all
fundraising events.
Reconciliations
should
be
prepared on a monthly basis by
the office manager and reviewed
by the principal within a timely
manner.
51
District Explanation
If Not Implemented
See current year Finding
2012-03.
APPENDIX B
FORM OF CONTINUING DISCLOSURE CERTIFICATE
FORM OF CONTINUING DISCLOSURE CERTIFICATE
GENERAL OBLIGATION BONDS
ELECTION OF 2002, SERIES 2013
Dated: December __, 2013
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is delivered by the Elverta
Joint Elementary School District (the “District”) in connection with the issuance of the above-referenced
bonds (the “Bonds”) pursuant to a Paying Agent Agreement dated as of December 1, 2013 (the “Paying
Agent Agreement”), between the District and Zions First National Bank (the “Paying Agent”). The
District covenants and agrees as follows:
Section 1.
Purpose of the Disclosure Certificate. This Disclosure Certificate is being
delivered by the District for the benefit of the beneficial owners of the Bonds and to assist the
Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5).
Section 2.
Definitions. Unless the context otherwise requires, the definitions set forth in the
Paying Agent Agreement apply to this Disclosure Certificate. The following additional capitalized terms
shall have the following meanings:
Annual Report means any report provided by the District pursuant to, and as described in,
Sections 3 (Provision of Annual Reports) and 4 (Content of Annual Reports) of this Disclosure
Certificate.
Beneficial Owner means any person that (a) has or shares the power, directly or indirectly, to
make investment decisions concerning ownership of any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for
federal income tax purposes.
Bondholders means either the registered owners of the Bonds, or, if the Bonds are registered in
the name of The Depository Trust Company or another recognized depository, any Beneficial Owner or
applicable participant in its depository system.
Dissemination Agent means the District, or any successor Dissemination Agent designated in
writing by the District and that has filed with the District a written acceptance of such designation.
EMMA or Electronic Municipal Market Access means the centralized on-line repository for
documents filed with the MSRB, such as official statements and disclosure information relating to
municipal bonds, notes and other securities as issued by state and local governments.
Listed Events means any of the events listed in Section 5(a) (Reporting of Significant Events –
Significant Events) of this Disclosure Certificate.
MSRB means the Municipal Securities Rulemaking Board, which has been designated by the
Securities and Exchange Commission as the sole repository of disclosure information for purposes of the
Rule, or any other repository of disclosure information, which may be designated by the Securities and
Exchange Commission as such for purposes of the Rule in the future.
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Official Statement means the final Official Statement dated December 4, 2013 relating to the
Bonds.
Opinion of Bond Counsel means a written opinion of a law firm or attorney experienced in
matters relating to obligations the interest on which is excludable from gross income for federal income
tax purposes.
Participating Underwriter means any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
Repositories means MSRB or any other repository of disclosure information that may be
designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
(As of the date of this Certificate, there is no California state information repository.)
Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
State means the State of California.
Section 3.
Provision of Annual Reports.
a.
Delivery of Annual Report to Repositories. The District shall, or shall cause the
Dissemination Agent to, not later than eight (8) months after the end of the District’s fiscal year (which
currently ends on June 30), commencing with the report for the 2012-2013 Fiscal Year, provide to the
Repositories an Annual Report that is consistent with the requirements of Section 4 (Content of Annual
Reports) of this Disclosure Certificate. The Annual Report may be submitted as a single document or as a
package of separate documents and may include by cross-reference other information as provided in
Section 4 (Content of Annual Reports) of this Disclosure Certificate; provided that the audited financial
statements of the District may be submitted separately from the balance of the Annual Report and later
than the date required above for the filing of the Annual Report if they are not available by that date.
b.
Change of Fiscal Year. If the District’s fiscal year changes, it shall give notice of
such change in the same manner as for a Listed Event under Section 5(d) (Notice of Listed Events).
c.
Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15)
Business Days prior to the date specified in subsection (a) for providing the Annual Report to the
Repositories, the District shall provide the Annual Report to the Dissemination Agent (if other than the
District). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the
Dissemination Agent shall notify the District.
d.
Report of Non-Compliance. If the District is unable to provide an Annual Report
to the Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to
the Repositories in substantially the form attached as Exhibit A.
e.
Annual Compliance Certification. The Dissemination Agent shall if the
Dissemination Agent is other than the District, file a report with the District certifying that the Annual
Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided.
B-2
Section 4.
Content of Annual Reports. The District’s Annual Report shall contain or
include by reference the following:
a.
Financial Statements. The audited financial statements of the District for the
prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to
apply to government entities from time to time by the Government Accounting Standards Bank. If the
District’s audited financial statements are not available by the time the Annual Report is required to be
filed pursuant to Section 3(a) (Provision of Annual Reports -- Delivery of Annual Report to Repositories),
the Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall be filed in
the same manner as the Annual Report when they become available;
b.
Other Financial Information and Operating Data. Material financial information
and operating data with respect to the District of the type included in the Official Statement in the
following categories (to the extent not included in the District’s audited financial statements):
(1)
Average daily attendance of the District for the last completed fiscal year;
(2)
Outstanding District indebtedness;
(3)
Summary financial information on revenues, expenditures and fund balances for
the District’s general fund reflecting adopted budget for the current fiscal year;
and
(4)
Assessed valuation of taxable property within the District; and
(5)
Largest local secured taxpayers within the District.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the District or related public entities that have been
submitted to each of the Repositories or the Securities and Exchange Commission. If the document
included by reference is a final official statement, it must be available from the Municipal Securities
Rulemaking Board. The District shall clearly identify each such other document so included by
reference.
Section 5.
Reporting of Significant Events.
a.
Significant Events. Pursuant to the provisions of this Section, the District shall
give, or cause to be given, notice of the occurrence of any of the following events with respect to the
Bonds:
(1)
(2)
(3)
(4)
(5)
(6)
principal and interest payment delinquencies;
non-payment related defaults, if material;
unscheduled draws on debt service reserves reflecting financial difficulties;
unscheduled draws on credit enhancements reflecting financial difficulties;
substitution of credit or liquidity providers, or their failure to perform;
the issuance by the Internal Revenue Service of proposed or final determinations
of taxability, or Notices of Proposed Issue (IRS Form 5701-TEB);
B-3
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
unless described in subsection (a)(6) above, adverse tax opinions or or other
material notices or determinations by the Internal Revenue Service with respect
to the tax status of the Bonds or other material events affecting the tax-exempt
status of the Bonds;
modifications to rights of Bondholders, if material;
Bond calls, if material;
tender offers;
defeasances;
release, substitution, or sale of property securing repayment of the Bonds, if
material;
rating changes;
bankruptcy, insolvency, receivership or similar event of the District;
the consummation of a merger, consolidation, or acquisition, or certain asset
sales, involving the District, or entry into or termination of a definitive agreement
relating to the foregoing, if material;
appointment of a successor or additional trustee or the change of name of the
Trustee, if material.
b.
Determination of Materiality. Whenever the District obtains knowledge of one
of the foregoing events notice of which must be given only if material, the District shall immediately
determine if such event would be material under applicable federal securities laws.
c.
Notice to Dissemination Agent. If the District has determined an occurrence of a
a Listed Event under applicable federal securities laws, the District shall promptly notify the
Dissemination Agent (if other than the District) in writing. Such notice shall instruct the Dissemination
Agent to report the occurrence pursuant to subsection (d) (Notice of Listed Events).
d.
Notice of Listed Events. The District shall file, or cause the Dissemination
Agent to file with the Repositories, a notice of the occurrence of a Listed Event to provide notice of
specified events in a timely manner not in excess of ten (10) business days after the event’s occurrence.
Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(9) (bond calls) need
not be given under this subsection any earlier than the notice (if any) given to Bondholders of affected
Bonds pursuant to the Paying Agent Agreement.
Section 6.
Filings with MSRB. All documents provided to MSRB under this Disclosure
Certificate shall be filed in a readable PDF or other electronic format as prescribed by MSRB and shall be
accompanied by identifying information as prescribed by MSRB.
Section 7.
Termination of Reporting Obligation. The District’s obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all
of the Bonds or upon the delivery to the District of an Opinion of Bond Counsel to the effect that
continuing disclosure is no longer required.. If such termination occurs prior to the final maturity of the
Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under
Section 5(d) (Notice of Listed Events).
Section 8.
Dissemination Agent. a. Appointment of Dissemination Agent. The District
may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its
obligations under this Disclosure Certificate, and may discharge any such agent, with or without
appointing a successor Dissemination Agent. If the Dissemination Agent is not the District, the
Dissemination Agent shall not be responsible in any manner for the content of any notice or report
B-4
prepared by the District pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be
the District.
b.
Compensation of Dissemination Agent. The Dissemination Agent shall be paid
compensation by the District for its services provided hereunder in accordance with its schedule of fees as
agreed to between the Dissemination Agent and the District from time to time and all expenses, legal fees
and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
The Dissemination Agent may at any time resign by giving written notice of such resignation to the
District.
c.
Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. The District
agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents,
harmless against any loss, expense, and liability that it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys
fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination
Agent’s negligence or willful misconduct. The Dissemination Agent shall not be deemed to be acting in
any fiduciary capacity for the District, the Bondholders, or any other party. The Dissemination Agent
may rely and shall be protected in acting or refraining from acting upon any direction from the District or
an Opinion of Bond Counsel. The obligations of the District under this Section shall survive resignation
or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to
commence any action against the Dissemination Agent seeking any remedy other than to compel specific
performance of this Disclosure Certificate.
Section 9.
Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the District may amend this Disclosure Certificate (and the Dissemination Agent shall agree
to any amendment so requested by the District that does not impose any greater duties or risk of liability
on the Dissemination Agent), and any provision of this Disclosure Certificate may be waived, provided
that the following conditions are satisfied:
a.
Change in Circumstances. If the amendment or waiver relates to the provisions
of Sections 3(a) (Delivery of Annual Report to Repositories), 4 (Content of Annual Reports), or 5(a)
(Significant Events), it may only be made in connection with a change in circumstances that arises from a
change in legal requirements, change in law, or change in the identity, nature, or status of an obligated
person with respect to the Bonds, or the type of business conducted;
b.
Compliance as of Issue Date. The undertaking, as amended or taking into
account such waiver, would have complied with the requirements of the Rule at the time of the original
issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as
any change in circumstances, and the District obtains an Opinion of Bond Counsel to that effect; and
c.
Consent of Holders; Non-impairment Opinion. The amendment or waiver either
(i) is approved by the Bondholders in the same manner as provided in the Paying Agent Agreement for
amendments to the Paying Agent Agreement with the consent of Bondholders, or (ii) does not materially
impair the interests of the Bondholders and the District obtains an Opinion of Bond Counsel to that effect.
If this Disclosure Certificate is amended or any provision of this Disclosure Certificate is waived,
the District shall describe such amendment or waiver in the next following Annual Report and shall
include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact
on the type (or in the case of a change of accounting principles, on the presentation) of financial
information or operating data being presented by the District. In addition, if the amendment relates to the
accounting principles to be followed in preparing financial statements, (i) notice of such change shall be
given in the same manner as for a Listed Event under Section 5(d) (Notice of Listed Events), and (ii) the
B-5
Annual Report for the year in which the change is made should present a comparison (in narrative form
and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the
new accounting principles and those prepared on the basis of the former accounting principles.
Section 10.
Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the District from disseminating any other information, using the means of dissemination set
forth in this Disclosure Certificate or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Certificate. If the District chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11.
Default. If the District fails to comply with any provision of this Disclosure
Certificate any Bondholder of the Bonds may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the District to comply with its
obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be
deemed an Event of Default under the Paying Agent Agreement, and the sole remedy under this
Disclosure Certificate if the District fails to comply with this Disclosure Certificate shall be an action to
compel performance.
Section 12.
Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
District, the Dissemination Agent, the Participating Underwriters, and the Bondholders and shall create no
rights in any other person or entity.
IN WITNESS WHEREOF, the District has caused this Continuing Disclosure Certificate to be
executed by its authorized officer as of the day and year first above written.
By:
Superintendent
B-6
EXHIBIT A
FORM OF NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of District:
Name of Bonds:
GENERAL OBLIGATION BONDS
ELECTION OF 2002, SERIES 2013
Date of Delivery:
December __, 2013
NOTICE IS HEREBY GIVEN that the Elverta Joint Elementary School District(the “District”)
has not provided an Annual Report with respect to the above-named Bonds as required by a Continuing
Disclosure Certificate executed December __, 2013, with respect to the above-captioned Bonds. The
District anticipates that the Annual Report will be filed by ___________.
Dated: _______________
[SAMPLE ONLY]
____________________________________
B-7
APPENDIX C
PROPOSED FORM OF BOND COUNSEL OPINION
PROPOSED FORM OF BOND COUNSEL OPINION
[Closing Date]
Board of Trustees
Re:
$631,298.25
(Sacramento and Placer Counties, California)
Election of 2002, Series 2013
Final Opinion of Bond Counsel
Members of the Board of Trustees:
We have acted as bond counsel in connection with the issuance by the Elverta Joint Elementary
School District (the “District”) of $631,298.25 principal amount of Elverta Joint Elementary School District
(Sacramento and Placer Counties, California) General Obligation Bonds, Election of 2002, Series 2013 (the
“Bonds”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Paying
Agent Agreement dated as of December 1, 2013 (the “Paying Agent Agreement”), providing for the issuance
of the Bonds.
In such capacity, we have examined such law and such certified proceedings, certifications, and other
documents as we have deemed necessary to render this opinion. The opinions expressed herein are based on
an analysis of existing statutes, regulations, rulings and court decisions and cover certain matters not directly
addressed by such authorities. Such opinions may be affected by actions taken or omitted to be taken or
events occurring after the date hereof. We have not undertaken to determine or to inform any person, whether
any such actions or events are taken or do occur, and we disclaim any obligation to update this opinion. We
have assumed the genuineness of all documents and signatures presented to us (whether as originals or as
copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than
the District. We have not undertaken to verify independently and have assumed the accuracy of the factual
matters represented, warranted or certified in the documents and of the legal conclusions contained in the
opinions referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all
covenants and agreements contained in the Paying Agent Agreement and the Tax Certificate, including,
without limitation, covenants and agreements compliance with which is necessary to assure that future
actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal
income tax purposes.
Based upon the foregoing, we are of the opinion that, under existing law:
1.
The Bonds have been duly authorized and executed by the District and are valid and binding
general obligations of the District.
2.
All taxable property in the territory of the District is subject to ad valorem taxation without
limitation regarding rate or amount (except certain personal property that is taxable at limited rates) to pay the
Bonds. The Counties of Sacramento and Placer are required by law to include in their respective annual tax
C-1
levy the principal and interest coming due on the Bonds to the extent that necessary funds are not provided
from other sources.
3.
Interest on the Bonds is excluded from gross income for federal income tax purposes under
Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”) and is exempt from personal
income taxes of the State of California. Interest on the Bonds is not a specific preference item for purposes of
the federal individual or corporate alternative minimum taxes, although we observe that it is included in
adjusted current earning when calculating corporate alternative minimum taxable income. The Bonds are
“qualified tax-exempt obligations” under the small issuer exception provided under section 265(b)(3) of the
Code. We express no opinion regarding other tax consequences relating to the ownership or disposition of, or
the accrual or receipt of interest on the Bonds.
In rendering the opinion in this paragraph 3, we have relied upon and assumed (i) the material
accuracy of the representations, statements of intention and reasonable expectations, and certifications of fact,
contained in the Tax Certificate delivered on the date hereof with respect to the use of proceeds of the Bonds
and the investment of certain funds, and other matters affecting the exclusion of interest on the Bonds in gross
income for Federal income tax purposes under Section 103 of the Code, and (ii) compliance by the District
with procedures and covenants set forth in the Tax Certificate and with the tax covenants set forth in the
Paying Agent Agreement as to such matters. Under the Code, failure to comply with such procedures and
covenants may cause the interest on the Bonds to be included in gross income for Federal income tax
purposes, retroactive to the date of issuance of the Bonds, irrespective of the date on which such
noncompliance occurs or is ascertained.
Other provisions of the Code may give rise to adverse federal income tax consequences to particular
holders of the Bonds. The scope of this opinion is limited to matters addressed above and no opinion is
expressed hereby regarding other federal tax consequences that may arise due to ownership of the Bonds.
We call attention to the fact that the rights and obligations under the Bonds, the Paying Agent
Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting
creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate
cases and to the limitations on legal remedies against unified school districts in the State of California.
We express no opinion with respect to any indemnification, contribution, penalty, choice of law,
choice of forum or waiver provisions contained in the foregoing documents. We undertake no responsibility
for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the
Bonds and express herein no opinion relating thereto.
This opinion is issued as of the date hereof, and we assume no obligation to update, revise or
supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances, or
any changes in law or in interpretations thereof, that may hereafter arise or occur, or for any other reason.
Very truly yours,
MEYERS, NAVE, RIBACK, SILVER & WILSON,
A Professional Law Corporation
C-2
APPENDIX D
SACRAMENTO COUNTY INVESTMENT POLICY
SA RAMENTO COU T
Annu lIn estment Poli y
of the Poled Investment Fund
CALENDAR YEAR 2013
Approved by the
Sacramento County Board 0.1 Supervisors
December 4, 201
Resolution No. 2012-0827
a I
en
. ...................................................... 1
I.
II.
Authority ........................ .
III.
Stalldard of Care .............................................................................................................................. 1
IV.
hlvestnlent Objectives ..................................................................................................................... 1
Policy Statement .............................................................................................................................. 1
A.
B.
C.
D.
Safety of Principal ...............................................................................................................
Liquidity ..............................................................................................................................
Public Trust .........................................................................................................................
Maxinlunl Rate of Retum ...................................................................................................
1
2
2
2
V.
Pooled Investment Fund Investors .................................................................................................. 2
VI.
Implenlentatioll ............................................................................................................................... 2
VII.
Intenlal Controls .............................................................................................................................. 3
VIII.
Sacramento County Treasury Oversight Committee ....................................................................... 4
IX.
Investment Parameters .................................................................................................................... 4
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
Investable Funds .................................................................................................................. 4
Authorized Investments ...................................................................................................... 5
Prohibited Investments ........................................................................................................ 5
Credit Requirements ............................................................................................................ 5
Maximum Maturities ........................................................................................................... 6
Maximulll Concentrations ................................................................................................... 7
Repurchase Agreements ...................................................................................................... 8
Community Reinvestment Act Program ............................................................................. 8
Criteria and Qualifications of Brokers/Dealers and Direct Issuers ..................................... 8
Investment Guidelines, Management Style and Strategy .................................................... 9
Approved Lists .................................................................................................................... 9
Calculation of Yield and Costs ............................................................................................ 9
Reviewing, Monitoring and Reporting of the Portfolio ................................................................ 10
XI.
Withdrawal Requests for Pooled Fund hlvestors .......................................................................... 10
Limits on Honoraria, Gifts and Gratuities ..................................................................................... 10
XIII.
TemlS and Conditions for Outside Investors ................................................................................. 11
Appendix A
Conlparison and Interpretation of Credit Ratings .............................................................. 12
SACRAMENT
COUNT
Annual nvestment Policy
of the Po led Investment Fund
C
I.
LE
EA
2013
Authority
Under the Sacranlento County Charter, the Board of Supervisors established the position of
Director of Finance and by ordinance will annually review and renevi the Director of Finance's
authority to invest and reinvest all the funds in the County Treasury.
Policy Statement
This Investment Policy (Policy) establishes cash management and investment guidelines for the
Director of Finance, who is responsible for the stewardship of the Sacramento County Pooled
Investment Fund. Each transaction and the entire portfolio must comply with California
Government Code and this Policy. All portfolio activities will be judged by the standards of the
Policy and its investment objectives. Activities that violate its spirit and intent will be considered
contrary to the Policy.
III.
Standard of Care
The Director of Finance is the Trustee of the Pooled Investment Fund and therefore, a fiduciary
subject to the prudent investor standard. The Director of Finance, employees involved in the
investment process, and members of the Sacramento County Treasury Oversight Committee
(Oversight Committee) shall refrain from all personal business activities that could conflict with
the managelnent of the investment program. All individuals involved will be required to report all
gifts and income in accordance with California state law. When investing, reinvesting, purchasing,
acquiring, exchanging, selling and managing public funds, the Director of Finance shall act with
care, skill, prudence, and diligence to meet the aims of the investment objectives listed in Section
IV, Investment Objectives.
IV.
Investment Objectives
The Pooled Investment Fund shall be prudently invested ii1 order to earn a reasonable retun1,
while awaiting application for governmental purposes. The specific objectives for the Pooled
Investment Fund are ranked in order of importance.
C;:~'FQ+"u'
of Principal
The preservation of principal is the primary objective. Each transaction shall seek to ensure
that capital losses are avoided, whether they be from securities default or erosion of n1arket
value.
Page 1
Annual Investment Policy of the Pooled Investment Fund
Calendar Year 2013
liquidity
As a second objective~ the Pooled Investment Fund should remain sufficiently flexible to
enable the Director of Finance to meet all operating requirements that may be reasonably
anticipated in any depositor's fund.
Public Trust
In managing the Pooled Investn1ent Fund, the Director of Finance and the authorized
investment traders should avoid any transactions that
impair public confidence in
Sacramento County and the participating local
Investn1ents should be n1ade with
precision and care, considering the probable safety of the capital as well as the probable
income to be derived.
Maximum
Return
As the fourth objective, the Pooled Investment Fund should be designed to attain a market
average rate of return through budgetary and economic cycles, consistent with the risk
limitations, prudent investment principles and cash flow characteristics identified herein. For
comparative purposes, the State of California Local Agency Investment Fund (LAIF) will be
used as a performance benchmark. The Pooled Investn1ent Fund quarterly performance
benchmark target has been set at or above LAIF's yield. This benchmark was chosen because
LAIF's portfolio structure is similar to the Pooled Investment Fund.
v.
Pooled Investment Fund Investors
The Pooled Investment Fund investors are comprised of Sacramento County, school and
community college districts, districts directed
the Board of Supervisors, and independent
special districts whose treasurer is the Director of Finance. Any local agencies not included in this
category are subject to California Government Code section 53684 and are referred to as outside
investors.
Implementation
In order to provide direction to those responsible for management of the Pooled Investment Fund,
the Director of Finance has established this Policy and will provide it to the Oversight Con1n1ittee
and render it to legislative bodies of local agencies that participate in the Pooled Investment Fund.
h1 accordance with California Goven1ment Code section 53646, et seq., the Board of Supervisors
shall review and approve this Policy annually.
This Policy provides a detailed description of investment parameters used to implement the
investment process and includes the following: investable funds; authorized instruments;
prohibited investn1ents; credit requirements; n1axin1um maturities and concentrations; repurchase
agreements; Community Reinvestment Act Program; criteria and qualifications of broke1'1dealers
and direct issuers; investment guidelines, management style and strategy; Approved Lists; and
calculation of yield and costs.
Page 2
VII.
Calendar Year 2013
Internal Controls
The Director of Finance shall establish internal controls to provide reasonable assurance that the
investment objectives are met and to ensure that the assets are protected from loss, theft, or
misuse. To assist in implementation and internal controls, the Director of Finance has established
an Investment Group and a Review Group.
The Investment Group, which is comprised the Director of Finance and his/her designees, is
guidelines
responsible for maintenance of the investment guidelines and Approved Lists.
The
and lists can be altered daily, if needed, to adjust to the ever-changing financial
guidelines can be more conservative or match the policy language. In no case can the guidelines
override the Policy.
The Review Group, which is comprised of the Director of Finance and his/her designees, is
responsible for the monthly
and appraisal of all the investments purchased
the Director
of Finance and staff. This review includes bond proceeds, which are invested separately from the
Pooled Investment Fund and are not govenled by this Policy.
The Director of Finance shall establish a process for daily, monthly, quarterly, and atmual review
and monitoring of the Pooled Investment Fund activity. The following articles, in order of
suprenlacy, govern the Pooled Investnlent Fund:
1.
California Government Code
2.
3.
4.
Annual Investment Policy
Current Investment Guidelines
Approved Lists (see page 9, Section IX.K)
The Director of Finance shall review the daily investnlent activity and corresponding bank
balances.
Monthly, the Review Group shall review all investment activity and its compliance to the
corresponding governing articles and investment objectives.
Quarterly, the Director of Finance will provide the Oversight Committee with a copy of the
Pooled Investment Fund activity and its conlpliance to the annual Policy and Califonlia
Governnlent Code.
Annually, the Oversight Committee shall cause an annual audit of the activities within the Pooled
Investment Fund to be conducted to determine conlpliance to the Policy and California
Government Code. This audit will include issues relating to the structure of the investment
portfolio and risk.
All securities purchased, with the exception of tilne deposits, money market nlutual funds, LAIF
and Wells Fargo's ovenlight investment fund, shall be delivered to the independent third-patiy
custodian selected by the Director of Finance. This includes all collateral for repurchase
agreements. All trades, where applicable, will be executed by delivery versus payment by the
designated third-party custodian.
Page 3
Calendar Year 2013
Sacramento County Treasury Oversight Committee
hl accordance with California Government Code section 27130 et seq., the Board of Supervisors,
in consultation with the Director of Finance, has created the Sacramento County Treasury
of Finance shall prepare an
Oversight Committee (Oversight Comnlittee). Annually, the
mvestlnent Policy that will be forwarded to and monitored by the Oversight Committee and
rendered to Boards of all local agency participants. The Board of Supervisors shall review and
Quarterly, the Director of Finance shall provide the
approve the Policy during public
of all investment activities of the Pooled hlvestment Fund to ensure
Oversight Committee a
compliance to the Policy. Annually, the Oversight Committee shall cause an audit to be conducted
on the Pooled mvestment Fund. The meetings of the Oversight Comnlittee
be open to the
public and subject to the Ralph M. Brown Act.
A member the Oversight Committee may not be employed by an entity that has contributed to
or contributed to the
of a
the campaign of a candidate for the office local
body of any local
that
deposited funds in the
candidate to be a member of a
county treasury, in the previous three
or during the period that the employee is a member of
the Oversight Conlmittee. A member lnay not directly or indirectly
money for a candidate for
or
board of
local treasurer or a member of the Sacramento County Board of
any local agency that has deposited funds in the county treasury while a member of the Oversight
Committee. Finally, a member may not secure employment with, or be employed by bond
underwriters, bond counsel, security brokerages or dealers, or financial services firms, with whom
the treasurer is doing business during the period that the person is a member of the Oversight
Conlmittee or for one year after leaving the committee.
The Oversight Committee is not allowed to direct individual investment decisions, select
individual investment advisors, brokers or dealers, or impinge on the day-to-day operations of the
Department of Finance treasury and investment operations.
Investment Parameters
Investable Funds
Total mvestable Funds (TIF) for purposes of this Policy are all Pooled hlvestment Fund
moneys that are available for investment at anyone tilne, including the estimated bank account
float. hlcluded in TIF are funds of outside investors, if applicable, for which the Director of
Finance provides investment services. Excluded from TIF are all bond proceeds.
The Cash Flow HOlizon is the period in which the Pooled hlvestnlent Fund cash flow can be
reasonably forecasted. This Policy establishes the Cash Flow Horizon to be one (1) year.
Once the Director of Finance has deemed that the cash flow forecast can be met, the Director
of Finance may invest funds with maturities beyond one year. These securities will be referred
to as the Core Portfolio.
Authorized Investments
Authorized investments shall nlatch the general categories established by the California
Government Code sections 53601 et seq. and 53635 et seq. Authorized investlllents shall
Page 4
Calendar Year 2013
include, in accordance with California Government Code section 16429.1, investnlents into
LAIF. Autholization for specific instruments within these general categolies, as well as
narrower portfolio concentration and matulity limits, will be established and nlaintained by the
Investment Group as pati of the Investment Guidelines. As the California Goven1lTIent Code is
amended, this Policy shall likewise beCOlTIe amended.
Prohibited Investments
No investments shall be autholized that have the possibility of returning a zero or negative
yield if held to maturity. These shall include inverse floaters, range notes, and interest only
stlips delived from a pool of mortgages.
All legal investnlents issued by a tobacco-related company are prohibited. A tobacco-related
conlpany is defined as an entity that makes smoking products from tobacco used in cigarettes,
cigars, or snuff or for smoking in pipes. The tobacco-related issuers restlicted from any
investment are any component companies in the Dow Jones U.S. Tobacco Index or the NYSE
Arca Tobacco Index. Annually the Director of Finance and/or his designee will update the list
of tobacco-related companies.
D.
Credit Requirements
Except for municipal obligations and Community Reinvestment Act (CRA) bank deposits and
certificates of deposit, the issuer's short-term credit ratings shall be at or above A-I by Standard
& Poor's, P-I by Moody's, and, if available, FI by Fitch, and the issuer's long-term credit
ratings shall be at or above A by Standard & Poor's, A2 by Moody's, and, if available, A by
Fitch. There are no credit requirements for Registered State Warrants. All other municipal
obligations shall be at or above a Sholi-term rating ofSP-I by Standard & Poor's, MIGI by
Moody's, and, if available, FI by Fitch. In addition, domestic banks are limited to those with a
Fitch Viability rating of a or better, without regard to modifiers. The Investment Group is
granted the autholity to specify approved California banks with Fitch Viability ratings ofbbb+
but they must have a Support rating of 1 where appropliate. Foreign banks with domestic
licensed offices must have a Fitch Sovereign rating of AAA and a Fitch Viability rating of a or
better, without
to nlodifiers; however, a foreign bank nlay have a rating of bbb+ but they
must have a Support rating of 1. DOlTIestic savings banks nlust be rated a or better, without
regard to lTIodifiers, or may have a rating ofbbb+ but they must a Support rating of 1.
Page 5
Calendar Year 2013
Community Reinvestment Act Program Credit Requirements
NCUSIF -insured lilnit
for the tenn of the
deposit
Over the FDIC- or
NCUSIF-insured limit
to $10 million
Collateral is required
Credit Unions -
NCUSIF Insurance Coverage
Credit unions are limited to a maximum deposit of the NCUSIF-insured limit since
they are not rated by nationally recognized rating agencies and are not required to
provide collateral on public deposits.
(Any 2 of 3 ratings)
S&P:
A-2
Moody's:
P-2
Fitch:
F-2
Eligible banks must have Community Reinvestment Act performance ratings of "satisfactory"
or "outstanding" ii-om each financial institution's regulatory authority. In addition, deposits
greater than the federally-insured amount must be collateralized. Banks must place securities
worth between 110% and 150% of the value of the deposit with the Federal Reserve Bank of
San Francisco, the Home Loan Bank of San Francisco, or a trust bank.
Since credit unions do not have Community Reinvestment Act performance ratings, they lllUSt
demonstrate their commitment to meeting the comnlunity reinvestment lending and charitable
activities, which are also required of banks.
All commercial paper and mediunl-term note issues must be issued by corporations operating
within the United States and having total assets in excess of one billion dollars
($1,000,000,000).
The Investment Group may raise these credit standards as paIi of the Investnlent Guidelines
and Approved Lists. Appendix A provides a COlllparison and Interpretation of Credit Ratings
by Standard & Poor's, Moody's, and Fitch.
Maximum Maturities
Due to the nature of the invested funds, no investment with limited market liquidity should be
used. Appropriate anlounts of highly-liquid investments, such as Treasury and Agency
securities, should be maintained to accOlllmodate unforeseen withdrawals.
The maximulll maturity, determined as the ternl from the date of ownership to the date of
lllaturity, for each investment shall be established as follows:
Page 6
Calendar Year 2013
U.S. Treasury Notes and Agency Obligations ..................................................... 5 years
Bonds issued by local agencies ............................................................................ 5 years
Registered State Warrants and Municipal Notes ................................................. 5 years
Bankers Acceptances......................................................................................... 180 days
Commercial Paper ............................................................................................. 270 days
Negotiable Certificates of Deposit.. .................................................................. 180 days
CRA Bank Deposit/Certificates of Deposit ........................................................... 1 year
Repurchase Agreenlents ......................................................................................... 1 year
Reverse Repurchase Agreeluents ........................................................................ 92 days
Mediunl Tenl1 Corporate Notes ......................................................................... 180 days
Shares of a Money Market Mutual Fund .................................... (per SEC regulations) I
Collateralized Mortgage Obligations ................................................................ 180 days
The Investment Group may reduce these maturity limits to a shorter term as part of the
Investment Guidelines and the Approved Lists.
The ultimate maximum n1aturity of any investment shall be five (5) years. The dollar-weighted
average maturity of all securities shall be equal to or less than three (3) years.
F.
Maximum Concentrations
No more than 80% of the portfolio may be invested in issues other than United States
Treasuries and Government Agencies. The maximum allowable percentage for each type of
security is set forth as follows:
U.S. Treasury and Agency Securities ..................................................................... 1000/0
Bonds issued by local agencies ................................................................................ 800/0
Registered State Warrants and Municipal Notes ..................................................... 80%
Ballkers Acceptallces ................................................................................................ 40%
COl11mercial Paper .................................................................................................... 40%
or CRA Bank Deposit/Certificates of Deposit ...................................... 300/0
Repurchase Agreements ........................................................................................... 300/0
Reverse Rcpurchase Agreenlents ............................................................................. 20%
Mediunl Tenn Corporate Notes ................................................. ............................... 30 %
Shares of a diversified Money Market Mutual Fund ............................................... 20%
Collateralized Mortgage Obligations ....................................................................... 20%
Local Agency Investment Fund (LAIF) ................................................ (per State linut)2
The Investment Group may reduce these concentrations as part of the Investment Guidelines
and the Approved Lists.
1 Money Market mutual funds are regulated by the Securities and Exchange Conm1ission under §270.2a-7 and are required to
maintain a dollar-weighted average portfolio maturity of 60 days or less.
2 LAIF current maximum allowed is $50 million.
Page 7
Calendar Year 2013
No more than 100/0 of the portfolio, except Treasuries and Agencies, may be invested in
securities of a single issuer including its related entities.
Where a percentage limitation is established above, for the purpose of determining investment
con1pliance, that maximum percentage will be applied on the date of purchase.
G.
Repurchase Agreements
Under California Govenlffient Code section 53601 paragraph (j) and section 53635, the
Director of Finance n1ay enter into Repurchase Agreements and Reverse Repurchase
Agreements. The maximum maturity of a Repurchase Agreement shall be one year. The
maximum maturity of a reverse repurchase
shall be 92 days, and the proceeds of a
reverse repurchase agreement may not be invested beyond the expiration of the agreement. The
reverse repurchase agreement Inust be "matched to maturity" and meet all other requirements
in the code.
All repurchase agreements n1ust have an executed Sacran1ento County Master Repurchase
Agreen1ent on file with both the Director of Finance and the Broker/Dealer. Repurchase
Agreements executed with approved broker-dealers must be collateralized with either: (1) U.S.
Treasuries or Agencies with a Inarket value of 1020/0 for collateral marked to market daily; or
(2) money market instruments which are on the Approved Lists of the County and which meet
the qualifications of the Policy, with a market value of 1020/0. Since the market value of the
underlying securities is subject to daily market fluctuations, investments in repurchase
agreements shall be in compliance if the value of the underlying securities is brought back up
to 102% no later than the next business day. Use oflnortgage-backed securities for collateral is
not permitted. Strictly for purposes of investing the daily excess banle balance, the collateral
provided by the Sacramento County's depository bank can be Treasuries or Agencies valued at
110%, or Inortgage-backed securities valued at 150%.
Community Reinvestment Act Program
The Director of Finance has allocated within the Pooled Investment Fund, a maximum of$90
million for the C01l1munity Reinvestment Act Program to
community investment by
financial institutions, which includes comlnunity banks and
and to acknowledge
and reward local financial institutions which support the community's financial needs. The
Director of Finance may increase this amount, as appropriate, while staying within the
investlnent policy objectives and maxin1um maturity and concentration limits. The eligible
banles and savings banks must have Community Reinvestment Act perfom1ance ratings of
"satisfactory" or "outstanding" from each financial institution's regulatory authority. The
minimum credit requirements are located on page 5 of Section IX.D.
I.
Criteria and Qualifications of Brokers! Dealers and Direct Issuers
All transactions initiated on behalf of the Pooled h1vestn1ent Fund and Sacrmnento County
shall be executed through either govenlffient security dealers repoliing as prilnary dealers to
the Market Reports Division of the Federal Reserve Bank of New York or direct issuers that
directly issue their own securities which have been placed on the Approved List of
Page 8
Calendar Year 2013
brokers/dealers and direct issuers. Further, these finns must have an investment grade rating
from at least two national rating services, if available.
Brokers/Dealers and direct issuers which have exceeded the political contribution linlits, as
contained in Rule G-37 of the Municipal Securities Rulemaking Board, within the preceding
four year period to the Director of Finance or any member of the governing board of a local
agency or any candidate for those offices, are prohibited from the Approved List of
brokers/dealers and direct issuers.
Each broker/dealer and direct issuer will be sent a copy of this Policy and a list of those
persons authorized to execute investment transactions. Each finl1 nlust acknowledge receipt of
such materials to qualify for the Approved List of brokers/dealers and direct issuers.
Each broker/dealer and direct issuer authorized to do business with Sacramento County shall,
at least annually, supply the Director of Finance with audited financial statements.
Investment Guidelines, Management Style and Strategy
The Investment Group, nanled by the Director of Finance, shall issue and Inaintain Investment
Guidelines specifying authorized investments, credit requirements, permitted transactions, and
issue maturity and concentration limits which are consistent with this Policy.
The Investment Group shall also issue a statement describing the investment management style
and current strategy for the entire investment program. The management style and strategy can
be changed to accommodate shifts in the financial markets, but at all times they must be
consistent with this Policy and its objectives.
Approved lists
The Investment Group, named by the Director of Finance, shall issue and maintain various
Approved Lists. These lists are:
1.
Approved Domestic Banks for all legal investments.
2.
A,-pproved Foreign Banks for all legal investments.
3.
Approved Commercial Paper and Mediunl Tenn Note Issuers.
4.
Approved Money Market Mutual Funds.
5.
Approved Firms for Purchase or Sale of Securities (Brokers/Dealers and Direct
Issuers ).
6.
Approved Banks / Credit Unions for the Community Reinvestment Act Program.
Calculation of Yield and Costs
The costs of managing the investnlent portfolio, including but not limited to: investment
management; accounting for the investment activity; custody of the assets; nlanaging and
accounting for the banking; receiving and remitting deposits; oversight controls; and indirect
and overhead expenses are charged to the investment earnings based upon actual labor hours
worked in respective areas. Costs of these respective areas are accumulated by specific cost
Page 9
Calendar Year 2013
accounting projects and charged to the Pooled Investment Fund on a quatierly basis throughout
the fiscal year.
The Department of Finance will allocate the net interest earnings of the Pooled Investment
Fund quarterly. The net interest earnings are allocated based upon the average daily cash
balance of each Pooled Investment Fund participant.
Reviewing, Monitoring and Reporting of the Portfolio
The Review Group will prepare and present to the Director of Finance at least monthly a
comprehensive review and evaluation of the transactions, positions, perforn1ance of the Pooled
Investment Fund and compliance to the California Government Code, Policy, and Investment
Guidelines.
Quarterly, the Director of Finance will provide to the Oversight COlTImittee and to any local
agency participant that requests a copy, a detailed repoli on the Pooled Investment Fund. Pursuant
to California Government Code section 53646, the report will list the type of investments, name
of issuer, maturity date, par and dollar amount of the investment. For the total Pooled Investment
Fund, the report will list
maturity, the market value, and the pricing source. Additionally,
the report will show
funds under the management of contracting parties, a statenlent of
compliance to the Policy and a statement of the Pooled lnvestnlent Fund's ability to meet the
expected expenditure requirements for the next six months.
Each quarter, the Director of Finance shall provide to the Board of Supervisors and interested
parties a comprehensive report on the Pooled Investment Fund.
Annually, the Director of Finance shall provide to the Oversight Committee the Investment Policy.
Additionally, the Director of Finance will render a copy of the Investment Policy to the legislative
body of the local agencies that participate in the Pooled Investment Fund.
Withdrawal Requests for Pooled Fund Investors
The Director of Finance will honor all requests to withdraw funds for normal cash flow purposes
that are approved by the Director of Finance at a one dollar net asset value. Any requests to
withdraw funds for purposes other than imn1ediate cash flow needs, such as for external investing,
are subject to the consent of the Director of Finance. In accordance with California Goven1ment
Code Sections 27133(h) and 27136, such requests for withdrawals tTIust first be made in writing to
the Director of Finance. When evaluating a request to withdraw funds, the Director of Finance
will take into account the effect of a withdrawal on the stability and predictability of the Pooled
Investment Fund and the interests of other depositors. Any withdrawal for such purposes will be at
the market value of the Pooled Investment Fund on the date of the withdrawal.
limits on Honoraria, Gifts, and Gratuities
In accordance with California Govenlment Code Section 27133( d), this Policy establishes limits
for the Director of Finance; individuals responsible for management of the portfolios; and
lnembers of the Investment Group and Review Group who direct individual investment decisions,
select individual investment advisors and broker/dealers, and conduct day-to-day investment
Page 10
trading activity. The limits also apply to nlembers of
who receives an
total of gifts,
and
Calendar Year 2013
Oversight COlnmittee.
U~U.~"~''''J in excess of
the
No individual may receive aggregate gifts, honoraria, and gratuities in a calendar year in excess of
the anlount specified in Section 18940.2(a) of Title 2, Division 6 of the California Code of
Regulations. This limitation is $440 for the period January 1,2013, to December 31,2014. Any
violation must be reported to the State Fair Political Practices Conlmission.
Terms and Conditions for Outside Investors
Outside investors nlay invest in the Pooled Investnlent Fund through California Govenlnlent Code
Director of Finance. The legislative
Section 53684. Their deposits are subject to
consent of
body of the local agency must approve the Sacranlento County Pooled hlvestment Fund as an
authorized investment and execute a Memorandunl of Understanding. Any withdrawal of these
deposits must be made in writing 30 days in advance and will be paid based upon the market
value of the Pooled Investment Fund. If the Director of Finance considers it appropriate, the
deposits Inay be returned at any tinle to the local agency.
Page 11
p
Comparison
A
Interpretation
Eong i!erm Debt Be. Int'lhlit'lual BanI( Ratings
Rating Interpretation
;;
Fitch
Moody's
S&P
Aaa
AAA
AAA
aaa
Aal
Aa2
Aa3
Al
AA+
AA
AAA
AA+
AA
AAA+
A
aa+
aa
aaa+
a
Lmv Grade
BI
B2
B3
BBB+
BBB
BBBBB+
BB
BBB+
B
B-
BBB+
BBB
BBBBB+
BB
BBB+
B
B-
bbb+
bbb
bbbbb+
bb
bbb+
b
b-
Poor Grade to Default
Caa
ccc+
CCC
ccc
-
CCC
CCC-
-
Best-quality grade
High-quali~y
grade
Upper Medium Grade
Baal
Baa2
Baa3
Bal
Ba2
Ba3
Medium Grade
Speculative Grade
In Poor Standing
High~)l
Speculative Default
Default
5holt i!erm
~
Ca
C
-
Fitch
CC
-
CC
-
DDD
DD
D
-
D
cc
c
f
f
f
Municipal Note Investment Grat'le 'Ratings
Moody's
S&P
Fitch
Superior Capacity
MIG-l
SP-l +/SP-l
Fl +/Fl
Strong Capaciry
MIG-2
SP-2
F2
MIG-3
SP-3
F3
Acceptable
Capaci~y
Page
e
51101"1: J'erm 7 Eommercial Raper Investment Grade R.atings
Moody's
S&P
Fitch
Superior Capacity
P-I
A-I +/A-I
FI +/FI
Strong Capacity
P-2
A-2
F2
Acceptable Capacity
P-3
F3
"
Eitcl1 Suppol"l: R.atings
-
"4
_'"
,
Rating
A bank for which there is an extremely
probability of external support. The potential provider of
support is very highly rated in its own
and has very
propensity to support the bank in
question. This probability of support indicates a minimum Long-Tenn
floor of 'A-'.
2
A bank for which there
high probability of external support. The potential provider of support is
highly rated in its own right and has
propensity to provide support to the bank in question. This
probability of support indicates a minimum Long-Tenn Rating floor of'888-'.
3
A bank for which there is a moderate probability of support because of uncertainties about the ability
or propensity of the potential provider of support to do so. This probability of support indicates a
minimum Long-Tenn Rating floor of'88-'.
4
A bank for which there is a limited probability of support because of significant uncertainties about
the ability or propensity of any possible provider of support to do so. This probability of support
indicates a minimum Long-Tenn
floor of'B'.
5
A bank for which external support, although possible, cannot be relied upon. This may be due to a
lack of propensity to provide support or to very weak financial ability to do so. This probability of
support indicates a Long-Term Rating floor no higher than 'B-' and in many cases no floor at all.
Page
A pe dix A
fitcH Sovereign Risk Ratings
:
Rating
interpretation
AAA
Highest credit quality. 'AAA' ratings denote the lowest expectation of default risk. They are assigned
only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is
highly unlikely to be advcrsely affected by foreseeable events.
AA
Very high credit quality. 'AA' ratings denote expectations of very low default risk. They indicate
__ "' ___ " for
of financial COlIDllitments. This capacity is not significantly
denote eX1:Je(:tatlOIlS
adverse business or economic conditions than
BBB
BB
B
CCC
CC
C
indicate that expectations of default risk are currently low. The
Good credit quality. 'BBB'
capacity for timely payment of financial commitments is considered adequate but adverse business or
economic conditions are more likely to impair this capacity.
Speculative. 'BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of
adverse changes in business or economic conditions over time.
Highly speculative. 'B' ratings indicate that material default risk is present, but a limited margin of
safety remains. Financial cOlIDnitments are currently being met; however, capacity for continued
payment is vulnerable to deterioration in the business and economic environment.
High default risk. Default is a real possibility.
Very high levels of credit risk. Default of some kind appears probable.
Exceptionally high levels of credit risk. Default appears ilIDninent or inevitable.
Default. Indicates a default. Default generally is defined as one of the following:
"
D
"
..
Failure to make payment of principal and/or interest under the contractual terms of the rated
obligation;
The bankruptcy filings, administration, receivership, liquidation or other winding-up or cessation
of the business of an issuer/obligor; or
The coercive exchange of an obligation, where creditors were offered securities with diminished
structural or economic terms compared with the existing obligation.
Page 14
APPENDIX E
ACCRETED VALUES TABLE
Dec 18, 2013
Jun 1, 2014
Dec 1, 2014
Jun 1, 2015
Dec 1, 2015
Jun 1, 2016
Dec 1, 2016
Jun 1, 2017
Dec 1, 2017
Jun 1, 2018
Dec 1, 2018
Jun 1, 2019
Dec 1, 2019
Jun 1, 2020
Dec 1, 2020
Jun 1, 2021
Dec 1, 2021
Jun 1, 2022
Dec 1, 2022
Jun 1, 2023
Dec 1, 2023
Jun 1, 2024
Dec 1, 2024
Jun 1, 2025
Dec 1, 2025
Jun 1, 2026
Dec 1, 2026
Jun 1, 2027
Dec 1, 2027
Date
2,194.70
2,248.30
2,309.00
2,371.35
2,435.35
2,501.10
2,568.65
2,638.00
2,709.25
2,782.40
2,857.50
2,934.65
3,013.90
3,095.25
3,178.85
3,264.65
3,352.80
3,443.35
3,536.30
3,631.80
3,729.85
3,830.55
3,934.00
4,040.20
4,149.30
4,261.35
4,376.40
4,494.55
4,615.90
CAB Bond
06/01/2029
5.4%
2,024.95
2,075.95
2,133.75
2,193.15
2,254.25
2,317.05
2,381.55
2,447.90
2,516.05
2,586.15
2,658.15
2,732.20
2,808.30
2,886.50
2,966.90
3,049.50
3,134.45
3,221.75
3,311.45
3,403.70
3,498.50
3,595.90
3,696.05
3,799.00
3,904.80
4,013.55
4,125.35
4,240.25
4,358.30
CAB Bond
06/01/2030
5.57%
1,871.65
1,920.00
1,974.80
2,031.20
2,089.20
2,148.85
2,210.20
2,273.30
2,338.20
2,404.95
2,473.60
2,544.25
2,616.85
2,691.60
2,768.40
2,847.45
2,928.75
3,012.40
3,098.40
3,186.85
3,277.80
3,371.40
3,467.65
3,566.65
3,668.50
3,773.25
3,880.95
3,991.75
4,105.70
CAB Bond
06/01/2031
5.71%
1,731.55
1,777.20
1,829.00
1,882.30
1,937.15
1,993.65
2,051.75
2,111.55
2,173.10
2,236.45
2,301.65
2,368.75
2,437.80
2,508.85
2,582.00
2,657.25
2,734.75
2,814.45
2,896.50
2,980.90
3,067.80
3,157.25
3,249.30
3,344.00
3,441.45
3,541.80
3,645.05
3,751.30
3,860.65
CAB Bond
06/01/2032
5.83%
1,601.20
1,644.20
1,693.05
1,743.30
1,795.10
1,848.40
1,903.30
1,959.85
2,018.05
2,078.00
2,139.70
2,203.25
2,268.70
2,336.10
2,405.45
2,476.90
2,550.45
2,626.20
2,704.20
2,784.55
2,867.25
2,952.40
3,040.10
3,130.35
3,223.35
3,319.05
3,417.65
3,519.15
3,623.65
CAB Bond
06/01/2033
5.94%
BOND ACCRETED VALUE TABLE
1,477.55
1,517.95
1,563.85
1,611.20
1,659.90
1,710.15
1,761.85
1,815.15
1,870.05
1,926.65
1,984.90
2,044.95
2,106.85
2,170.55
2,236.20
2,303.85
2,373.55
2,445.35
2,519.35
2,595.55
2,674.05
2,754.95
2,838.30
2,924.15
3,012.60
3,103.75
3,197.60
3,294.35
3,394.00
CAB Bond
06/01/2034
6.05%
1,374.75
1,412.75
1,455.90
1,500.40
1,546.20
1,593.45
1,642.15
1,692.30
1,744.00
1,797.30
1,852.20
1,908.75
1,967.10
2,027.20
2,089.10
2,152.95
2,218.70
2,286.50
2,356.35
2,428.35
2,502.50
2,578.95
2,657.75
2,738.95
2,822.65
2,908.85
2,997.75
3,089.30
3,183.70
CAB Bond
06/01/2035
6.11%
1,277.65
1,313.30
1,353.80
1,395.55
1,438.65
1,483.00
1,528.75
1,575.90
1,624.55
1,674.65
1,726.30
1,779.60
1,834.50
1,891.10
1,949.40
2,009.55
2,071.55
2,135.45
2,201.35
2,269.25
2,339.25
2,411.45
2,485.80
2,562.50
2,641.55
2,723.05
2,807.05
2,893.65
2,982.95
CAB Bond
06/01/2036
6.17%
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
1, 2028
1, 2028
1, 2029
1, 2029
1, 2030
1, 2030
1, 2031
1, 2031
1, 2032
1, 2032
1, 2033
1, 2033
1, 2034
1, 2034
1, 2035
1, 2035
1, 2036
1, 2036
1, 2037
1, 2037
1, 2038
Date
4,740.55
4,868.50
5,000.00
-
CAB Bond
06/01/2029
5.4%
4,479.70
4,604.45
4,732.70
4,864.50
5,000.00
-
CAB Bond
06/01/2030
5.57%
4,222.95
4,343.50
4,467.50
4,595.05
4,726.25
4,861.20
5,000.00
-
CAB Bond
06/01/2031
5.71%
3,973.20
4,089.00
4,208.20
4,330.85
4,457.10
4,587.05
4,720.75
4,858.35
5,000.00
-
CAB Bond
06/01/2032
5.83%
3,731.30
3,842.10
3,956.25
4,073.75
4,194.70
4,319.30
4,447.60
4,579.70
4,715.70
4,855.75
5,000.00
-
CAB Bond
06/01/2033
5.94%
3,496.70
3,602.45
3,711.45
3,823.70
3,939.35
4,058.55
4,181.30
4,307.80
4,438.10
4,572.35
4,710.65
4,853.15
5,000.00
-
CAB Bond
06/01/2034
6.05%
3,280.95
3,381.20
3,484.50
3,590.95
3,700.65
3,813.70
3,930.20
4,050.25
4,174.00
4,301.50
4,432.95
4,568.35
4,707.95
4,851.75
5,000.00
-
CAB Bond
06/01/2035
6.11%
3,074.95
3,169.80
3,267.60
3,368.40
3,472.35
3,579.45
3,689.90
3,803.70
3,921.05
4,042.00
4,166.70
4,295.25
4,427.80
4,564.35
4,705.20
4,850.35
5,000.00
-
CAB Bond
06/01/2036
6.17%
Dec 18, 2013
Jun 1, 2014
Dec 1, 2014
Jun 1, 2015
Dec 1, 2015
Jun 1, 2016
Dec 1, 2016
Jun 1, 2017
Dec 1, 2017
Jun 1, 2018
Dec 1, 2018
Jun 1, 2019
Dec 1, 2019
Jun 1, 2020
Dec 1, 2020
Jun 1, 2021
Dec 1, 2021
Jun 1, 2022
Dec 1, 2022
Jun 1, 2023
Dec 1, 2023
Jun 1, 2024
Dec 1, 2024
Jun 1, 2025
Dec 1, 2025
Jun 1, 2026
Dec 1, 2026
Jun 1, 2027
Dec 1, 2027
Date
1,188.70
1,222.15
1,260.15
1,299.35
1,339.75
1,381.45
1,424.40
1,468.70
1,514.35
1,561.45
1,610.05
1,660.10
1,711.75
1,764.95
1,819.85
1,876.45
1,934.80
1,995.00
2,057.05
2,121.00
2,186.95
2,255.00
2,325.10
2,397.45
2,472.00
2,548.85
2,628.15
2,709.90
2,794.15
CAB Bond
06/01/2037
6.22%
1,110.15
1,141.55
1,177.20
1,214.00
1,251.95
1,291.05
1,331.40
1,373.00
1,415.90
1,460.15
1,505.80
1,552.85
1,601.40
1,651.45
1,703.05
1,756.25
1,811.15
1,867.75
1,926.10
1,986.30
2,048.40
2,112.40
2,178.40
2,246.50
2,316.70
2,389.10
2,463.75
2,540.75
2,620.15
CAB Bond
06/01/2038
6.25%
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
1, 2028
1, 2028
1, 2029
1, 2029
1, 2030
1, 2030
1, 2031
1, 2031
1, 2032
1, 2032
1, 2033
1, 2033
1, 2034
1, 2034
1, 2035
1, 2035
1, 2036
1, 2036
1, 2037
1, 2037
1, 2038
Date
2,881.05
2,970.65
3,063.05
3,158.30
3,256.55
3,357.80
3,462.25
3,569.90
3,680.95
3,795.40
3,913.45
4,035.15
4,160.65
4,290.05
4,423.50
4,561.05
4,702.90
4,849.15
5,000.00
-
CAB Bond
06/01/2037
6.22%
2,702.00
2,786.45
2,873.50
2,963.30
3,055.95
3,151.45
3,249.90
3,351.45
3,456.20
3,564.20
3,675.60
3,790.45
3,908.90
4,031.05
4,157.05
4,286.95
4,420.90
4,559.05
4,701.55
4,848.45
5,000.00
CAB Bond
06/01/2038
6.25%
APPENDIX F
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
MUNICIPAL BOND
INSURANCE POLICY
Policy No:
ISSUER:
BONDS:
$ in aggregate principal amount of
-N
Effective Date:
Premium: $
ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, hereby
UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the
"Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for
the Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only to
the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and
interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by
the Issuer.
On the later of the day on which such principal and interest becomes Due for Payment or the
Business Day next following the Business Day on which AGM shall have received Notice of Nonpayment,
AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest
on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but
only upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to
receive payment of the principal or interest then Due for Payment and (b) evidence, including any
appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such
principal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will be
deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such
Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of
Nonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM for
purposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent or
Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in
respect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or right
to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of the
Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by
AGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, to
the extent thereof, discharge the obligation of AGM under this Policy.
Except to the extent expressly modified by an endorsement hereto, the following terms shall have
the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a
Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's
Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment"
means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date
on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to
any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking
fund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its sole
discretion, to pay such principal due upon such acceleration together with any accrued interest to the date
of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of
interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient
funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and
interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any
payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer
which
has
been
recovered
from
such
Owner
pursuant
to
the
Page 2 of 2
Policy No. -N
United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order
of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently
confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or
the Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the Policy
Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner"
means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the
terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or
entity whose direct or indirect obligation constitutes the underlying security for the Bonds.
AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by
giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the
Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying
Agent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall be
simultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received until
received by both and (b) all payments required to be made by AGM under this Policy may be made directly
by AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGM
only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal
Agent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments due
under this Policy.
To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives,
only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses
(including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or
otherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of its
obligations under this Policy in accordance with the express provisions of this Policy.
This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered or
affected by any other agreement or instrument, including any modification or amendment thereto. Except to
the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is
nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the
Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76
OF THE NEW YORK INSURANCE LAW.
In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. has caused this Policy to be
executed on its behalf by its Authorized Officer.
ASSURED GUARANTY MUNICIPAL CORP.
By
Authorized Officer
Form 500NY (5/90)
1228 N Street, Suite 13
Sacramento, CA 95814
(916) 444-5100

$631,298.25 ELVERTA JOINT ELEMENTARY SCHOOL DISTRICT

Transcription

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