2200000* GUERNEVILLE ELEMENTARY SCHOOL

Transcription

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to
buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction .
PRELIMINARY OFFICIAL STATEMENT DATED JUNE 5, 2013
NEW ISSUE - FULL BOOK-ENTRY
BANK QUALIFIED
RATING: Standard & Poor’s: “A+”
See “RATING” herein.
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain
qualifications described in this Official Statement, under existing law, interest on the Series B Bonds is excluded from gross income for
federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed
on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations,
interest on the Series B Bonds is taken into account in determining certain income and earnings, and the Series B Bonds are “qualified taxexempt obligations” within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel,
interest on the Series B Bonds is exempt from California personal income taxes. See “TAX MATTERS.”
$2,200,000*
GUERNEVILLE ELEMENTARY SCHOOL DISTRICT
(Sonoma County, California)
General Obligation Bonds
Election of 2012, Series B
(Bank Qualified)
Dated: Date of Delivery
Due: August 1, as shown on inside front cover
Authority and Purpose. The captioned bonds (the “Series B Bonds”) are being issued by the Guerneville Elementary School District
(the “District”) pursuant to certain provisions of the California Government Code and a resolution of the Governing Board of the District
adopted on May 20, 2013 (the “Bond Resolution”). The Series B Bonds were authorized at an election of the registered voters of the District
held on June 5, 2012, which authorized the issuance of $6,000,000 principal amount of general obligation bonds for the purpose of
financing the renovation, construction and improvement of school facilities. The Bonds are the second series of bonds to be issued under
this authorization. In November 2012, the District issued $2,100,000 General Obligation Bonds, Election of 2012, Series A under this
authorization. See “THE SERIES B BONDS – Authority For Issuance” and “THE FINANCING PLAN” herein.
Security. The Series B Bonds are payable solely from ad valorem property taxes levied and collected by Sonoma County (the
“County”). The County Board of Supervisors is empowered and is obligated to annually levy ad valorem taxes for the payment of interest
on, and principal of, the Series B Bonds upon all property subject to taxation by the District, without limitation of rate or amount (except
certain personal property which is taxable at limited rates). See “SECURITY FOR THE SERIES B BONDS.”
Book-Entry Only. The Series B Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of
Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers will not receive physical certificates
representing their interests in the Series B Bonds. See “THE SERIES B BONDS” and “APPENDIX F - DTC AND THE BOOK-ENTRY ONLY
SYSTEM.”
Payments. The Series B Bonds are dated the date of delivery set forth above and are being issued as current interest bonds (as
defined herein). The Series B Bonds accrue interest at the rates set forth on the inside cover page hereof, payable semiannually on each
February 1 and August 1 until maturity, commencing February 1, 2014. Payments of principal of and interest on the Series B Bonds will be
paid by The Bank of New York Mellon Trust Company, Los Angeles, California, as agent for the County of Sonoma, the designated paying
agent, registrar and transfer agent for the Series B Bonds (the “Paying Agent”), to DTC for subsequent disbursement to DTC Participants
who will remit such payments to the beneficial owners of the Series B Bonds. See “THE SERIES B BONDS - Description of the Series B
Bonds.”
Redemption. The Series B Bonds are subject to redemption prior to maturity as described herein. See “THE SERIES B BONDS –
Optional Redemption” and “– Mandatory Sinking Fund Redemption.”
Bond Insurance. The District has applied for bond insurance to guarantee the scheduled payment of principal of and interest on the
Series B Bonds and, if a commitment is issued to insure the Series B Bonds, will determine prior to the sale of the Series B Bonds whether
to obtain such insurance. See “BOND INSURANCE.”
MATURITY SCHEDULE
(See inside cover)
Cover Page. This cover page contains certain information for general reference only. It is not a summary of all the provisions of the
Series B Bonds. Prospective investors must read the entire Official Statement to obtain information essential to making an informed
investment decision.
The Series B Bonds will be offered when, as and if issued and accepted by the Underwriter, subject to the approval as to legality by
Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel to the District, and subject to certain other conditions.
Jones Hall is also serving as Disclosure Counsel to the District. Nossaman, LLP, Irvine, California, is serving as Underwriter’s Counsel. It is
anticipated that the Series B Bonds, in book-entry form, will be available for delivery through the facilities of DTC in New York, New York, on
or about June 25, 2013.
The date of this Official Statement is June __, 2013.
_____________________________
*Preliminary subject to change.
MATURITY SCHEDULE*
$____________ Serial Series B Bonds
Maturity Date
(August 1)
Principal
Amount
Interest
Rate
Yield
Price
CUSIP†
$___________ ___% Term Series B Bond maturing August 1, 20__; Yield: _______%;
Price: __________%; CUSIP†: _____________
*Preliminary; subject to change.
†
Copyright 2013, American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service Bureau,
a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the District nor the
Underwriter assumes any responsibility for the accuracy of these CUSIP data.
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Series
B 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 a contract between any bond owner and the District or the Underwriter.
No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has
been authorized by the District or the Underwriter to give any information or to make any representations other
than those contained in this Official Statement and, if given or made, such other information or representation
must not be relied upon as having been authorized by the District or the Underwriter.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy nor may there be any sale of the Series B Bonds by a person in any jurisdiction in
which it is unlawful for such person to make such an offer, solicitation or sale.
Information in Official Statement. The information set forth in this Official Statement has been furnished
by the District and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or
completeness.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the
District in any press release and in any oral statement made with the approval of an authorized officer of the
District or any other entity described or referenced herein, the words or phrases “will likely result,” “are
expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar
expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward-looking statements. Any forecast is subject to such
uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and
unanticipated events and circumstances may occur. Therefore, there are likely to be differences between
forecasts and actual results, and those differences may be material. The information and expressions of
opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any
sale made hereunder shall, under any circumstances, give rise to any implication that there has been no
change in the affairs of the District or any other entity described or referenced herein since the date hereof.
Involvement of Underwriter. The Underwriter has provided the following statement for inclusion in this
Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with,
and as a part of, its responsibilities to investors under the 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.
Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that
stabilize or maintain the market prices of the Series B Bonds at levels above that which might otherwise prevail
in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The
Underwriter may offer and sell the Series B Bonds to certain securities dealers, dealer banks and banks acting
as agent at prices lower than the public offering prices stated on the inside cover page of this Official
Statement, and those public offering prices may be changed from time to time by the Underwriter.
Document Summaries. All summaries of the Bond Resolution or other documents referred to in this
Official Statement are made subject to the provisions of such documents and qualified in their entirety to
reference to such documents, and do not purport to be complete statements of any or all of such provisions.
No Securities Laws Registration. The Series B Bonds have not been registered under the Securities Act
of 1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities.
The Series B Bonds have not been registered or qualified under the securities laws of any state.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of
opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this
Official Statement nor any sale of the Series B Bonds will, under any circumstances, give rise to any implication
that there has been no change in the affairs of the District, the County, the other parties described in this
Official Statement, or the condition of the property within the District since the date of this Official Statement.
Website. The District maintains a website. However, the information presented on the website is not a
part of this Official Statement and should not be relied upon in making an investment decision with respect to
the Series B Bonds.
GOVERNING BOARD OF THE DISTRICT
Donna Hines, President
Jamie Greule, Member
Pam Kruse, Member
Robin Leone, Member
Sarah Cranke, Member
DISTRICT ADMINISTRATION
Elaine Carlson, Superintendent
Michael “Sid” Albaugh, Business Manager
PROFESSIONAL SERVICES
FINANCIAL ADVISOR
Isom Advisors, A Division of Urban Futures
Walnut Creek, California
BOND AND DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
UNDERWRITER’S COUNSEL
Nossaman, LLP
Irvine, California
BOND REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The Bank of New York Mellon Trust Company, N.A.,
as the designated agent for the County of Sonoma
Los Angeles, California
TABLE OF CONTENTS
Page
INTRODUCTION ....................................................................................................................... 1 THE FINANCING PLAN ............................................................................................................ 3 SOURCES AND USES OF FUNDS .......................................................................................... 3 THE SERIES B BONDS ............................................................................................................ 4 Authority for Issuance............................................................................................................. 4 Description of the Series B Bonds.......................................................................................... 4 Book-Entry Only Form ............................................................................................................ 4 Optional Redemption.............................................................................................................. 5 Mandatory Sinking Fund Redemption .................................................................................... 5 Notice of Redemption ............................................................................................................. 6 Partial Redemption of Bonds.................................................................................................. 6 Right to Rescind Notice of Redemption ................................................................................. 6 Registration, Transfer and Exchange of Bonds...................................................................... 7 Defeasance ............................................................................................................................ 7 DEBT SERVICE SCHEDULE .................................................................................................... 9 SECURITY FOR THE SERIES B BONDS .............................................................................. 10 Ad Valorem Taxes ................................................................................................................ 10 Debt Service Fund................................................................................................................ 10 Not a County Obligation ....................................................................................................... 11 PROPERTY TAXATION .......................................................................................................... 11 Property Tax Collection Procedures..................................................................................... 11 Taxation of State-Assessed Utility Property ......................................................................... 12 Assessed Valuation .............................................................................................................. 12 Appeals of Assessed Value.................................................................................................. 15 Tax Rates ............................................................................................................................. 16 Tax Levies and Delinquencies ............................................................................................. 16 Major Taxpayers................................................................................................................... 17 Direct and Overlapping Debt ................................................................................................ 18 TAX MATTERS ........................................................................................................................ 19 Tax Exemption ..................................................................................................................... 19 Other Tax Considerations .................................................................................................... 20 CERTAIN LEGAL MATTERS .................................................................................................. 21 Legality for Investment ......................................................................................................... 21 Absence of Litigation ............................................................................................................ 21 Compensation of Certain Professionals ............................................................................... 21 CONTINUING DISCLOSURE .................................................................................................. 21 RATING ................................................................................................................................... 22 UNDERWRITING .................................................................................................................... 22 ADDITIONAL INFORMATION ................................................................................................. 22 APPENDIX A - GUERNEVILLE ELEMENTARY SCHOOL DISTRICT AUDITED FINANCIAL
STATEMENTS FOR FISCAL YEAR 2011-12 .............................................................. A-1
APPENDIX B - GENERAL AND FINANCIAL INFORMATION FOR GUERNEVILLE
ELEMENTARY SCHOOL DISTRICT ......................................................................... B-1
APPENDIX C - ECONOMIC AND DEMOGRAPHIC INFORMATION FOR SONOMA COUNTY .......C-1
APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL ...........................................D-1
APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE ............................................ E-1
APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM ......................................................... F-1
APPENDIX G - SONOMA COUNTY INVESTMENT POLICY AND QUARTERLY
REPORT FOR QUARTER ENDING MARCH 31, 2013 .............................................. G-1
i
[THIS PAGE INTENTIONALLY LEFT BLANK]
$2,200,000*
(Bank Qualified)
The purpose of this Official Statement, which includes the cover page, inside cover page
and attached appendices, is to set forth certain information concerning the sale and delivery of
the general obligation bonds captioned above (the “Series B Bonds”) by the Guerneville
Elementary School District (the “District”).
INTRODUCTION
This Introduction is not a summary of this Official Statement. It is only a brief description
of and guide to, and is qualified by, more complete and detailed information contained in the
entire Official Statement and the documents summarized or described in this Official Statement.
A full review should be made of the entire Official Statement. The offering of Series B Bonds to
potential investors is made only by means of the entire Official Statement.
The District. The District provides educational services to the residents of most of the
community of Guerneville, an unincorporated town located in the County of Sonoma (the
"County"), in the State of California (the "State"), approximately 75 miles north of San
Francisco and 12 miles from the Sonoma County coastline. The District is an elementary
school district providing education for students in grades K-8. The District currently operates
one elementary school and one community day school. Total enrollment for the 2012-13 school
year is 281 students. For more information regarding the District and its finances, see Appendix
B attached hereto. See also Appendix C hereto for demographic and other statistical
information regarding the County.
Basic Aid Status. Commencing in fiscal year 2011-12 and continuing in 2012-13, the
District’s local revenue, consisting of its share of local property taxes, have exceeded the
District’s deficited revenue limit and therefore, the District is considered a “Basic Aid District,”
meaning it is entitled to retain local property tax revenues which exceed its revenue limit. The
District in uncertain if it will continue to be a Basic Aid District in 2013-14 based on its revenue
limit and its share of local property taxes in 2013-14.
Purpose. The net proceeds of the Series B Bonds will be used to finance school
construction and improvements to the school facilities as approved by the voters at an election
held in the District on June 5, 2012 (the “Bond Election”). See “THE FINANCING PLAN”
herein.
Authority for Issuance of the Series B Bonds. Issuance of the Series B Bonds was
approved by the requisite 55% of the voters of the District voting at the Bond Election and will
be issued pursuant to certain provisions of the Government Code of the State, commencing with
Section 53506 thereof (the “Bond Law”), and pursuant to a resolution adopted by the
Governing Board of the District adopted on May 20, 2013 (the “Bond Resolution”). See “THE
SERIES B BONDS - Authority for Issuance” herein.
*Preliminary, subject to change.
-1-
Payment and Registration of the Series B Bonds. The Series B Bonds are being
issued as current interest bonds. The Series B Bonds mature in the years and in the amounts
as set forth on the inside cover page hereof. The Series B Bonds will be issued in book-entry
form only, and will be initially issued and registered in the name of Cede & Co. as nominee for
DTC. Purchasers will not receive physical certificates representing their interest in the Bonds.
See “THE SERIES B BONDS” and “APPENDIX F - DTC AND THE BOOK-ENTRY ONLY
SYSTEM.”
Redemption. The Series B Bonds are subject to redemption prior to maturity as
described herein. See “THE SERIES B BONDS – Optional Redemption” and “– Mandatory
Sinking Fund Redemption.”
Security and Sources of Payment for the Series B Bonds. The Series B Bonds are
general obligation bonds of the District payable solely from ad valorem property taxes levied
and collected by the County. The County is empowered and is obligated to annually levy ad
valorem taxes for the payment of interest on, and principal of, the Series B Bonds upon all
property subject to taxation by the District, without limitation of rate or amount (except with
respect to certain personal property which is taxable at limited rates). See “SECURITY FOR
THE SERIES B BONDS.”
Bond Insurance. The District has applied for bond insurance to guarantee the
scheduled payment of principal of and interest on the Series B Bonds and, if a commitment is
issued to insure the Series B Bonds, will determine prior to the sale of the Series B Bonds
whether to obtain such insurance. See “BOND INSURANCE.”
Bank Qualified. The District has designated the Series B Bonds as "qualified taxexempt obligations" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986. Such
section provides an exception to the prohibition against the ability of a “financial institution” (as
defined in the Internal Revenue Code of 1986) to deduct its interest expense allocable to taxexempt interest. See “TAX MATTERS” herein.
Other Information. This Official Statement speaks only as of its date, and the
information contained in this Official Statement is subject to change. Copies of documents
referred to in this Official Statement and information concerning the Series B Bonds are
available from the District from the Superintendent’s Office at 14630 Armstrong Woods Road,
Guerneville, California 95446, Telephone: (707) 869-2864. The District may impose a charge
for copying, mailing and handling.
END OF INTRODUCTION
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THE FINANCING PLAN
The proceeds of the Series B Bonds will be used to finance projects approved by the
voters at the Bond Election, which was approved by 64.8% of the voters (the “2012
Authorization”). The abbreviated form of the ballot measure is as follows:
“To improve the quality of education, improve student access to computers and modern
technology, make health and safety improvements, modernize outdated classrooms and
restrooms, improve energy efficiency by installing solar panels, modernize playgrounds
and playfields, and replace outdated heating, ventilation and air-conditioning systems,
shall the Guerneville School District issue $6,000,000 of bonds at legal interest rates,
have an independent citizens' oversight committee and have no money used for
administrative salaries or be taken by the State?”
On November 6, 2012, the District issued a first series of bonds pursuant to the 2012
Authorization obtained at the Bond Election, in the principal amount of $2,100,000 (the “Series
A Bonds”). The Series B Bonds represent the second issuance of bonds pursuant to the 2012
Authorization.
SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the Series B Bonds are as
follows:
Sources of Funds
Principal Amount of Series B Bonds
Net Original Issue Premium
Total Sources
Uses of Funds
Deposit to Building Fund
Debt Service Fund
Costs of Issuance
Total Uses
(1)
(1) All estimated costs of issuance including, but not limited to, Underwriter’s discount,
printing costs, and fees of Bond Counsel, Disclosure Counsel, the Financial Advisor,
bond insurance premium, if any, the Paying Agent, and the rating agency.
-3-
THE SERIES B BONDS
Authority for Issuance
The Series B Bonds will be issued under the Bond Law and the Bond Resolution, and
pursuant to the 2012 Bond Authorization. The Series B Bonds are the second series of bonds
issued pursuant to the 2012 Bond Authorization. See “DEBT SERVICE SCHEDULE” below for
the debt service due on the Series B Bonds, together with the Series A Bonds.
Description of the Series B Bonds
The Series B Bonds are being issued as current interest bonds. The Series B Bonds
mature in the years and in the amounts as set forth on the inside cover page hereof. The Series
B Bonds will be issued in book-entry form only, and will be initially issued and registered in the
name of Cede & Co. as nominee for DTC. Purchasers will not receive physical certificates
representing their interest in the Series B Bonds. See “Book-Entry Only System” below and
“APPENDIX F – DTC and the Book-Entry Only System.”
The Series B Bonds shall be issued in denominations of $5,000 principal amount each
or any integral multiple thereof. Interest on the Series B Bonds is payable semiannually on each
February 1 and August 1, commencing February 1, 2014 (each, an “Interest Payment Date”).
Each Series B Bond will bear interest from the Interest Payment Date next preceding the date of
registration and authentication thereof unless (i) it is authenticated as of an Interest Payment
Date, in which event it will bear interest from such date, or (ii) it is authenticated prior to an
Interest Payment Date and after the close of business on the fifteenth (15th) day of the month
preceding the Interest Payment Date (the “Record Date”), in which event it will bear interest
from such Interest Payment Date, or (iii) it is authenticated prior to January 15, 2014, in which
event it will bear interest from the Closing Date identified on the cover page hereof.
Notwithstanding the foregoing, if interest on any Series B Bond is in default at the time of
authentication thereof, such Series B Bond will bear interest from the Interest Payment Date to
which interest has previously been paid or made available for payment thereon. Payments of
principal of and interest on the Series B Bonds will be paid by the Paying Agent to DTC for
subsequent disbursement to DTC Participants who will remit such payments to the beneficial
owners of the Series B Bonds.
See the maturity schedules on the inside cover page of this Official Statement and
“DEBT SERVICE SCHEDULE” herein.
Book-Entry Only System
The Series B Bonds will be issued in book-entry form only, and will be initially issued
and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New
York, New York (“DTC”). Purchasers of the Series B Bonds (the “Beneficial Owners”) will not
receive physical certificates representing their interest in the Series B Bonds. Payments of
principal of and interest on the Series B Bonds will be paid by Bank of New York Mellon Trust
Company, Los Angeles, California, as agent for the County of Sonoma, the designated paying
agent for the Series B Bonds (the “Paying Agent”) to DTC for subsequent disbursement to DTC
Participants which will remit such payments to the Beneficial Owners of the Series B Bonds.
As long as DTC’s book-entry method is used for the Series B Bonds, the Paying Agent
will send any notice of prepayment or other notices to owners only to DTC. Any failure of DTC
-4-
to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any
such notice and its content or effect will not affect the validity or sufficiency of the proceedings
relating to the prepayment of the Series B Bonds called for prepayment or of any other action
premised on such notice. See “APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
The Paying Agent, the District, and the Underwriter of the Series B Bonds have no
responsibility or liability for any aspects of the records relating to or payments made on account
of beneficial ownership, or for maintaining, supervising or reviewing any records relating to
beneficial ownership, of interests in the Series B Bonds.
Optional Redemption*
The Series B Bonds maturing on or after August 1, 2024 are subject to redemption prior
to maturity, at the option of the District, in whole or in part among maturities on such basis as
shall be designated by the District and by lot within a maturity, from any available source of
funds, on August 1, 2023, or on any date thereafter, at a price equal to 100% of the principal
amount thereof, without premium, together with accrued interest thereon to the redemption date.
For the purpose of selection for optional redemption, Series B Bonds will be deemed to
consist of $5,000 portions, and any such portion may be separately redeemed. Whenever less
than all of the outstanding Series B Bonds of any one maturity are designated for redemption,
the Paying Agent shall select the outstanding Series B Bonds of such maturity to be redeemed
by lot in any manner deemed fair by the Paying Agent. For purposes of such selection, each
Series B Bond will be deemed to consist of individual bonds of $5,000 portions. The Series B
Bonds may all be separately redeemed.
Mandatory Sinking Fund Redemption
The Series B Bonds maturing on August 1, 20__ (the “Term Bonds”), are subject to
mandatory sinking fund redemption on August 1 of each year in accordance with the schedule
set forth below. The Term Bonds so called for mandatory sinking fund redemption shall be
redeemed in the sinking fund payments amounts and on the dates set forth below, without
premium.
Term Bonds Maturing August 1, 20__
Redemption Date
(August 1)
Sinking Fund
Redemption
*Preliminary; subject to change.
-5-
If any such Term Bonds are redeemed pursuant to optional redemption, the total amount
of all future sinking fund payments with respect to such Term Bonds shall be reduced by the
aggregate principal amount of such Term Bonds so redeemed, to be allocated among such
payments on a pro rata basis in integral multiples of $5,000 principal amount (or on such other
basis as the District may determined) as set forth in written notice given by the District to the
Paying Agent.
Notice of Redemption
The Paying Agent is required to give notice of the redemption of the Series B Bonds, at
the expense of the District. Notice of any redemption of Series B Bonds shall specify: (a) the
Series B Bonds or designated portions thereof (in the case of redemption of the Series B Bonds
in part but not in whole) which are to be redeemed, (b) the date of redemption, (c) the place or
places where the redemption will be made, including the name and address of the Paying
Agent, (d) the redemption price, (e) the CUSIP numbers (if any) assigned to the Series B Bonds
to be redeemed, (f) the Series B Bond numbers of the Series B Bonds to be redeemed in whole
or in part and, in the case of any Series B Bond to be redeemed in part only, the principal
amount of such Series B Bond to be redeemed, and (g) the original issue date, interest rate and
stated maturity date of each Series B Bond to be redeemed in whole or in part. Such notice
shall further state that on the specified date there shall become due and payable upon each
Series B Bond or portion thereof being redeemed the redemption price thereof, and that from
and after such date, interest thereon shall cease to accrue.
Neither failure to receive or failure to send any notice of redemption nor any defect in
any such redemption notice so given shall affect the sufficiency of the proceedings for the
redemption of the affected Series B Bonds.
Partial Redemption of Bonds
Upon the surrender of any Series B Bond redeemed in part only, the Paying Agent shall
execute and deliver to the Owner thereof a new Series B Bond or Bonds of like tenor and
maturity and of authorized denominations equal in transfer amounts to the unredeemed portion
of the Series B Bond surrendered. Such partial redemption shall be valid upon payment of the
amount required to be paid to such Owner, and the County and the District shall be released
and discharged thereupon from all liability to the extent of such payment.
Right to Rescind Notice of Redemption
The District has the right to rescind any notice of the optional redemption of Series B
Bonds by written notice to the Paying Agent on or prior to the date fixed for redemption. Any
notice of redemption shall be cancelled and annulled if for any reason funds will not be or are
not available on the date fixed for redemption for the payment in full of the Series B Bonds then
called for redemption. The District and the Paying Agent have no liability to the Bond owners or
any other party related to or arising from such rescission of redemption. The Paying Agent shall
mail notice of such rescission of redemption in the same manner as the original notice of
redemption was sent under the Bond Resolution.
-6-
Registration, Transfer and Exchange of Bonds
If the book entry system is discontinued, the District shall cause the Paying Agent to
maintain and keep at its principal corporate trust office all books and records necessary for the
registration, exchange and transfer of the Bonds.
If the book entry system is discontinued, the person in whose name a Series B Bond is
registered on the Bond Register shall be regarded as the absolute owner of that Bond.
Payment of the principal of and interest on any Series B Bond shall be made only to or upon the
order of that person; neither the District, the County nor the Paying Agent shall be affected by
any notice to the contrary, but the registration may be changed as provided the Bond
Resolution.
Bonds may be exchanged at the principal corporate trust office of the Paying Agent in
San Francisco, California for a like aggregate principal amount of Series B Bonds of authorized
denominations and of the same maturity. Any Series B Bond may, in accordance with its terms,
but only if (i) the District determines to no longer maintain the book entry only status of the
Series B Bonds, (ii) DTC determines to discontinue providing such services and no successor
securities depository is named or (iii) DTC requests the District to deliver Series B Bond
certificates to particular DTC Participants, be transferred, upon the books required to be kept
pursuant to the provisions of the Bond Resolution, by the person in whose name it is registered,
in person or by his duly authorized attorney, upon surrender of such Series B Bond for
cancellation at the office of the Paying Agent, accompanied by delivery of a written instrument of
transfer in a form approved by the Paying Agent, duly executed.
No exchanges of Series B Bonds shall be required to be made (a) fifteen days prior to
an Interest Payment Date or the date established by the Paying Agent for selection of Series B
Bonds for redemption until the close of business on the Interest Payment Date or day on which
the applicable notice of redemption is given or (b) with respect to a Series B Bond after such
Series B Bond has been selected or called for redemption in whole or in part.
Defeasance
The Series B Bonds may be paid by the District, in whole or in part, in any one or more
of the following ways:
(a)
by paying or causing to be paid the principal or redemption price of and
interest on such Series B Bonds, as and when the same become due and
payable;
(b)
by irrevocably depositing, in trust, at or before maturity, money or
securities in the necessary amount (as provided in the Bond Resolution)
to pay or redeem such Series B Bonds; or
(c)
by delivering such Series B Bonds to the Paying Agent for cancellation by
it.
Whenever in the Bond Resolution it is provided or permitted that there be deposited with
or held in trust by the Paying Agent money or securities in the necessary amount to pay or
redeem any Series B Bonds, the money or securities so to be deposited or held may be held by
the Paying Agent or by any other fiduciary. Such money or securities may include money or
-7-
securities held by the Paying Agent in the funds and accounts established under the Bond
Resolution and will be:
(i) lawful money of the United States of America in an amount equal to the
principal amount of such Series B Bonds and all unpaid interest thereon
to maturity, except that, in the case of Series B Bonds which are to be
redeemed prior to maturity and in respect of which notice of such
redemption is given as provided in the Bond Resolution or provision
satisfactory to the Paying Agent is made for the giving of such notice, the
amount to be deposited or held will be the principal amount or redemption
price of such Series B Bonds and all unpaid interest thereon to the
redemption date; or
(ii) Federal Securities (not callable by the issuer thereof prior to maturity) the
principal of and interest on which when due, in the opinion of a certified
public accountant delivered to the County and the District, will provide
money sufficient to pay the principal or redemption price of and all unpaid
interest to maturity, or to the redemption date, as the case may be, on the
Series B Bonds to be paid or redeemed, as such principal or redemption
price and interest become due, provided that, in the case of Series B
Bonds which are to be redeemed prior to the maturity thereof, notice of
such redemption is given as provided in the Bond Resolution or provision
satisfactory to the Paying Agent is made for the giving of such notice.
Upon the deposit, in trust, at or before maturity, of money or securities in the necessary
amount (as described above) to pay or redeem any outstanding Series B Bond (whether upon
or prior to its maturity or the redemption date of such Bond), then all liability of the County and
the District in respect of such Series B Bond will cease and be completely discharged, except
only that thereafter the owner thereof will be entitled only to payment of the principal of and
interest on such Series B Bond by the District, and the District will remain liable for such
payment, but only out of such money or securities deposited with the Paying Agent for such
payment.
“Federal Securities” means United States Treasury notes, bonds, bills or certificates of
indebtedness, or obligations issued by any agency or department of the United States which are
secured, directly or indirectly, by the full faith and credit of the United States.
-8-
DEBT SERVICE SCHEDULE
The following table shows the debt service schedule with respect to the Series B Bonds,
assuming no optional redemptions. The Series A Bonds and the Series B Bonds being issued
are currently the only outstanding general obligation bonds of the District.
Series B Bonds Debt Service Schedule
Bond Year
Ending
August 1
2013
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
2039
2040
2041
2042
Total
Series A
Bonds Total
Debt Service
$197,185.86
173,856.26
95,106.26
95,106.26
95,106.26
95,106.26
105,106.26
104,906.26
109,706.26
114,368.76
113,843.76
118,293.76
122,543.76
126,643.76
130,550.00
139,250.00
142,437.50
145,443.76
153,268.76
155,731.26
163,012.50
169,931.26
176,487.50
182,681.26
185,637.50
192,981.26
199,406.26
204,912.50
214,500.00
222,862.50
$4,445,973.56
Series B
Bonds
Principal
Series B
Bonds
Interest
-9-
Series B Total
Debt Service
Series A
Bonds and
Series B
Bonds
Aggregate
Deb Service
SECURITY FOR THE SERIES B BONDS
Ad Valorem Taxes
Bonds Payable from Ad Valorem Property Taxes. The Series B Bonds are general
obligations of the District, payable solely from ad valorem property taxes levied and collected by
the County. The County is empowered and is obligated to annually levy ad valorem taxes for
the payment of the Series B Bonds and the interest thereon upon all property within the District
subject to taxation by the District, without limitation of rate or amount (except certain personal
property which is taxable at limited rates).
Other Bonds Payable from Ad Valorem Property Taxes. The District intends to issue
additional general obligation bonds under the 2012 Authorization, which are payable from ad
valorem taxes on a parity basis. In addition to the general obligation bonds issued by the
District, there is other debt issued by entities with jurisdiction in the District, which is payable
from ad valorem taxes levied on parcels in the District. See “PROPERTY TAXATION – Tax
Rates” and “- Direct and Overlapping Debt” below.
Levy and Collection. The County will levy and collect such ad valorem taxes in such
amounts and at such times as is necessary to ensure the timely payment of debt service. Such
taxes, when collected, will be deposited into a debt service fund for the Series B Bonds, which is
maintained by the County and which is irrevocably pledged for the payment of principal of and
interest on the Series B Bonds when due.
District property taxes are assessed and collected by the County in the same manner
and at the same time, and in the same installments as other ad valorem taxes on real property,
and will have the same priority, become delinquent at the same times and in the same
proportionate amounts, and bear the same proportionate penalties and interest after
delinquency, as do the other ad valorem taxes on real property.
Annual Tax Rates. The amount of the annual ad valorem tax levied by the County to
repay the Series B Bonds will be determined by the relationship between the assessed
valuation of taxable property in the District and the amount of debt service due on the Series B
Bonds. Fluctuations in the annual debt service on the Series B Bonds and the assessed value
of taxable property in the District may cause the annual tax rate to fluctuate.
Economic and other factors beyond the District’s control, such as economic recession,
deflation of land values, a relocation out of the District or financial difficulty or bankruptcy by one
or more major property taxpayers, or the complete or partial destruction of taxable property
caused by, among other eventualities, earthquake, flood, fire or other natural disaster, could
cause a reduction in the assessed value within the District and necessitate a corresponding
increase in the annual tax rate.
Debt Service Fund
The County will establish a Debt Service Fund (the “Debt Service Fund”) for the Series
B Bonds, which will be established as a separate fund to be maintained distinct from all other
funds of the County. All taxes levied by the County for the payment of the principal of and
interest and premium (if any) on the Series B Bonds will be deposited in the Debt Service Fund
by the County promptly upon the receipt. The Debt Service Fund is pledged for the payment of
the principal of and interest and premium (if any) on the Series B Bonds when and as the same
-10-
become due. The District will transfer amounts in the Debt Service Fund to the Paying Agent to
the extent necessary to pay the principal of and interest and premium (if any) on the Series B
Bonds as the same becomes due and payable.
If, after payment in full of the Series B Bonds, any amounts remain on deposit in a Debt
Service Fund, the District shall transfer such amounts to its general fund, to be applied solely in
a manner which is consistent with the requirements of applicable state and federal tax law.
Not a County Obligation
The Series B Bonds are payable solely from the proceeds of an ad valorem tax levied
and collected by the County, for the payment of principal and interest on the Series B Bonds.
Although the County is obligated to collect the ad valorem tax for the payment of the Series B
Bonds, the Series B Bonds are not a debt of the County.
PROPERTY TAXATION
Property Tax Collection Procedures
In California, property which is subject to ad valorem taxes is classified as “secured” or
“unsecured.” The “secured roll” is that part of the assessment roll containing state assessed
public utilities’ property and real property, the taxes on which create a lien on such property
sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on
unsecured property does not become a lien against such unsecured property, but may become
a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on
secured property has priority over all other liens arising pursuant to State law on such secured
property, regardless of the time of the creation of the other liens. Secured and unsecured
property are entered separately on the assessment roll maintained by the county assessor. The
method of collecting delinquent taxes is substantially different for the two classifications of
property.
Property taxes on the secured roll are due in two installments, on November 1 and
February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and
April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition,
property on the secured roll with respect to which taxes are delinquent is declared tax defaulted
on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment
of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1/2% per
month to the time of redemption. If taxes are unpaid for a period of five years or more, the
property is subject to sale by the County.
Property taxes are levied for each fiscal year on taxable real and personal property
situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813
(Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and
taxation of property as of the occurrence of a change of ownership or completion of new
construction. Thus, this legislation eliminated delays in the realization of increased property
taxes from new assessments. As amended, SB813 provided increased revenue to taxing
jurisdictions to the extent that supplemental assessments of new construction or changes of
ownership occur subsequent to the January 1 lien date and result in increased assessed value.
-11-
Property taxes on the unsecured roll are due on the January 1 lien date and become
delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent
taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2%
per month accrues with respect to such taxes beginning the first day of the third month following
the delinquency date. The taxing authority has four ways of collecting unsecured personal
property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the
county clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order
to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal
property, improvements or possessory interests belonging or assessed to the assessee. The
exclusive means of enforcing the payment of delinquent taxes in respect of property on the
secured roll is the sale of the property securing the taxes for the amount of taxes which are
delinquent.
Taxation of State-Assessed Utility Property
The State Constitution provides that most classes of property owned or used by
regulated utilities be assessed by the State Board of Equalization (“SBE”) and taxed locally.
Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is
known as “unitary property”, a concept designed to permit assessment of the utility as a going
concern rather than assessment of each individual element of real and personal property owned
by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which
excludes nonunitary property of regulated railways) is allocated to the counties based on the
situs of the various components of the unitary property. Except for unitary property of regulated
railways and certain other excepted property, all unitary and operating nonunitary property is
taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions
according to statutory formulae generally based on the distribution of taxes in the prior year.
Assessed Valuation
Assessed Valuation History. The table below shows a recent history of the District’s
assessed valuation.
Assessed Valuations of All Taxable Property
Fiscal Years 2001-02 to 2012-13
Fiscal Year
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Local Secured
$399,551,373
434,423,982
480,312,099
526,949,882
591,194,585
658,983,856
716,075,958
759,093,352
735,345,484
695,308,683
690,297,514
675,327,612
Utility
$0
0
0
0
0
0
0
0
0
0
0
0
Source: California Municipal Statistics, Inc.
-12-
Unsecured
$6,946,422
6,225,838
5,722,403
5,580,451
5,627,808
5,541,687
6,132,665
6,363,202
6,322,031
6,006,018
6,448,454
7,698,897
Total
$406,497,795
440,649,820
486,034,502
532,530,333
596,822,393
664,525,543
722,208,623
765,456,554
741,667,515
701,314,701
696,745,968
683,026,509
Annual
% Change
-8.4%
10.3
9.6
12.1
11.3
8.7
6.0
(3.1)
(5.4)
(0.7)
(2.0)
Assessed Valuation by Land Use. The following table shows the land use of property
in the District, as measured by assessed valuation and the number of parcels for fiscal year
2012-13. As shown, the majority of the District’s assessed valuation is represented by
residential property, although a significant portion of residential property is vacant, representing
approximately 26 percent of residential parcels.
Assessed Valuation and Parcels by Land Use
Fiscal Year 2012-13
Non-Residential:
Agricultural/Rural
Commercial/Office
Vacant Commercial
Industrial/Winery
Recreational
Government/Social/Institutional
Miscellaneous
Subtotal Non-Residential
2012-13
% of
Assessed Valuation (1) Total
$ 48,775,531
7.22%
26,883,000
3.98
189,717
0.03
40,688,777
6.03
2,877,750
0.43
679,604
0.10
1,528,496
0.23
$121,622,875
18.01%
No. of
Parcels
298
75
6
8
10
14
62
473
% of
Total
6.67%
1.68
0.13
0.18
0.22
0.31
1.39
10.58%
Residential:
Single Family Residence
Condominium/Townhouse
Mobile Home
Mobile Home Park
Hotel/Motel
2-4 Residential Units
5+ Residential Units/Apartments
Miscellaneous Residential
Vacant Residential
Subtotal Residential
$433,468,835
10,882,983
3,884,882
1,594,554
27,983,804
54,325,872
2,514,510
1,190,070
17,859,227
$553,704,737
64.19%
1.61
0.58
0.24
4.14
8.04
0.37
0.18
2.64
81.99%
2,446
55
26
4
38
240
6
7
1,176
3,998
54.71%
1.23
0.58
0.09
0.85
5.37
0.13
0.16
26.30
89.42%
Total
$675,327,612
100.00%
4,471
100.00%
(1) Local secured assessed valuation; excluding tax-exempt property.
-13-
Assessed Valuation of Single Family Residential Parcels. The following table shows
a breakdown of the assessed valuations of improved single-family residential parcels in the
District, for fiscal year 2012-13.
Per Parcel 2012-13 Assessed Valuation of Single Family Homes
No. of
Parcels
2,446
Single Family Residential
2012-13
Assessed Valuation
$0 - $24,999
$25,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $124,999
$125,000 - $149,999
$150,000 - $174,999
$175,000 - $199,999
$200,000 - $224,999
$225,000 - $249,999
$250,000 - $274,999
$275,000 - $299,999
$300,000 - $324,999
$325,000 - $349,999
$350,000 - $374,999
$375,000 - $399,999
$400,000 - $424,999
$425,000 - $449,999
$450,000 - $474,999
$475,000 - $499,999
$500,000 and greater
Total
No. of
Parcels (1)
232
180
177
199
198
200
177
225
128
127
107
94
84
72
56
45
38
26
13
19
49
2,446
2012-13
Average
Median
Assessed Valuation Assessed Valuation Assessed Valuation
$433,468,835
$177,215
$154,327
% of
Cumulative
Total
% of Total
9.485%
9.485%
7.359
16.844
7.236
24.080
8.136
32.216
8.095
40.311
8.177
48.487
7.236
55.724
9.199
64.922
5.233
70.155
5.192
75.348
4.374
79.722
3.843
83.565
3.434
86.999
2.944
89.943
2.289
92.232
1.840
94.072
1.554
95.626
1.063
96.688
0.531
97.220
0.777
97.997
2.003
100.000
100.000%
Total
% of
Cumulative
Valuation
Total
% of Total
$ 3,779,550
0.872%
0.872%
6,482,097
1.495
2.367
11,205,914
2.585
4.953
17,205,484
3.969
8.922
22,457,174
5.181
14.103
27,733,646
6.398
20.501
28,712,508
6.624
27.125
42,120,218
9.717
36.842
27,016,167
6.233
43.074
30,001,865
6.921
49.995
28,345,141
6.539
56.535
26,748,168
6.171
62.705
26,031,351
6.005
68.711
24,343,469
5.616
74.327
20,388,082
4.703
79.030
17,378,581
4.009
83.039
15,646,236
3.610
86.649
11,370,023
2.623
89.272
6,013,346
1.387
90.659
9,199,483
2.122
92.781
31,290,332
7.219
100.000
$433,468,835 100.000%
(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units.
Assessed Value by Jurisdiction. The table below shows the assessed valuation in the
District, by jurisdiction.
Assessed Valuation by Jurisdiction
Fiscal Year 2012-13
Jurisdiction:
Unincorporated Sonoma County
Total Sonoma County
Assessed Valuation
in School District
$683,026,509
$683,026,509
% of
Assessed Valuation
School District
of Jurisdiction
100.00%
$27,544,249,730
100.00%
$65,254,732,556
(1) Before deduction of redevelopment incremental valuation.
-14-
% of Jurisdiction
in School District
2.48%
1.05%
Appeals of Assessed Value
There are two types of appeals of assessed values that could adversely impact property
tax revenues within the District.
Appeals may be based on Proposition 8 of November 1978, which requires that for each
January 1 lien date, the taxable value of real property must be the lesser of its base year value,
annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution, or its
full cash value, taking into account reductions in value due to damage, destruction, depreciation,
obsolescence, removal of property or other factors causing a decline in value. See
“CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES
AND APPROPRIATIONS – Article XIIIA of the California Constitution” in Appendix B.
Under California law, property owners may apply for a Proposition 8 reduction of their
property tax assessment by filing a written application, in form prescribed by the State Board of
Equalization, with the County board of equalization or assessment appeals board. In most
cases, the appeal is filed because the applicant believes that present market conditions (such
as residential home prices) cause the property to be worth less than its current assessed value.
Proposition 8 reductions may also be unilaterally applied by the County Assessor.
Any reduction in the assessment ultimately granted as a result of such appeal applies to
the year for which application is made and during which the written application was filed. These
reductions are subject to yearly reappraisals and are adjusted back to their original values when
market conditions improve. Once the property has regained its prior value, adjusted for
inflation, it once again is subject to the annual inflationary factor growth rate allowed under
Article XIIIA.
A second type of assessment appeal involves a challenge to the base year value of an
assessed property. Appeals for reduction in the base year value of an assessment, if
successful, reduce the assessment for the year in which the appeal is taken and prospectively
thereafter. The base year is determined by the completion date of new construction or the date
of change of ownership. Any base year appeal must be made within four years of the change of
ownership or new construction date.
The District cannot predict 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 Series B Bonds to increase accordingly, so that the fixed debt
service on the Series B Bonds (and other outstanding general obligation bonds, if any) may be
paid.
-15-
Tax Rates
The table below summarizes the total ad valorem tax rates levied by all taxing entities in
a representative tax rate area in the District during fiscal years 2008-09 through 2012-13.
Typical Tax Rates
(TRA 93-044)
Dollars per $100 of Assessed Valuation
Fiscal Years 2008-09 through 2012-13
General Tax Rate
Warm Springs Dam Debt Service
Palm Drive Health Care District
Guerneville School District
West Sonoma Union High School District Bond
Sonoma County Joint Community College District Bond
Total Tax Rate
2008-09
1.00000
.00700
.00550
-.01150
.02500
1.04900
2009-10
1.00000
.00700
.00540
-.01150
.02500
1.04890
2010-11
1.00000
.00700
.00550
-.01150
.02100
1.04500
2011-12
1.00000
.00700
.00550
-.01550
.02100
1.04900
2012-13
1.00000
.00700
.00550
.03060
.01610
.02100
1.08020
Russian River Sanitation District (land and improvements)
.04300
.04100
.04100
.04100
.02500
________________________
Tax Levies and Delinquencies
The Board of Supervisors of the County has adopted the Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as
provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the
Teeter Plan, each entity levying property taxes in the County may draw on the amount of
uncollected secured taxes credited to its fund, in the same manner as if the amount credited
had been collected. The District participates in the Teeter Plan, and thus receives 100% of
secured property taxes levied in exchange for foregoing any interest and penalties collected on
delinquent taxes. Currently, the County includes the District’s general obligation bond levies in
its Teeter Plan.
So long as the Teeter Plan remains in effect and the County continues to include the
District in the Teeter Plan, the District’s receipt of revenues with respect to the levy of ad
valorem property taxes will not be dependent upon actual collections of the ad valorem property
taxes by the County. However, under the statute creating the Teeter Plan, the Board of
Supervisors could under certain circumstances terminate the Teeter Plan in its entirety and, in
addition, the Board of Supervisors could terminate the Teeter Plan with respect to the District if
the delinquency rate for all ad valorem property taxes levied within the District in any year
exceeds 3%. In the event that the Teeter Plan were terminated with regard to the secured tax
roll, the amount of the levy of ad valorem property taxes in the District would depend upon the
collections of the ad valorem property taxes and delinquency rates experienced with respect to
the parcels within the District.
-16-
Major Taxpayers
The following table shows the 20 largest taxpayers in the District as determined by their
secured assessed valuations in fiscal year 2012-13. Each taxpayer listed below is a unique
name listed on the tax rolls. The District cannot determine from County 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 below. A large concentration of ownership in a single individual or entity
results in a greater amount of tax collections which are dependent upon that property owner’s
ability or willingness to pay property taxes.
Largest 2012-13 Local Secured Taxpayers
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
2012-13
Property Owner
Primary Land Use Assessed Valuation
F. Korbel & Bros.
Winery
$46,706,537
Safeway Stores Inc.
Supermarket
4,334,688
Isaac LLC
Hotel/Motel
3,606,843
Lynn Crescione
Hotel/Motel
2,885,251
Michael J. and Margaret Kennett
Hotel/Motel
2,550,801
Pebble Ridge Vineyards & Wine Estates LLC
Vineyards
2,547,639
Merrill L. Mazza, Trust
Hotel/Motel
2,482,747
Karen Alexander Biase
Residence
2,283,805
D Judd Apartments LLC
Apartments
2,242,755
Autumn Dreams LLC
Hotel/Motel
2,220,425
Jay Duncanson, Trust
Residence
1,908,547
John A. Staszel, Trust
Commercial
1,756,002
Clyde Cournale, Trust
Commercial
1,621,409
Jorge U. Saldana, Trust
Residence
1,570,000
Naveed Haneef and Karen O’Brien
Hotel/Motel
1,492,507
Robert Lilley, Trust
Residence
1,335,595
John and Jane Cramer
Residence
1,300,000
River Gas Inc.
Commercial
1,298,414
Federal Home Loan Mortgage Corp.
Residential Properties
1,267,302
Douglas Sutton Johnson
Residence
1,262,189
$86,673,456
% of
Total (1)
6.92%
0.64
0.53
0.43
0.38
0.38
0.37
0.34
0.33
0.33
0.28
0.26
0.24
0.23
0.22
0.20
0.19
0.19
0.19
0.19
12.83%
(1) 2012-13 local secured assessed valuation: $675,327,612.
Large Property Owner: F. Korbel & Bros. F. Korbel & Bros. (“Korbel”) currently owns
property in the District accounting for approximately 6.92% of the assessed valuation in the
District. Based on publicly available information which the District believe to be accurate, Korbel
produces champagnes and other wines from its vineyards and the products of its winery and
distillery located in Guerneville. Korbel also bottles its wine grown from grapes in Alexander
Valley, and has three wineries in Sonoma County.
Notwithstanding that this property owner is responsible for approximately 6.92% of the
secured property tax levy within the District, the Series B Bonds are secured by the property tax
levy and collections in the District and not the credit of any property owner in the District. The
property securing such taxes is subject to the penalties and other remedies available for
nonpayment of secured property taxes, including foreclosure. Furthermore, the County has
adopted the Teeter Plan described above, which assures that the ad valorem taxes levied for
the District securing the Series B Bonds will be available to pay debt service on the Series B
Bonds, notwithstanding delinquent collections by the County.
-17-
Direct and Overlapping Debt
Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by
California Municipal Statistics, Inc. for debt issued as of May 13, 2013. The Debt Report is
included for general information purposes only. The District has not reviewed the Debt Report
for completeness or accuracy and makes no representation in connection therewith.
The Debt Report generally includes long-term obligations sold in the public credit
markets by public agencies whose boundaries overlap the boundaries of the District in whole or
in part. 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.
Statement of Direct and Overlapping Bonded Debt
(Debt Issued as of May 13, 2013)
2012-13 Assessed Valuation: $683,026,509
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Sonoma County Joint Community College District
West Sonoma County Union High School District
Palm Drive Healthcare District
Guerneville School District
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:
Sonoma County General Fund Obligations
Sonoma County Pension Obligations
Sonoma County Office of Education Certificates of Participation
Sonoma County Joint Community College District General Fund Obligations
TOTAL OVERLAPPING GENERAL FUND DEBT
COMBINED TOTAL DEBT
% Applicable
1.036%
9.577
9.057
100.
1.047%
1.047
1.047
1.036
Debt 7/1/13
$2,009,739
1,467,518
2,077,676
2,100,000
$7,654,933
(1) Report prepared 5/13/13. Excludes any bonds issued between 5/13/13 and 7/1/13.
(2) Excludes general obligation bonds to be sold.
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded
capital lease obligations.
-18-
(2)
$ 327,208
4,944,510
18,480
19,166
$5,309,364
$12,964,297
Ratios to 2012-13 Assessed Valuation:
Direct Debt ($2,100,000) .........................................................0.31%
Total Direct and Overlapping Tax and Assessment Debt .........1.12%
Combined Total Debt ................................................................1.90%
(1)
(3)
TAX MATTERS
Tax Exemption
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel, subject, however to the qualifications set forth below,
under existing law, the interest on the Series B Bonds is excluded from gross income for federal
income tax purposes and such interest is not an item of tax preference for purposes of the
federal alternative minimum tax imposed on individuals and corporations, although for the
purpose of computing the alternative minimum tax imposed on certain corporations, such
interest is taken into account in determining certain income and earnings, and the Series B
Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended (the “Tax Code”) such that, in the case of certain
financial institutions (within the meaning of section 265(b)(5) of the Tax Code), a deduction for
federal income tax purposes is allowed for 80 percent of that portion of such financial
institution's interest expense allocable to interest payable on the Series B Bonds.
The opinions set forth in the preceding paragraph are subject to the condition that the
District comply with all requirements of the Tax Code that must be satisfied subsequent to the
issuance of the Series B Bonds. The District has covenanted to comply with each such
requirement. Failure to comply with certain of such requirements may cause the inclusion of
such interest in gross income for federal income tax purposes to be retroactive to the date of
issuance of the Series B Bonds. We express no opinion regarding other federal tax
consequences arising with respect to the Series B Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to
the public (excluding bond houses and brokers) at which a Series B Bond is sold is less than the
amount payable at maturity thereof, then such difference constitutes "original issue discount"
for purposes of federal income taxes and State of California personal income taxes. If the initial
offering price to the public (excluding bond houses and brokers) at which a Series B Bond is
sold is greater than the amount payable at maturity thereof, then such difference constitutes
"original issue premium" for purposes of federal income taxes and State of California
personal income taxes. De minimis original issue discount and original issue premium are
disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal
gross income and exempt from State of California personal income taxes to the extent properly
allocable to each owner thereof subject to the limitations described in the first paragraph of this
section. The original issue discount accrues over the term to maturity of the Series B Bond on
the basis of a constant interest rate compounded on each interest or principal payment date
(with straight-line interpolations between compounding dates). The amount of original issue
discount accruing during each period is added to the adjusted basis of such Series B Bonds to
determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of
such Series B Bond. The Tax Code contains certain provisions relating to the accrual of original
issue discount in the case of purchasers of the Series B Bonds who purchase the Series B
Bonds after the initial offering of a substantial amount of such maturity. Owners of such Series
B Bonds should consult their own tax advisors with respect to the tax consequences of
ownership of Series B Bonds with original issue discount, including the treatment of purchasers
who do not purchase in the original offering, the allowance of a deduction for any loss on a sale
or other disposition, and the treatment of accrued original issue discount on such Series B
Bonds under federal individual and corporate alternative minimum taxes.
-19-
Under the Tax Code, original issue premium is amortized on an annual basis over the
term of the Series B Bond (said term being the shorter of the Series B Bond's maturity date or
its call date). The amount of original issue premium amortized each year reduces the adjusted
basis of the owner of the Series B Bond for purposes of determining taxable gain or loss upon
disposition. The amount of original issue premium on a Series B Bond is amortized each year
over the term to maturity of the Series B Bond on the basis of a constant interest rate
compounded on each interest or principal payment date (with straight-line interpolations
between compounding dates). Amortized bond premium is not deductible for federal income tax
purposes. Owners of premium Series B Bonds, including purchasers who do not purchase in
the original offering, should consult their own tax advisors with respect to State of California
personal income tax and federal income tax consequences of owning such Series B Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the Series B
Bonds is exempt from California personal income taxes.
Form of Opinion. A copy of the proposed form of opinion of Bond Counsel is attached
hereto as Appendix D.
Other Tax Considerations
Owners of the Series B Bonds should also be aware that the ownership or disposition of,
or the accrual or receipt of interest on, the Series B Bonds may have federal or state tax
consequences other than as described above. Bond Counsel expresses no opinion regarding
any federal or state tax consequences arising with respect to the Series B Bonds other than as
expressly described above.
Future legislation, if enacted into law, or clarification of the Tax Code may cause interest
on the Series B Bonds to be subject, directly or indirectly, to federal income taxation, or
otherwise prevent owners of the Series B Bonds from realizing the full current benefit of the tax
status of such interest. The introduction or enactment of any such future legislation or
clarification of the Tax Code may also affect the market price for, or marketability of, the Series
B Bonds. Prospective purchasers of the Series B Bonds should consult their own tax advisors
regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses
no opinion.
-20-
CERTAIN LEGAL MATTERS
Legality for Investment
Under provisions of the California Financial Code, the Series B Bonds are legal
investments for commercial banks in California to the extent that the Series B Bonds, in the
informed opinion of the bank, are prudent for the investment of funds of depositors, and under
provisions of the California Government Code, the Series B Bonds are eligible to secure
deposits of public moneys in California.
Absence of Litigation
No litigation is pending or threatened concerning the validity of the Series B Bonds, and
a certificate to that effect will be furnished to purchasers at the time of the original delivery of the
Series B Bonds. The District is not aware of any litigation pending or threatened that (i)
questions the political existence of the District, (ii) contests the District's ability to receive ad
valorem taxes or to collect other revenues or (iii) contests the District's ability to issue and retire
the Series B Bonds.
The District is routinely subject to lawsuits and claims. In the opinion of the District, the
aggregate amount of the uninsured liabilities of the District under these lawsuits and claims will
not materially affect the financial position or operations of the District.
Compensation of Certain Professionals
Payment of the fees and expenses of Jones Hall, A Professional Law Corporation, as
Bond Counsel and Disclosure Counsel to the District, Isom Advisors, A Division of Urban
Futures, Inc., as financial advisor to the District, and Nossaman LLP, Irvine, California, as
Underwriter’s Counsel, is contingent upon issuance of the Series B Bonds.
CONTINUING DISCLOSURE
The District will execute a Continuing Disclosure Certificate in connection with the
issuance of the Series B Bonds in the form attached hereto as Appendix E. The District has
covenanted therein, for the benefit of holders and beneficial owners of the Series B Bonds to
provide certain financial information and operating data relating to the District to the Municipal
Securities Rulemaking Board (an “Annual Report”) not later than nine months after the end of
the District’s fiscal year (which currently would be March 30), commencing March 30, 2014 with
the report for the 2012-2013 Fiscal Year, and to provide notices of the occurrence of certain
enumerated events. Such notices will be filed by the District with the Municipal Securities
Rulemaking Board. The specific nature of the information to be contained in an Annual Report
or the notices of enumerated events is set forth in “APPENDIX E – FORM OF CONTINUING
DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the
Underwriter of the Series B Bonds in complying with S.E.C. Rule 15c2-12(b)(5) (the “Rule”).
The District’s only prior undertaking pursuant to the Rule is in connection with its Series
A Bonds. The District is currently in compliance with such undertaking, having filed its annual
report in a complete and timely manner, as well as having filed a notice of rating change relating
to the bond insurer for the Series A Bonds. Isom Advisors, A Division of Urban Futures, Inc., is
serving as dissemination agent for both the Series A Bonds undertaking and the Series B Bodns
-21-
undertaking, to ensure the DIstrict’s the timely and complete compliance with the Rule and its
undertakings.
Neither the County nor any other entity other than the District shall have any obligation
or incur any liability whatsoever with respect to the performance of the District’s duties regarding
continuing disclosure.
RATING
Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC
business (“S&P”) has assigned a rating of “A+” to the Series B Bonds. The District has
provided certain additional information and materials to S&P (some of which does not appear in
this Official Statement). Such rating reflects only the view of S&P, and explanations of the
significance of such rating may be obtained only from S&P. There is no assurance that any
credit ratings given to the Series B Bonds will be maintained for any period of time or that the
rating may not be lowered or withdrawn entirely by S&P, in such agency’s judgment,
circumstances so warrant. Any such downward revision or withdrawal of a rating may have an
adverse effect on the market price of the Series B Bonds.
UNDERWRITING
The Series B Bonds are being purchased by E. J. De La Rosa & Co., Inc. (the
“Underwriter”). The Underwriter has agreed to purchase the Series B Bonds at a price of
$_________ which is equal to the initial principal amount of the Series B Bonds of $_________,
plus original issue premium of $_________, less an Underwriter’s discount of $_________. The
purchase contract relating to the Series B Bonds provides that the Underwriter will purchase all
of the Series B Bonds (if any are purchased), and provides that the Underwriter’s obligation to
purchase is subject to certain terms and conditions, including the approval of certain legal
matters by counsel.
The Underwriter may offer and sell Series B Bonds to certain dealers and others at
prices lower than the offering prices stated on the inside cover page hereof. The offering prices
may be changed by the Underwriter.
ADDITIONAL INFORMATION
The discussions herein about the Bond Resolution and the Continuing Disclosure
Certificate are brief outlines of certain provisions thereof. Such outlines do not purport to be
complete and for full and complete statements of such provisions reference is made to such
documents. Copies of these documents mentioned are available from the Underwriter and
following delivery of the Series B Bonds will be on file at the offices of the Paying Agent in San
Francisco, California.
References are also made herein to certain documents and reports relating to the
District; such references are brief summaries and do not purport to be complete or definitive.
Copies of such documents are available upon written request to the District.
-22-
Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. This Official
Statement is not to be construed as a contract or agreement between the District and the
purchasers or Owners of any of the Series B Bonds.
The execution and delivery of this Official Statement have been duly authorized by the
District.
By:
Superintendent
-23-
APPENDIX A
AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2011-12
A-1
COUNTY OF SONOMA
GUERNEVILLE, CALIFORNIA
AUDIT REPORT
JUNE 30,2012
JUNE 30, 2012
TABLE OF CONTENTS
FINANCIAL SECTION
Independent Auditor's Report
1
Management's Discussion and Analysis (Unaudited)
3
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets
14
Statement of Activities
15
Fund Financial Statements:
Balance Sheet - Governmental Funds
16
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets
17
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds
18
Reconciliation of the Governmental Funds Statement of
Revenues, Expenditures, and Changes in Fund Balances
to the Statement of Activities
19
Notes to the Basic Financial Statements
20
SUPPLEMENTARY INFORMATION SECTION
Schedule of Revenues, Expenditures, and Changes in Fund
Balances - Budget and Actual - General Fund
39
Combining Statements - Non-Major Funds:
Combining Balance Sheet - Non-Major Governmental Funds
40
Combining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Non-Major Governmental Funds
41
JUNE 3D, 2012
TABLE OF CONTENTS (CONCLUDED)
SUPPLEMENTARY INFORMATION SECTION (CONCLUDED)
Schedule of Funding Progress
42
Organization/Board of Education/Administration
43
Schedule of Average Daily Attendance
44
Schedule of Instructional Time
45
Schedule of Expenditures of Federal Awards
46
Reconciliation of Annual Financial and Budget Report
with Audited Financial Statements
47
Schedule of Financial Trends and Analysis
48
Notes to Supplementary Information
49
OTHER INDEPENDENT AUDITORS REPORTS SECTION
Independent Auditor's Report on State Compliance
51
Independent Auditor's Report on Internal Control over
Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
53
FINDINGS AND QUESTIONED COSTS SECTION
Schedule of Findings and Questioned Costs:
Summary of Auditor's Results
55
Section II
Financial Statement Findings
56
Section III -
State Award Findings and Questioned Costs
59
Section I
-
63
Status of Prior Year Recommendations
ii
FINANCIAL SECTION
STEPHEN ROATCH ACCOUNTANCY CORPORA TlON
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
Board of Education
Guerneville Elementary School District
Guerneville, California
We have audited the accompanying financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of Guerneville Elementary School
District, as of and for the year ended June 30, 2012, which collectively comprise the District's
basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the Guerneville Elementary School District's management. Our responsibility is
to express 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 the 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 the Guerneville Elementary School District, as of June 30, 2012, and
the respective changes in financial position thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
December 7, 2012 on our consideration of Guerneville Elementary School District's internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 Govemment 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 through 12, the budgetary comparison
information on page 39, and the schedule of funding progress on page 42 be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers
it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
1
P.O. Box 2196/Fo/som, CA 95763/ Phone (916) 966-3883/ Fax (916) 966-3815
Board of Education
Page Two
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise Guerneville Elementary School District's financial statements as a whole.
The accompanying combining fund financial statements and supplementary schedules listed in the
table of contents, including the Schedule of Expenditures of Federal Awards, which is presented as
required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and
are not required parts 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 information has 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 information is fairly stated
in all material respects in relation to the financial statements as a whole.
STEPHEN ROATCH ACCOUNTANCY CORPORATION
December 7,2012
2
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE FISCAL YEAR ENDED JUNE 30, 2012
(PREPARED BY DISTRICT MANAGEMENT)
This section of Guerneville Elementary School District's annual financial report presents our
discussion and analysis of the District's financial performance during the fiscal year that ended on
June 30, 2012. Please read it in conjunction with the Independent Auditor's Report presented on
pages 1 and 2, and the District's financial statements, which immediately follow this section.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and
Statement of Activities, presented on pages 14 and 15, provide information about the activities of
the District as a whole and present a longer-term view of the District's finances. The fund financial
statements for governmental activities, presented on pages 16 through 19, provide information
about how District services were financed in the short-term, and how much remains for future
spending. Fund financial statements also report the District's operations in more detail than the
government-wide statements by providing information about the District's most significant funds.
FINANCIAL HIGHLIGHTS
~
The District's overall financial status declined slightly during the course of the year, as total
net assets decreased less than 1%.
~
On the Statement of Activities, total current year expenses exceeded total current year
revenues by $21,127.
~
On the Statement of Revenues, Expenditures, and Changes in Fund Balances, total
current year revenues and other financing sources exceeded total current year
expenditures by $103,909.
~
Capital assets, net of depreciation, decreased $136,558, due to current year acquisitions
of $79,946 of new capital assets, and the recognition of current year depreciation expense
of $216,504.
~
Total long-term liabilities decreased $9,846.
~
The District's P-2 ADA decreased from 276 ADA in fiscal year 2010-11, down to 275 ADA
in fiscal year 2011-12, a decrease of less than 1%.
~
During fiscal year 2011-12, the District's General Fund produced an operating surplus of
$104,324.
~
The District maintains sufficient reserves for a district its size. It meets the state required
minimum reserve for economic uncertainty of 5% of total General Fund expenditures,
transfers out, and other uses (total outgo). During fiscal year 2011-12, General Fund
expenditures totaled $2,666,127. At June 30, 2012, the District had available reserves of
$654,988 in the General Fund which represents a reserve of 24.6%.
3
THE FINANCIAL REPORT
The full annual financial report consists of three separate parts, including the basic financial
statements, supplementary information, and Management's Discussion and Analysis. The three
sections together provide a comprehensive overview of the District. The basic financial
statements are comprised of two kinds of statements that present financial information from
different perspectives, government-wide and funds.
~
District-wide financial statements, which comprise the first two statements, provide both
short-term and long-term information about the District's overall financial position.
~
Individual parts of the District, which are reported as fund financial statements comprise
the remaining statements .
•:. Basic services funding is described in the governmental funds statements. These
statements include short-term financing and identify the balance remaining for
future spending .
•:. Short and long-term financial information about the activities of the District that
operate like businesses are provided in the proprietary fund statements .
•:. Financial relationships, for which the District acts as an agent or trustee for the
benefit of others to whom the resources belong, are presented in the fiduciary
funds statements.
Notes to the financials, which are included in the financial statements, provide more detailed data
and explain some of the information in the statements. The required supplementary information
provides further explanations and provides additional support for the financial statements.
A comparison of the District's budget for the year is included.
Reporting the District as a Whole
The District as a whole is reported in the Goverment-wide statements and uses accounting
methods similar to those used by companies in the private sector. All of the District's assets and
liabilities are included in the Statement of Net Assets. The Statement of Activities reports all of the
current year's revenues and expenses regardless of when cash is received or paid.
The District's financial health or position (net assets) can be measured by the difference between
the District's assets and liabilities.
~
Increases or decreases in the net assets of the District over time are indicators of whether
its financial position is improving or deteriorating, respectively.
~
Additional non-financial factors such as the condition of school buildings and other
facilities, and changes in the property tax base of the District need to be considered in
assessing the overall health of the District.
4
THE FINANCIAL REPORT (CONCLUDED)
Reporting the District as a Whole (Concluded)
In the Statement of Net Assets and the Statement of Activities, we divide the District into two kinds
of activities:
Governmental Activities:
The basic services provided by the District, such as regular and special education and
administration are included here, and are primarily financed by property taxes and state formula
aid. Non-basic services, such as child nutrition are also included here, but are financed by a
combination of state and federal contracts and grants, and local revenues.
Business-type Activities:
The District does not provide any services that should be included in this category.
Reporting the District's Most Significant Funds
The District's fund-based financial statements provide detailed information about the District's
most significant funds. Some funds are required to be established by State law and bond
covenants. However, the District establishes many other funds as needed to control and
manage money for specific purposes.
Governmental Funds:
The major governmental funds of the Guerneville Elementary School District are the General
Fund and County School Facilities Fund. Governmental fund reporting focuses on how money
flows into and out of the funds and the balances that remain at the end of the year. A modified
accrual basis of accounting measures cash and all other financial assets that can readily be
converted to cash. The governmental fund statements provide a detailed short-term view of the
District's operations and services. Governmental fund information helps to determine the level of
financial resources available in the near future to finance the District's programs.
Proprietary Funds:
Services for which the District charges a fee are generally reported in proprietary funds on a full
accrual basis. These include both Enterprise funds and Internal Service funds. Enterprise funds
are considered business-type activities and are also reported under a full accrual method. This is
the same basis as business-type activities; therefore no reconciling entries are required. Internal
service funds are reported with the Governmental Funds. The District has no funds of this type.
Fiduciary Funds:
Fiduciary Funds include trust and agency funds, which are typically used by districts to maintain
control over funds that are held for student scholarships or student body organizations. The
District no longer maintains funds of this type.
5
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
GOVERNMENTAL ACTIVITIES
The District's net assets decreased from $5,167,069 at June 30,2011, down to $5,145,942 at
June 30, 2012, a decrease of less than 1 %.
Comparative Statement of Net Assets
Governmental
Activities
2011
Assets
Deposits and Investments
Receivables
Capital Assets, net
$
Total Assets
Liabilities
Current
Long-term
Total Liabilities
Net Assets
Invested in Capital Assets
- Net of Related Debt
Restricted
Unrestricted
$
Total Net Assets
Table includes financial data of the combined governmental funds
6
1,645,725
256,015
3,990,552
2012
$
1,870,849
303,315
3,853,994
5,892,292
6,028,158
240,224
484,999
447,847
434,369
725,223
882,216
3,456,529
1,267,828
442,712
3,353,323
705,484
1,087,135
5,167,069
$
5,145,942
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE (CONTINUED)
GOVERNMENTAL ACTIVITIES (CONTINUED)
. The District's total current year expenses exceeded total current year revenues by $21,127.
Comparative Statement of Changes in Net Assets
Governmental Activities
2011
Program Revenues
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
$
53,686
842,439
2,433
2012
$
58,134
842,327
0
General Revenues
Taxes Levied
Federal and State Aid
Interest and Investment Earnings
Miscellaneous
1,286,681
551,319
8,980
96,447
1,508,042
462,561
18,952
52,592
Total Revenues
2,841,985
2,942,608
Expenses
Instruction
Instruction-Related Services
Pupil Services
General Administration
Plant Services
Interest on Long-Term Debt
Other Outgo
2,155,936
99,737
163,409
195,895
262,527
22,136
122,972
2,158,901
96,765
161,749
166,082
272,942
20,336
86,960
Total Expenses
3,022,612
2,963,735
Changes in Net Assets
$
(180,627)
7
$
(21,127)
Comparative Schedule of Costs of Services
Net Cost of Services
Total Cost of Services
2011
Instruction
Pupil Services
Plant Services
Other Outgo
Totals
2012
2011
2012
$
2,155,936
99,737
163,409
195,895
262,527
22,136
122,972
$
2,158,901
96,765
161,749
166,082
272,942
20,336
86,960
$
1,387,599
93,013
72,701
193,347
253,207
22,136
102,051
$
1,393,387
91,227
83,303
157,379
251,609
20,336
66,033
$
3,022,612
$
2,963,735
$
2,124,054
$
2,063,274
The table above presents the cost of major District activities. The table also shows each
activity's net cost (total cost less fees generated by the activities and intergovernmental aid
provided for specific programs). The $2,063,274 net cost represents the financial burden that
was placed on the District's general revenues for providing the services listed.
80.0%
70.3%
70.0%
60.0%
50.0%
• Program Revenues
40.0%
• General Revenues
30.0%
20.0%
10.0%
0.0%
2011
2012
For fiscal year 2011-12, program revenues financed 30.4% of the total cost of providing the
services above, while the remaining 69.6% was financed by the general revenues of the District.
8
Summary of Revenues For Governmental Functions
FYE 2011
Amount
Program Revenues
Charges for Services
Operating Grants & Contributions
$
General Revenues
Taxes Levied
Federal & State Aid
Other Revenues
$
Total Revenues
Percent of
Total
53,686
842,439
1.89%
29.64%
1,286,681
551,319
107,860
45.27%
19.40%
3.80%
2,841,985
100.00%
FYE 2012
Amount
$
$
58,134
842,327
1.98%
28.63%
1,508,042
462,561
71,544
51.25%
15.72%
2.43%
2,942,608
100.00%
Table includes financial data or the combined governmental funds
Comparative Reyenues
$1,600,000
• Charges for Services
$1,400,000
$1,200,000
• Operating Grants &
Contributions
$1,000,000
$800,000
• Taxes Levied
$600,000
$400,000
• Federal & State Aid
$200,000
$-
• Other Revenues
2011
2012
9
Percent of
Total
FOR THE FISCAL YEAR ENDED JUNE 30,2012
Schedule of Expenses For Governmental Functions
FYE 2011
Amount
Expenses
Instruction
Pupil Services
Plant Services
Other Expenses
Total Expenses
Percent of
Total
FYE 2012
Amount
$
2,155,936
99,737
163,409
195,895
262,527
145,108
71.33%
3.30%
5.41%
6.48%
8.69%
4.80%
$
2,158,901
96,765
161,749
166,082
272,942
107,296
72.84%
3.26%
5.46%
5.60%
9.21%
3.62%
$
3,022,612
100.00%
$
2,963,735
100.00%
Table includes financial data afthe combined governmental funds
CQrnPlI[lItill!: ElIP!:"!>!:!>
$2,500,000
_Instruction
$2,000,000
• Instruction-Related
Services
$1,500,000
• Pu pH Services
$1,000,000
• General Administration
• Plant Services
$500,000
• Other Expenses
$2011
Percent of
Total
2012
10
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE (CONCLUDED)
GOVERNMENTAL ACTIVITIES (CONCLUDED)
Comparative Schedule of Capital Assets
2011
Land
Sites and Improvements
Buildings and Improvements
Furniture and Equipment
Work-in-Progress
$
Subtotals
Less: Accumulated Depreciation
Capital Assets, net
$
2012
1,384
638,553
6,349,827
119,625
0
$
1,384
638,553
6,349,827
130,161
69,410
7,109,389
7,189,335
(3,118,837)
(3,335,341 )
3,990,552
$
3,853,994
Capital assets, net of depreciation, decreased $136,558, due to current year acquisitions of
$79,946 of new capital assets, and the recognition of current year depreciation expense of
$216,504.
Comparative Schedule of Long-Term Liabilities
Governmental
Activities
2011
Compensated Absences
Capital Leases
Early Retirement Incentives
Other Post Employment Benefits
$
2012
13,632
11,339
481,903
12,718
21,779
537,585
=$==.=5=27~,7~3=9
10,374
513,579
o
Totals
$
$
Total long-term liabilities decreased $9,846. The notes to the financial statements are an integral
part of the financial presentation and contain more detailed information as to interest, principal,
retirement amounts, and future debt retirement dates.
11
FINANCIAL ANALYSIS OF DISTRICT'S FUNDS
The fund balance of the General Fund increased $104,324, while the combined fund balances of
all other District governmental funds decreased $415.
GENERAL FUND BUDGETARY HIGHLIGHTS
The District's budget is prepared in accordance with California law and is based on the modified
accrual basis of accounting. Over the course of the year, the District revises its budget based on
updated financial information. The original budget, approved at the end of June for July 1, is
based on May Revise figures and updated 45 days after the State approves its final budget. In
addition, the District revises its budget at First and Second Interim.
ECONOMIC FACTORS BEARING ON THE DISTRICT'S FUTURE
~
Based upon the most recent student enrollment information, available, the District will
likely continue to experience declining enrollment during fiscal year 2012-13. Since
student enrollment and attendance are primary factors in the computation of most funding
formulas for public schools in the State of California, the District will likely experience a
corresponding decline in future funding. Since revenue limit funding is generally based on
the ADA of the current fiscal year or the prior fiscal year, whichever is most beneficial, the
District's 2012-13 revenue limit funding will be based on no less than fiscal year 2011-12
P-2ADA.
~
Due to the unprecedented nature of the current State and Federal fiscal crisis, the amount
of funding that will be available to the District remains uncertain. As a result, management
will need to plan carefully and prudently to provide the resources to meet student needs
over the next several years. The District has an excellent track record in meeting this
challenge in what has proven to be a cycle of lean years and prosperous years for
education finances.
CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, parents, investors, and
creditors with a general overview of the District's finances and to show the District's accountability
for the money it receives. If you have questions regarding this report or need additional financial
information, contact the District Office, Guerneville Elementary School District, 14630 Armstrong
Woods Road, Guerneville, California 95446.
12
BASIC FINANCIAL STATEMENTS
13
STATEMENT OF NET ASSETS
JUNE 30, 2012
Governmental
Activities
Assets
$
Deposits and Investments (Note 2)
Receivables (Note 4)
Capilal Assets: (Note 6)
Land
Buildings and Improvemenls
Furnilure and Equipment
Work-in-Progress
Less: Accumulated Depreciation
1,870,849
303,315
1,384
638,553
6,349,827
130,161
69,410
(3,335,341 )
6,028,158
Total Assels
Liabilities
Accounts Payable and Other Current Liabilities
Deferred Revenue (Nole 1H)
Long-Term Liabililies:
Portion Due or Payable Within One Year:
Compensated Absences (Note 1H)
Capital Leases (Note 7)
Early Relirement Incentives (Note 8)
Olher Post Employment Benefits (Note 9)
344,103
10,374
11,339
47,534
12,718
21,779
Portion Due or Payable After One Year:
Capilal Leases (Note 7)
434,369
Total Liabililies
882,216
Net Assets
Invesled in Capilal Assets, Net of Related Debl
Restricled:
For Capilal Projects
For Educational Programs
For Olher Purposes
Unrestricted
3,353,323
509,562
172,196
23,726
1,087,135
Total Net Assets
$
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
14
5,145,942
STATEMENT OF ACTIVITIES
Net (Expense)
Revenue and
Changes in
Net Assets
Program Revenues
Functions
Expenses
Charges for
Services
Operating
Grants
and
Contributions
$
$
Capital
Grants
and
Contributions
Governmental
Activities
Instruction
$
Instruction-Related Services:
Supervision of Instruction
2,158,901
35,444
67
96,698
6
Food Services
88,243
12,813
Other Pupil Services
73,506
School Site Administration
Pupil Services:
730,Q70
$ (1,393,387)
15
5,517
(91,181)
(46)
(9,797)
65,633
(73,506)
General Administration:
Other General Administration
Plant Services
166,082
272,942
20,336
Other Outgo
86,960
Total Governmental Activities
$
2,963,735
$
8,703
(157,379)
3,484
17,849
(251,609)
(20,336)
6,387
14,540
(66,033)
58,134
$
842,327
$
0
(2,063,274)
General Revenues
Taxes Levied for General Purposes
1,452,861
Taxes Levied for Specific Purposes
55,181
462,561
Federal and State Aid - Unrestricted
Interest and Investment Earnings
Miscellaneous
18,952
52,592
Total General Revenues
2,042,147
Change in Net Assets
(21,127)
Net Assets - July 1, 2011
5,167,069
Net Assets - June 30, 2012
$
15
5,145,942
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2012
County .
School
Facilities
General
Non-Major
Governmental
Funds
Total
Governmental
Funds
Assets
Deposits and Investments (Note 2)
Receivables (Note 4)
Due from Other Funds (Note 5)
Total Assets
$
1,350,266
292,108
$
408,546
$
112,037
11,207
55,311
$
1,870,849
303,315
55,311
$
1,642,374
$
408,546
$
178,555
$
2,229,475
$
325,292
55,311
10,374
$
43
$
325,335
55,311
10,374
Liabilities and Fund Balances
Liabilities:
Accounts Payable
Due to Other Funds (Note 5)
Deferred Revenue (Note 1 H)
Total Liabilities
43
391,020
408,546
123,742
54,770
1,000
704,484
477,983
654,988
408,546
178,512
1,838,455
390,977
Fund Balances: (Note 11)
Nonspendable
Restricted
Assigned
Unassigned
1,000
172,196
423,213
654,988
Total Fund Balances
Total Liabilities and Fund Balances
$
1,251,397
$
1,642,374
$
408,546
$
178,555
16
$
2,229,475
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
JUNE 30, 2012
Total Fund Balances - Governmental Funds
$
1,838,455
Amounts reported for governmental activities in the statement of net assets are
different from amounts reported in governmental funds due to the following:
Capital assets: In governmental funds, only current assets are reported. In the
statement of net assets, all assets are reported, including capital assets and
accumulated depreciation. Capital assets and accumulated depreciation are:
Capital Assets
Accumulated Depreciation
Net
$
7,189,335
(3,335,341)
3,853,994
Long-term liabilities: In governmental funds, only current liabilities are reported.
In the statement of net assets, all liabilities, including long-term liabilities, are
reported. Long-term liabilities reported at the end of the period are:
Capital Leases
Total
11,339
481,903
12,718
21,779
(527,739)
Unmatured interest on long-term debt: In governmental funds, interest on longterm debt is not recognized until the period in which it matures and is paid. In
the government-wide statements of activities, it is recognized in the period that
it is incurred. The additional liability for unmatured interest owed at the end of
the period was:
(18,768)
$
Total Net Assets - Governmental Activities
17
5,145,942
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
County
School
Facilities
General
Non-Major
Governmental
Funds
Total
Governmental
Funds
Revenues
Revenue Limit Sources:
State Apportionment
Local Taxes
$
Total Revenue Limit Sources
$
29,943
1,452,860
1,482,803
Federal Revenue
State Revenue
Local Revenue
1,482,803
$
261,901
760,369
265,378
Total Revenues
29,943
1,452,860
$
2,770,451
3,611
77,407
6,684
84,455
339,308
767,053
353,444
3,611
168,546
2,942,608
Expenditures
Instruction
Food Services
Plant Services
Facilities Acquisition and Construction
Debt Service:
Principal Retirement
Interest and Issuance Costs
Other Outgo
1,974,401
62
89,369
67,935
152,439
230,075
69,410
90
22,179
10,536
1,974,401
62
89,369
81,555
67,935
152,529
252,254
79,946
82,436
42,212
22,012
4,524
42,212
22,012
86,960
81,555
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
2,666,127
0
183,108
2,849,235
104,324
3,611
(14,562)
93,373
10,536
10,536
Other Financing Sources
Other Sources
Net Change in Fund Balances
Fund Balances - July 1, 2011
Fund Balances - June 30, 2012
$
104,324
3,611
(4,026)
103,909
1,147,073
404,935
182,538
1,734,546
$
1,251,397
408,546
$
178,512
18
$
1,838,455
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
Net Change in Fund Balances - Governmental Funds
$
103,909
Amounts reported for governmental activities in the statement of activities are
different from amounts reported in governmental funds due to the following:
Capital outlay: In governmental funds, the costs of capital assets are reported as
expenditures in the period when the assets are acquired. In the statement of
activities, costs of capital assets are allocated over their useful lives as
depreciation expense. The difference between capital outlay expenditures and
depreciation expense for the period is:
Capital Outlays
Depreciation Expense
$
79,946
(216,504)
Net
(136,558)
Compensated absences: In governmental funds, compensated absences are
measured by the amounts paid during the period. In the statements of activities,
compensated absences are measured by the amounts earned during the fiscal
year. The difference between amounts paid and amounts earned was:
(965)
Other post employment benefits (OPEB) and early retirement incentives: In
governmental funds, OPEB and early retirement incentives costs are recognized
when employer contributions are made. In the statement of activities, OPEB and
early retirement incentives costs are recognized on the accrual basis. This year,
the difference between OPEB and early retirement incentives costs accrued and
actual employer contributions was:
(20,865)
Debt service: In governmental funds, 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. Expenditures for repayment of the
principal portion of long-term debt were:
Capital Leases
42,212
Debt proceeds: In governmental funds, proceeds from debt are recognized as
Other Financing Sources. In the government-wide statements, proceeds from
debt are reported as increases to liabilities. Amounts recognized in
governmental funds as proceeds from debt were:
(10,536)
Umatured interest on long-term debt: In governmental funds, interest on longterm debt is recognized in the period that it becomes due. In the governmentwide statement of aclivilies, interest expense is recognized in the period that it is
incurred. Unmatured interest owing at the end of the period, less matured
interest paid during the period but owing from the prior period, was:
1,676
Change in Net Assets of Governmental Activities
$
19
(21,127)
NOTES TO THE BASIC FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
A.
Financial Reporting Entity
The Guerneville Elementary School District (the "District") is a public educational agency
operating under the applicable laws and regulations of the State of California. It is governed
by a five member Soard of Education elected by registered voters of the District, which
comprises an area in Sonoma County. The District serves students in kindergarten through
grade eight.
The District accounts for its financial transactions in accordance with the policies and
procedures of the Department of Education's California School Accounting Manual. The
accounting policies of the District conform to generally accepted accounting prinCiples as
prescribed by the Governmental Accounting Standards Soard (GASS) and the American
Institute of Certified Public Accountants (AI CPA).
The District has reviewed criteria to determine whether other entities with activities that
benefit the District should be included within its financial reporting entity under GASS
Statement No. 14 (GASS 14), The Financial Reporting Entity. The criteria include, but are
not limited to, whether the entity exercises oversight responsibility (which includes financial
interdependency, selection of governing authority, designation of management, ability to
significantly influence operations and accountability for fiscal matters), the scope of public
service, and a special financing relationship. The District has determined that there are no
organizations, with financial activities that benefit the District, which should be included
within its financial reporting entity under GASS 14.
The District has also reviewed criteria to determine whether other organizations, for which
the District is not financially accountable, should be reported within its financial reporting
entity, based on the nature and significance of its relationship with the District, under GASS
Statement No. 39 (GASS 39), Determining Whether Certain Organizations are Component
Units. In order for an organization to be classified as a component unit, all of the GASS 39
criteria must be met, as follows:
~
~
~
The economic resources received or held by the organization are entirely or almost
entirely for the direct benefit of the primary government or its component units.
The primary government, or its component units, is entitled to, or has the ability to
otherwise access, a majority of the economic resources received or held by the
organization.
The economic resources received or held by the organization that the primary
government, or its component units, is entitled to, or has the ability to otherwise
access, are significant to that primary government.
The District has determined that there are no organizations, for which the District is not
financially accountable, which should be reported within its financial reporting entity under
GASS39.
20
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B.
Basis of Presentation
Government-wide Financial Statements:
The government-wide financial statements (i.e., the Statement of Net Assets and the
Statement of Activities) report information on all of the non-fiduciary activities of the District
and its component units. The effect of interfund activity, within the governmental and
business type activities columns, has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees
and charges for support. Likewise, the primary government is reported separately from
certain legally separate component units for which the primary government is financially
accountable.
The government-wide financial statements are prepared using the economic resources
measurement focus. This is the same approach used in the preparation of the proprietary
fund and fiduciary fund financial statements but differs from the manner in which
governmental fund financial statements are prepared. Governmental fund financial
statements, therefore, include a reconciliation with brief explanations to better identify the
relationship between the government-wide statements and the statements for the
governmental funds.
The government-wide statement of activities presents a comparison between direct
expenses and program revenues for each function or program of the District's governmental
activities. Direct expenses are those that are specifically associated with a service, program,
or department and are therefore clearly identifiable to a particular function. The District does
not allocate indirect expenses to functions in the statement of activities. Program revenues
include charges paid by the recipients of goods or services offered by a program, as well as
grants and contributions that are restricted to meeting the operational or capital requirements
of a particular program. Revenues which are not classified as program revenues are
presented as general revenues of the District, with certain exceptions. The comparison of
direct expenses with program revenues identifies the extent to which each governmental
function is self-financing or draws from the general revenues of the District.
Fund Financial Statements:
Fund financial statements report detailed information about the District. The focus of
governmental fund financial statements is on major funds rather than reporting funds by
type. Each major governmental fund is presented in a separate column, and all non-major
funds are aggregated into one column.
The accounting and financial treatment applied to a fund is determined by its measurement
focus. All governmental funds are accounted for using a flow of current financial resources
measurement focus. With this measurement focus, only current assets and current liabilities
are generally included on the balance sheet. The Statement of Revenues, Expenditures,
and Changes in Fund Balances for these funds present increases (i.e., revenues and other
financing sources) and decreases (i.e., expenditures and other financing uses) in net current
assets.
21
C.
Basis of Accounting
Basis of accounting refers to when revenues and expenditures are recognized in the
accounts and reported in the financial statements. Government-wide financial statements
are prepared using the accrual basis of accounting. Governmental funds use the modified
accrual basis of accounting.
Revenues - Exchange and Non-exchange Transactions:
Revenue resulting from exchange transactions, in which each party gives and receives
essentially equal value, is recorded under the accrual basis when the exchange takes place.
Under the modified accrual basis, revenue is recorded in the fiscal year in which the
resources are measurable and become available. "Available" means the resources will be
collected within the current fiscal year or are expected to be collected soon enough
thereafter to be used to pay liabilities of the current fiscal year. For the District, "available"
means collectible within the current period or within 45, 60, 90 days after year-end,
depending on the revenue source. However, to achieve comparability of reporting among
California Districts and so as not to distort normal revenue patterns, with specific respect to
reimbursement grants and corrections to state apportionments, the California Department of
Education has defined available as collectible within one year.
Non-exchange transactions, in which the District receives value without directly giving equal
value in return, include property taxes, grants, and entitlements. Under the accrual basis,
revenue from property taxes is recognized in the fiscal year for which the taxes are
levied. Revenue from grants and entitlements is recognized in the fiscal year in which
all eligibility requirements have been satisfied. Eligibility requirements include timing
requirements, which specify the year when the resources are to be used or the fiscal year
when use is first permitted; matching requirements, in which the District must provide local
resources to be used for a specific purpose; and expenditure requirements, in which the
resources are provided to the District on a reimbursement basis. Under the modified accrual
basis, revenue from non-exchange transactions must also be available before it can be
recognized.
Deferred Revenue:
Deferred revenue arises when assets are received before revenue recognition criteria have
been satisfied. Grants and entitlements received before eligibility requirements are met are
recorded as deferred revenue. On governmental fund financial statements, receivables
associated with non-exchange transactions that will not be collected within the availability
period have also been recorded as deferred revenue.
Expenses/Expenditures:
On an accrual basis of accounting, expenses are recognized at the time a liability is incurred.
On the modified accrual basis of accounting, expenditures are generally recognized in the
accounting period in which the related fund liability is incurred, as under the accrual basis of
accounting. However under the modified accrual basis of accounting, debt service
expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due. Allocations of cost, such as
depreciation and amortization, are not recognized in the governmental funds.
22
C.
Basis of Accounting (Concluded)
Expenses/Expenditures (Concluded):
When both restricted and unrestricted resources are available for use, it is the District's
policy to use restricted resources first, then unrestricted resources as they are needed.
D.
Fund Accounting
The accounts of the District are organized on the basis of funds, each of which is considered
to be 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 equity
or retained earnings, revenues, and expenditures or expenses, as appropriate. 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 maintains the following governmental fund types:
Genera/ Fund - The general fund is used to account for and report all financial resources not
accounted for and reported in another fund.
Special Revenue Funds - Special revenue funds are used to account for and report the
proceeds of specific revenue sources that are restricted or committed to expenditure for
specified purposes other than debt service or capital projects. Other resources also may be
reported in the fund if those resources are restricted, committed, or assigned to the specified
purpose of the fund.
Capital Projects Funds - Capital projects funds are used to account for and report financial
resources that are restricted, committed, or assigned to expenditure for capital outlays,
including the acquisition or construction of capital facilities and other capital assets.
The District's accounts are organized into major and non-major funds as follows:
Major Governmental Funds:
General Fund is the primary operating fund of the District.
County School Facilities Fund is used to account for state apportionments (Education Code
Sections 17009.5 and 17070.10-17076.10).
Non-major Governmental Funds:
Cafeteria Fund is used to account for revenues received and expenditures made to operate
the District's cafeteria program.
Capital Facilities Fund is used to account for resources received from developer impact fees
assessed under provision of the California Environmental Quality Act (CEQA).
Capital Projects - Special Reserve Fund is used to account for special building projects as
determined by the governing board of the District.
23
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUEDl
E.
Budgets and Budgetary Accounting
Annual budgets are adopted on a basis consistent with accounting principles generally
accepted in the United States of America for all governmental funds. By state law, the
District's Governing Board must adopt a final budget no later than July 1. A public hearing
must be conducted to receive comments prior to adoption. The District's Governing Board
satisfied these requirements.
These budgets are revised by the District's Governing Board and Superintendent during the
year to give consideration to unanticipated income and expenditures. The original and final
revised budget is presented for the General Fund as required supplementary information on
page 39.
Formal budgetary integration was employed as a management control device during the
year for all budgeted funds. The District employs budget control by minor object and by
individual appropriation accounts. Expenditures cannot legally exceed appropriations by
major object account (See Note 3).
F.
Use of 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 that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
G.
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.
H.
Assets. Liabilities and Eguity
1. Deposits and Investments
The District is authorized to maintain cash in banks and revolving funds that are insured
to $250,000 by the Federal Depository Insurance Corporation (FDIC).
The District is considered to be an involuntary participant in an external investment pool
as the District is required to deposit all receipts and collections of monies with their
County Treasurer (Education Code Section 41001).
The County is authorized to deposit cash and invest excess funds by California
Government Code Section 53648 et seq. The funds maintained by the County are either
secured by the FDIC or are collateralized.
24
H.
Assets. Liabilities and Equity (Continued)
1.
Deposits and Investments (Concluded)
The District is authorized under California Government Code to make direct investments
in local agency bonds, notes, or warrants within the State; U.S. Treasury instruments;
registered State warrants or treasury notes; securities of the U.S. Government, or its
agencies; bankers acceptances; commercial paper; certificates of deposit; repurchase or
reverse repurchase agreements; medium term corporate notes; shares of beneficial
interest issued by diversified management companies; certificates of participation;
obligations with first priority security; and collateralized mortgage obligations.
Investments with original maturities greater than one year are stated at fair value. Fair
value is estimated based on quoted market prices at year-end. All investments not
required to be reported at fair value are stated at cost or amortized cost.
2. Capital Assets
Capital assets purchased or acquired with an original cost of $5,000 or more are
reported 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
outlays that significantly extend the useful life of an asset are capitalized. The costs of
normal maintenance and repairs that do not add to the value of the assets or materially
extend the asset's lives are not capitalized, but are expensed as incurred. Depreciation
on all capital assets is computed using a straight-line basis over the following estimated
useful lives:
Asset Class
Years
20
30-40
5-15
3. Deferred Revenue
Cash received for federal and state special projects and programs is recognized as
revenue to the extent that qualified expenditures have been incurred. Deferred revenue
is recorded to the extent that cash received on specific projects and programs exceeds
qualified expenditures.
4. Compensated Absences
All vacation pay is accrued when incurred in the government-wide financial statements.
Accumulated 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.
25
H.
Assets, Liabilities and Equity (Continued)
5. Long-term Liabilities
In the government-wide financial statements, long-terrn debt and other long-term
obligations are reported as long-term liabilities in the Statement of Net Assets. Bond
premiums and discounts as well as issuance costs, when applicable, are deferred and
amortized over the life of the bonds.
In the fund financial statements, governmental funds recognize bond premiums and
discounts as well as bond issuance costs, during the current period. The face amount of
the debt issued, premiums, or discounts is reported as other financing sources or uses.
6.
Fund Balances
The governmental fund financial statements present fund balances based on
classifications that comprise a hierarchy that is based primarily on the extent to which
the District is bound to honor constraints on the specific purposes for which amounts in
the respective governmental funds can be spent. The allowable classifications used in
the governmental fund financial statements are as follows:
Nonspendable Fund Balance consists of funds that cannot be spent due to their form
(e.g. inventories) or funds that legally or contractually must be maintained intact.
Restricted Fund Balance consists of funds that are mandated for a specific purpose by
external parties, constitutional provisions or enabling legislation.
Committed Fund Balance consists of funds that are set aside for a specific purpose by
the district's highest level of decision making authority (governing board). Formal action
must be taken prior to the end of the fiscal year. The same formal action must be
taken to remove or change the limitations placed on the funds.
Assigned Fund Balance consists of funds that are set aside with the intent to be used for
a specific purpose by the district's highest level of decision making authority or a body or
official that has been given the authority to assign funds. Assigned funds cannot cause
a deficit in unassigned fund balance. In accordance with board policy, the Business
Manager has been given this authority.
Unassigned Fund Balance consists of excess funds that have not been classified in the
previous four categories. All funds in this category are considered spendable resources.
This category also provides the resources necessary to meet unexpected expenditures
and revenue shortfalls. In accordance with board policy, the District intends to maintain
a Reserve for Economic Uncertainties of at least 5% of the General Fund's annual total
expenditures and other financing uses.
26
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)
H.
Assets. Liabilities and Equity (Concluded)
6. Fund Balances (Concluded)
The District considers restricted fund balances to have been spent first when an
expenditure is incurred for purposes for which both restricted and unrestricted fund
balance is available. Similarly, when an expenditure is incurred for purposes for which
amounts in any of the unrestricted classifications of fund balance could be used, the
District considers committed amounts to be reduced first, followed by assigned amounts
and then unassigned amounts.
7.
Revenue Limit/Property Tax
The District's revenue limit is received from a combination of local property taxes, state
apportionments, and other local sources.
The County of Sonoma is responsible for assessing, collecting and apportioning property
taxes. Taxes are levied for each fiscal year on taxable real and personal property in the
county. The levy is based on the assessed values as of the preceding January 1, which
is also the lien date. Property taxes on the secured roll are due on November 1 and
February 1, and taxes become delinquent after December 10 and April 10, respectively.
Property taxes on the unsecured roll are due on the lien date (January 1), and become
delinquent if unpaid by August 31.
Secured property taxes are recorded as revenue when apportioned, in the fiscal year of
the levy. The county apportions secured property tax revenue in accordance with the
alternative method of distribution prescribed by Section 4706 of the California Revenue
and Taxation Code. This alternate method provides for crediting each applicable fund
with its total secured taxes upon completion of the secured tax roll, approximately
October 1 of each year. The County Auditor reports the amount of the District's allocated
property tax revenue to the California Department of Education. Property taxes are
recorded as local revenue limit sources by the District.
The District's Base Revenue Limit is the amount of general purpose tax revenue, per
average daily attendance (ADA), that the District is entitled to by law. This amount is
multiplied by the applicable attendance period ADA to derive the District's total
entitlement. The California Department of Education reduces the District's entitlement
by the District's local property tax revenue. The balance is paid from the State General
Fund, and is known as the state apportionment. Since the total computed entitlement is
generally less than the allocated property tax revenues, the District was funded under
the Basic Aid Provision.
27
NOTE 2 - DEPOSITS AND INVESTMENTS
Summary of Deposits and Investments
Deposits and investments as of June 30, 2012, are classified in the accompanying financial
statements as follows:
Governmental
Activities
Cash in Revolving Fund
County Pool Investments
$
Total Deposits and Investments
$ 1.870.849
1,000
1,869,849
Cash in Revolving Fund
Cash in revolving fund consists of all cash maintained in commercial bank accounts that are
used as revolving funds.
County pool investments consist of District cash held by the Sonoma County Treasury that is
invested in the county investment pool. The fair value of the District's investment in the pool
is reported in the financial statements at amounts that are based upon the District's pro-rata
share of the fair value provided by the County Treasurer for the entire portfolio (in relation to
the amortized cost of that portfolio).
General Authorization
Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are
indicated in the schedule below:
Maximum
Maximum
Maximum
Authorized
Remaining
Percentage
Investment
Investment Type
Maturity
of Portfolio
in One Issuer
Local Agency Bonds, Notes, Warrants
Registered State Bonds, Notes, Warrants
U.S. Treasury Obligations
U.S. Agency Securities
Banker's Acceptance
Commercial Paper
Negotiable Certificates of Deposit
Repurchase Agreements
Reverse Repurchase Agreements
Medium-Term Notes
Mutual Funds
Money Market Mutual Funds
Mortgage Pass-Through Securities
County Pooled Investment Funds
Local Agency Investment Fund (LAIF)
Joint Powers Authority Pools
5 years
5 years
5 years
5 years
180 days
270 days
5 years
1 year
92 days
5 years
N/A
N/A
5 years
N/A
N/A
N/A
28
None
None
None
None
40%
25%
30%
None
20% of base
30%
20%
20%
20%
None
None
None
None
None
None
None
30%
10%
None
None
None
None
10%
10%
None
None
None
None
NOTE 2 - DEPOSITS AND INVESTMENTS (CONTINUED)
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rate will adversely affect the fair
value of an investment. Generally, as the length of the maturity of an investment increases,
the greater the sensitivity of its fair value to changes in market interest rates. The District
manages its exposure to interest rate risk by investing in the County Treasury that
purchases a combination of shorter term and longer term investments and by timing cash
flows from maturities so that a portion of the portfolio is maturing or coming close to maturity
evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Segmented Time Distribution
Information about the sensitivity of the fair value of the District's investment to market
interest rate fluctuations is provided by the following schedule that shows the distribution of
the District's investment by maturity:
Carrying
Value
Investment Type
$
Less Than
1 Year
Fair
Value
1,869,849
$
1,872,672
$
532,963
More Than
1 Year
$
1,336,886
Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder
of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by the
California Government Code, the District's investment policy, or debt agreements, and the
actual rating as of the year-end for each investment type.
Investment Type
County Pool Investments $
Carrying
Value
1,869,849
Fair
Value
$
1,872,672
Rating as of Year End
AAA
Aa
Unrated
$
1,869,849
Concentration of Credit Risk
The investment policy of the District contains no limitations on the amount that can be
invested in anyone issuer beyond the amount stipulated by the California Government
Code. However, the District does not hold any investments in anyone issuer, at year-end,
that represents five percent or more of the total investments held by the District.
Custodial Credit Risk - Deposits
This is the risk that in the event of a bank failure, the District's deposits may not be returned
to it. The District does not have a policy for custodial credit risk for deposits. However, the
California Government Code requires that a financial institution secure deposits made by
state or local governmental units by pledging securities in an undivided collateral pool held
by a depository regulated under state law (unless so waived by the governmental unit).
29
NOTE 2 - DEPOSITS AND INVESTMENTS (CONCLUDED)
Custodial Credit Risk - Deposits (Concluded)
The market value of the pledged securities in the collateral pool must equal at least 110
percent of the total amount deposited by the public agencies. California law also allows
financial institutions to secure public deposits by pledging first trust deed mortgage notes
having a value of 150 percent of the secured public deposits and letters of credit issued by
the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured
deposits. As of June 30, 2012, the District does not have a bank balance that is exposed to
custodial credit risk because it was uninsured and collateralized with securities held by the
pledging financial institution's trust department or agent, but not in the name of the District.
Custodial Credit Risk - Investments
This is the risk that in the event of the failure of the counterparty, the District will not be able
to recover the value of its investments or collateral securities that are in possession of an
outside party. The District does not have a policy limiting the amount of securities that can
be held by counterparties. As of June 30, 2012, the District does not have any investments
that are held by counterparties.
NOTE 3 - EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Excess of expenditures over appropriations in the General Fund were as follows:
$
Services and Other Operating Expenditures
99,054
The District incurred unanticipated bond related expenditures for which the budget was not
revised.
NOTE 4 - RECEIVABLES
General
Fund
Federal Government
$
26,172
Non-Major
Governmental
Funds
$
10,312
Totals
$
36,484
163,537
State Government
162,642
Local Governments
91,690
91,690
Miscellaneous
11,604
11,604
Totals
$
292,108
30
895
$
11,207
$
303,315
NOTE 5 - INTERFUND ACTIVITIES
Interfund transactions are reported as either loans, services provided, reimbursements, or
transfers. Loans are reported as interfund receivables and payables, as appropriate, and
are subject to elimination upon consolidation. Services provided, deemed to be at market or
near market rates, are treated as revenues and expenditures. Reimbursements occur when
one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost
as a reimbursement. All other interfund transactions are treated as transfers.
Due From/Due To Other Funds
Individual fund interfund receivable and payable balances at June 30, 2012 were as follows:
Interfund
Payable
Interfund
Receivable
Funds
General
Cafeteria
Capital Projects - Special Reserve
Totals
$
131
55.180
$
55311
$
55,311
$
55311
All interfund receivables and payables are scheduled to be paid within one year.
NOTE 6 - CAPITAL ASSETS AND DEPRECIATION
Capital asset activity for the year ended June 30, 2012, is shown below:
Balances
Balances
1, 2011
Additions
Deletions
June 30, 2012
1,384
$
$
1,384
638,553
638,553
6,349,827
6,349,827
119,625 $
10,536
130,161
69,410
0
69,410
7.109,389 $
79,946 $
0
7,189,335
Jul~
Land
Work-in-Progress
Totals at Historical Cost
Less Accumulated Depreciation for:
Total Accumulated Depreciation
Capital Assets, net
$
595,549
2,405,289
117,999
3,118,837
4,442
209,734
2,328
216,504
0
599,991
2,615,023
120,327
3,335,341
3,990,552 $
(136,558) $
0 $
3,853,994
31
NOTE 6 - CAPITAL ASSETS AND DEPRECIATION (CONCLUDED>
Depreciation expense was charged to governmental activities as follows:
Instruction
Food Services
Plant Services
$
163,635
5
7,329
6,688
5,571
12,588
20,688
Total Depreciation Expense
$
216504
NOTE 7 - CAPITAL LEASES
The District leases building improvements and equipment valued at $710,536, under
agreements, which provide for titles to pass upon expiration of the lease terms. Future
minimum lease payments under the agreements are as follows:
Lease
Payments
Year Ended
June 30
2013
2014
2015
2016
2017
2018-22
$
Total payments
67,736
67,736
67,736
64,225
64,225
256,897
588,555
(106,652)
Less amounts representing interest
Present value of net minimum lease payments
$
481,903
The District will receive no sublease rental revenues nor pay any contingent rentals for these
assets.
NOTE 8 - EARLY RETIREMENT INCENTIVES
During fiscal year 2011-12, the District provided one-time financial incentive benefits to all
employees who retire from the District on or after attaining age 55 with at least 10 years of
service to the District.
32
NOTE 8 - EARLY RETIREMENT INCENTIVES (CONCLUDED)
Future payments at June 30, 2012 are as follows:
Early
Retirement
Incentives
Year Ended
June 30
2013
Total
$
12,718
$
12718
NOTE 9 - OTHER POST EMPLOYMENT BENEFITS (OPE B)
From an accrual accounting perspective, the cost of post employment health care benefits
(OPEB), like the cost of pension benefits, generally should be associated with the periods in
which the cost occurs, rather than in the future year when the benefits are paid or provided,
Governmental Accounting Standards Board Statement No, 45 requires an accrual basis
measurement and recognition of OPEB cost over a period that approximates employees'
years of service and provides information about actuarial accrued liabilities associated with
OPEB and to what extent progress is being made in funding the plan,
Plan Descriptions: The District provides benefits to one retired management employee
under a special arrangement. In addition, the District provides medical coverage to
certificated employees who retire from active status at a minimum age of 56 with at least 15
years of service in the District. The District subsidizes a percentage of the benefits, up to the
District's cap, which was capped at $14,400 per year at the time of this valuation, The
District subsidizes 100% of benefits from age 56 to age 58; 75% of benefits from age 59 to
age 61; and 60% of benefits from age 62 to age 65, The District subsidy ceases when the
retiree becomes eligible for Medicare or when a retiree secures employment elsewhere
where insurance coverage is provided, The retirees may take any plan available to the
District, but are responsible for paying any excess costs above the District subsidy.
All contracts with District employees will be renegotiated at various times in the future and,
thus, costs and benefits are subject to change. Benefits and contribution requirements (both
employee and employer) for the OPEB Plan are established by labor agreements.
The District had thirteen (13) active employees and four (4) retired employees as of
April 1, 2011, the effective date of the triennial OPEB valuation. For the District, OPEB
benefits are administered by District personnel. No separate financial statements are
issued.
Funding Policy. The District currently pays for post employment health care benefits on a
pay-as-you-go basis, and these financial statements assume that pay-as-you-go funding will
continue.
Annua/OPEB Cost and Net OPEB Obligation: The following table shows the components of
the District's Annual OPEB Cost for the fiscal year ended June 30, 2012, the amount actually
contributed to the plan, and changes in the District's Net OPEB Obligation that resulted in a
Net OPES Obligation of $21 ,779 for the year ended June 30, 2012:
33
NOTE 9 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED)
Normal cost with interest to end of year
$
12,155
Amortization of UAAL with interest to end of year
22.872
Annual required contribution (ARC)
35,027
Interest on Net OPEB Obligation
682
(604)
Adjustment to ARC
Annual OPEB cost (expense)
35,105
(26.958)
Contributions for the fiscal year
Increase in Net OPEB Obligation
8,147
13.632
Net OPEB Obligation - June 3D, 2011
$
Net OPEB Obligation - June 30,2012
21779
The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the
Plan, and the net OPEB obligation for the last three fiscal years was as follows:
Fiscal '(ear Ended
June 3D, 2012
June 3D, 2011
June 3D, 2010
Annual
OPEB Cost
$
35,105
24,822
23,997
Percentage
Contributed
76.8%
119%
23.6%
Net OPEB
Obligation
$
21,779
13,632
18,339
Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes
are based on the substantive plan (the plan as understood by the employer and plan
members) and include the types of benefits provided at the time of each valuation and the
historical pattern of sharing benefit costs between the employer and plan members to that
point.
The projection of future benefits for an ongoing plan involves estimates of the value of
reported amounts and assumptions about the probability of occurrence of future events far
into the future. Examples include mortality, turnover, disability, retirement and other factors
that affect the number of people eligible to receive future retiree benefits. Actuarially
determined amounts are subject to continual revision as actual results are compared with
past expectations and new estimates are made about the future. The actuarial methods and
assumptions used include techniques that are designed to reduce the effects of short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the
long-term perspective of the calculations.
34
NOTE 9 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONCLUDED)
In the April 1, 2011, actuarial valuation, the liabilities were computed using the entry age
normal method and level dollar amortization over a closed 25 year period for the initial
UAAL, and the residual UAAL is being amortized over an open 30 year period. The actuarial
assumptions utilized a 5% discount rate, the expected long-term rate of return on District
assets, and a compensation increase rate of 3%, which was provided by the District and
based on the historical per annum increase. The valuation assumes a 4% health care cost
trend rate based on the actuary's long-term assumption that the average increase over time
cannot continue to outstrip general inflation by a wide margin.
NOTE 10 - LONG-TERM LIABILITIES
A schedule of changes in long-term liabilities for the year ended June 30, 2012, is shown
below.
Capital Leases
Totals
Balances
July 1, 2011
Additions
10,374
513,579
0
13,632
537,585
$ 11,339
10,536
21,051
35,105
$ 78,031
$
$
Balances
Deductions June 30,2012
Due within
One Year
$ 10,374
42,212
8,333
26,958
$ 87,877
$ 11,339
47,534
12,718
.21,779
$ 93,370
$
$
11,339
481,903
12,718
21,779
527,739
NOTE 11 - FUND BALANCES
The fund balances as of June 30, 2012 are as follows:
County
School
Facilities
Fund
General
Fund
Nonspendable
Restricted
Assigned
Unassigned:
Economic Uncertainties
Other
Totals
$
1,000
172,196
423,213
Non-major
Governmental
Funds
$
$
408,546
$
123,742
54,770
133,306
521,682
$
1,251,397
35
Totals
1,000
704,484
477,983
133,306
521,682
$
408,546
$
178,512
$ 1,838,455
NOTE 12 - EMPLOYEE RETIREMENT SYSTEMS
Qualified employees are covered under multiple-employer contributory retirement plans
maintained by agencies of the State of California. Certificated employees are members of
the California State Teachers' Retirement System (CaISTRS) and classified employees are
members of the California Public Employees' Retirement System (CaIPERS).
A.
California State Teachers' Retirement System (CaISTRS)
Plan Description
The District contributes to the California State Teachers' Retirement System (CaISTRS), a
cost-sharing multiple-employer public employee retirement system defined benefit pension
plan administered by CaISTRS. The plan provides retirement, disability, and survivor
benefits to plan members and beneficiaries. Benefit provisions are established by State
statutes, as legislatively amended, within the State Teachers' Retirement Law. CalSTRS
issues a separate comprehensive annual financial report that includes financial statements
and required supplementary information. Copies of the CalSTRS annual financial report may
be obtained from the CaISTRS, 100 Waterfront Place, West Sacramento, California 95605.
Funding Policy
Active plan members are required to contribute 8.0% 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 CalSTRS Teachers'
Retirement Board. The required employer contribution rate for fiscal year 2011-12
was 8.25% of annual payroll. The contribution requirements of the plan members are
established by State statute. The District's contributions to CalSTRS for the fiscal years
ended June 30,2012,2011, and 2010, were $87,590, $86,873, and $87,520, respectively,
and equal 100% of the required contributions for each year.
B.
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, CA 95811.
36
NOTE 12 - EMPLOYEE RETIREMENT SYSTEMS (CONCLUDED)
B.
California Public Employees' Retirement System (CaIPERS) (Concluded)
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 2011-12 was
10.923%. The contribution requirements of the plan members are established by State
statute. The District's contributions to CalPERS for the fiscal years ended June 30, 2012,
2011, and 2010, were $26,628, $33,752, and $40,228, respectively, and equal 100% of the
required contributions for each year.
C.
Social Security
As established by Federal law, all public sector employees who are not members of their
employer's existing retirement system (CaISTRS or CaIPERS) must be covered by social
security or an alternative plan. The District has elected to use Social Security as its
alternative plan. Contributions made by the District and participating employees vest
immediately. The District contributes 6.2% of an employee's gross earnings. In addition,
the employees were required to contribute 4.2% of their gross earnings.
NOTE 13 - ON-BEHALF PAYMENTS MADE BY THE STATE OF CALIFORNIA
The District was the recipient of on-behalf payments made by the State of California to the
California State Teachers' Retirement System (CaISTRS) for K-12 Education. These
payments consist of state general fund contributions of $51,504 to CalSTRS (4.855% of
salaries subject to CaISTRS).
NOTE 14 - RISK MANAGEMENT
The District is exposed to various risks of loss related to theft of, damage to, and destruction
of assets; errors and omissions; injuries to employees; and natural disasters. During fiscal
year 2011-12, the District participated in one joint powers authority (JPA) for purposes of
pooling for risk. There have been no significant reductions in coverage.
NOTE 15 - JOINT VENTURES
The District participates in two joint ventures under joint powers agreements (JPAs) with the
Redwood Empire Schools' Insurance Group (RESIG) for property & liability, workers'
compensation, and dental insurance coverage, and the West County Transportation Agency
for pupil transportation. The relationships between the District and the JPAs are such that
the JPAs are not component units of the District for financial reporting purposes.
The JPAs arrange for and/or provide coverage for its members. The JPAs are governed by
a board consisting of a representative from each member district. Each board controls the
operations of their JPAs, including selection of management and approval of operating
budgets independent of any influence by the member districts beyond their representation
on the Board. Each member district pays a premium commensurate with the level of
coverage requested and shares surpluses and deficits proportionately to their participation in
the JPAs. The JPAs are audited on an annual basis.
37
------
~-
~--
--~~-------~------
NOTE 16 - COMMITMENTS AND CONTINGENCIES
A.
State and Federal Allowances, Awards and Grants
The District has received state and federal funds for specific purposes that are subject to
review and 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.
B.
Litigation
The District is subject to various legal proceedings and claims. In the opInion of
management, the ultimate liability with respect to these actions will not materially affect the
financial position or results of operations of the District.
NOTE 17-SUBSEQUENTEVENT
On the June 5, 2012, general election, the registered voters of the District approved
Measure F, which authorizes the District to issue up to $6,000,000 in general obligation
bonds to improve the quality of education, improve student access to computers and modern
technology, make health and safety improvements, modernize outdated classrooms and
restrooms, improve energy efficiency by installing solar panels, modernize playgrounds and
playfields, and replace outdated heating, ventilation and air-conditioning systems. On
November 6, 2012, the District issued general obligation bonds in the amount of $2,100,000.
38
SUPPLEMENTARY INFORMATION SECTION
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - GENERAL FUND
Original
Budget
Final
Budget
Actual
Variance with
Final Budget
Favorable
(Unfavorable)
Revenues
Revenue Limit Sources:
State Apportionment
Local Sources
$
Federal Revenue
Other State Revenue
Other Local Revenue
Total Revenues
134,762
1,167,635
$
196,915
1,426,108
$
29,943
1,452,860
$
(166,972)
26,752
1,302,397
1,623,023
1,482,803
(140,220)
265,863
658,364
237,714
274,169
744,501
211,150
261,901
760,369
265,378
(12,268)
15,868
54,228
2,464,338
2,852,843
2,770,451
(82,392)
950,795
284,846
396,712
82,823
1,021,318
306,827
452,503
60,742
1,014,241
306,020
450,687
46,997
7,077
807
1,816
13,745
741,872
99,349
666,692
82,436
765,746
82,436
(99,054)
2,556,397
2,590,518
2,666,127
(75,609)
(92,059)
262,325
104,324
1,147,073
1,147,073
1,147,073
Expenditures
Certificated Salaries
Classified Salaries
Employee Benefits
Books and Supplies
Services and Other
Operating Expenditures
Other Expenditures
Total Expenditures
$
1,055,014
$
1.409,398
$
1,251,397
39
$
(158,001)
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
JUNE 30, 2012
Capital
Projects Special
Reserve
Capital
Facilities
Cafeteria
Total
Non-Major
Governmental
Funds
Assets
Deposils and Investments
11,431
11,207
131
$
$
22,769
$
$
43
$
Receivables
Due from Other Funds
Total Assels
41,083
$
59,523
$
112,037
11,207
55,311
$
178,555
$
43
55,180
41,083
$
114,703
Liabilities and Fund Balances
Liabilities:
Accounls Payable
43
Tolal Liabilities
Fund Balances:
Restricled
43
22,726
$
41,083
$
Assigned
22,726
Total Fund Balances
Total Liabilities and Fund Balances
$
41,083
22,769
$
41,083
$
59,933
54,770
123,742
54,770
114,703
178,512
114,703
40
$
178,555
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
Capital
Projects Special
Reserve
Capital
Facilities
Cafeteria
Total
Non-Major
Governmental
Funds
Revenues
$
Federal Revenue
State Revenue
Local Revenue
Total Revenues
$
77,407
6,684
15,688
$
99,779
13,060
$
13,060
55,707
77,407
6,684
84,455
55,707
168,546
10,536
81,555
90
22,179
10,536
Expenditures
Food SelVices
Plant SelVices
Facilities Acquisition and Construction
Debt SelVice:
Principal Retirement
Interest and Issuance Costs
Other Outgo
81,555
90
22,179
42,212
22,012
4,524
42,212
22,012
4,524
Total Expenditures
103,734
Excess of Revenues Over
(Under) Expenditures
(3,955)
68,838
10,536
183,108
(55,778)
45,171
(14,562)
10,536
10,536
Other Financing Sources
Other Sources
(3,955)
(55,778)
55,707
(4,026)
26,681
96,861
58,996
182,538
$
$
22,726
41,083
$
114,703
41
$
178,512
SCHEDULE OF FUNDING PROGRESS
Actuarial
Valuation
Date
Accrued
Liability
{AAL}
Value of
Assets
Unfunded
AAL
{UAAL}
Percentage
Covered
Funded
Ratio
Pa~roll
of Covered
Pa~roll
4/1/2011
$
0 $
350,293 $
350,293
0%
$
1,051,167
33.3%
4/1/2008
$
0 $
266,670 $
266,670
0%
$
938,884
28.4%
SEE NOTES TO SUPPLEMENTARY INFORMATION
42
ORGANIZATION/BOARD OF EDUCATION/ADMINISTRATION
ORGANIZATION
The Guerneville Elementary School District was established to provide elementary education to
pupils in kindergarten through eighth grade. The District currently operates one elementary school
and one community day school. There were no boundary changes during the year.
BOARD OF EDUCATION
Name
Office
Term Expires
Donna Hines
President
November 2014
Pamela Kruse
Clerk
November 2014
Nancy Saxe
Member
November 2012
Elaine Sundberg
Member
November 2012
Jamie Schiavone
Member
November 2014
ADMINISTRATION
Elaine Carlson
Superintendent
Michael (Sid) Albaugh
Business Manager
43
SCHEDULE OF AVERAGE DAILY ATTENDANCE
Second
Period
Report
Annual
Report
Elementary
Kindergarten
First through Third
Fourth through Sixth
Seventh and Eighth
Special Education - NPS
Extended Year - NPS
Totals
39.35
84.70
82.55
66.96
1.77
0.07
38.01
85.80
83.00
67.18
1.81
0.07
275.40
275.87
44
SCHEDULE OF INSTRUCTIONAL TIME
Grade Level
1982-83
Actual
Minutes
Adjusted
1982-83
Actual
Minutes
Kindergarten
36,000
Grade 1
1986-87
Minutes
Required
Adjusted
1986-87
Minutes
Required
2011-12
Actual
Minutes
Number
of Days
Traditional
Calendar
Number
of Days
Multitrack
Calendar
Status
33,600
36,000
33,600
56,035
175
N/A
In Compliance
50,400
47,040
50,400
47,040
52,535
175
N/A
In Compliance
Grade 2
50,400
47,040
50,400
47,040
52,535
175
N/A
In Compliance
Grade 3
50,400
47,040
50,400
47,040
52,535
175
N/A
In Compliance
Grade 4
54,000
50,400
54,000
50,400
52,535
175
N/A
In Compliance
Grade 5
54,000
50,400
54,000
50,400
52,535
175
N/A
In Compliance
Grade 6
54,000
50,400
54,000
50,400
52,535
175
N/A
In Compliance
Grade 7
54,000
50,400
54,000
50,400
52,535
175
N/A
In Compliance
Grade 8
54,000
50,400
54,000
50,400
52,535
175
N/A
In Compliance
45
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Program Name
Federal
Catalog
Number
Pass-Through
Identification
Number
U.S. Department of Agriculture:
Passed through California
Department of Education (CDE):
Child Nutrition Cluster:
National School lunch
Especially Needy Breakfast
10.555
10.553
13524
13526
U.S. Department of Education:
Passed through CDE:
NClB: Title I, Part A - Basic Grant
NClB: Title II - Improving Teacher Quality
NClB: Title X McKinney-Vento Homeless Assistance
Education Jobs Fund
84.010
84.367
84.196
84.410
14329
14341
14332
25152
107,941
31,563
11,772
53,094
Passed through Sonoma County SElPA:
Special Education Cluster:
IDEA Part B Basic local Assistance
84.027
13379
47,867
Received Direct:
Rural Education Achievement Program
84.358A
nfa
5,172
10060
4,492
U.S. Department of Health and Human Services:
Passed through Sonoma County SElPA:
Medi-Cal Administrative Activities
93.778
Total
Federal
Program
Expenditures
$
$
46
63,197
14,210
339,308
RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT
WITH AUDITED FINANCIAL STATEMENTS
Deferred
Maintenance
Fund
General
Fund
June 30, 2012 Annual Financial and
Budget Report Fund Balances
$
710,124
Special
Revenue Special
Reserve
Fund
$
562
$
590,011
Reclassifications and Adjustments
Increasing (Decreasing) Fund Balances:
Overstatement of Fund Balances
Understatement of Fund Balance
Understatement of Services and Other
Operating Expenditures
Overstatement of Books and Supplies
Expenditures
Understatement of Other State Revenues
Understatement of Other Local Revenues
(590,011 )
(562)
(590,011 )
(100,389)
10,485
31,010
9,594
Total Reclassifications and Adjustments
Increasing (Decreasing) Fund Balances
June 30, 2012 Audited Financial
Statements Fund Balances
(562)
590,573
541,273
1,251,397
$
$
0
$
0
The reclassification of fund balance above was required as a result of the definition of special revenue funds
prescribed by GASB 54.
Auditor's Comments
The audited financial statements of all other funds were in agreement with the Annual Financial and Budget
Report for the fiscal year ended June 30, 2012.
47
SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS
GENERAL FUND
(Budget) •
2012-13
Revenues and Other Financial Sources
$
Expenditures
Other Uses and Transfers Out
Total Outgo
Change in Fund Balance
2010-11
2011-12
2,295,993
$
2,770,451
$
2009-10
2,619,099
$
2,625,505
2,478,480
2,666,127
2,682,055
2,723,474
0
0
9,699
0
2,478,480
2,666,127
2,691,754
2,723,474
(182,487)
104,324
(72,655)
(97,969)
Ending Fund Balance
$
1,068,910
$
1,251,397
$
1,147,073
$
1,219,728
Available Reserves
$
472,016
$
654,988
$
388,429
$
1,106,722
Reserve for Economic Uncertainties ..
$
125,000
$
133,306
$
134,588
$
140,135
Available Reserves as a Percentage
of Total Outgo
Total Long-Term Liabilities
Average Daily Attendance at P-2
19.0%
$
434,369
24.6%
$
264
527,739
14.4%
$
275
537,585
40.6%
$
588,319
276
280
• The amounts reported for the 2012-13 budget are presented for analy1ical purposes only and have not been audited.
--
Reported balances are a component of available reserves.
The fund balance of the General Fund increased $31,669 (2.6%) over the past two years. The fiscal year 2012-13 budget
projects a decrease of $182,487 (14.6%). For a district this size, the state recommends available reserves of at least 5% of
total General Fund expenditures, transfers out, and other uses (total outgo).
The District incurred operating deficits of $97,969 and $72,655 during fiscal years 2009-10 and 2010-11, respectively,
and produced an operating surplus of $104,324 during fiscal year 2011-12.
Total long-term liabilities decreased $60,580 over the past two years.
Average daily attendance (ADA) decreased 5 ADA over the past two years. The District projects a decrease of 11 ADA
during fiscal year 2012-13.
48
NOTES TO SUPPLEMENTARY INFORMATION
NOTE 1 - PURPOSE OF STATEMENTS AND SCHEDULES
A.
Schedule of Revenues. Expenditures. and Changes in Fund Balance - Budget and Actual
In accordance with Governmental Accounting Standards Board (GAS B) Statement No. 34,
the District is required to present a Schedule of Revenues, Expenditures, and Changes in
Fund Balance budgetary comparison for the General Fund and each Major Special Revenue
Fund that has an adopted budget. This schedule presents the original adopted budget, final
adopted budget, and the actual revenues and expenditures of each of these funds by object.
B.
Combining Statements
Combining statements are presented for purposes of additional analysis, and are not a
required part of the District's basic financial statements. These statements present more
detailed information about the financial position and financial activities of the District's
individual funds.
C.
Schedule of Funding Progress
In accordance with Governmental Accounting Standards Board (GASB) Statement No. 45,
the District is required to present a Schedule of Funding Progress which shows the funding
progress of the District's OPEB plan for the most recent valuation and the two preceding
valuations. The information required to be disclosed includes the valuation date, the
actuarial value of assets, the actuarial accrued liability, the total unfunded actuarial liability,
the actuarial value of assets as a percentage of the actuarial accrued liability (funded ratio),
the annual covered payroll and the ratio of the unfunded actuarial liability to annual covered
payroll.
D.
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.
E.
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 46200 through 46206.
F.
Schedule of Expenditures of Federal Awards
The accompanying schedule of expenditures of federal awards includes the federal grant
activities of the District and is presented on the modified accrual basis of accounting. The
information in this schedule is presented in accordance with the requirements of OMB
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
49
NOTES TO SUPPLEMENTARY INFORMATION
NOTE 1 - PURPOSE OF STATEMENTS AND SCHEDULES (CONCLUDED)
G.
Reconciliation of Annual Financial and Budget Report with Audited Financial Statements
This schedule provides the information necessary to reconcile the fund balances of all funds,
as reported in the Annual Financial and Budget Report to the audited financial statements.
H.
Schedule of Financial Trends and Analysis
This schedule discloses the District's financial trends by displaying past years' data along
with current year budget information. These financial trend disclosures are used to evaluate
the District's ability to continue as a going concern for a reasonable period of time.
50
OTHER INDEPENDENT AUDITOR'S REPORTS SECTION
INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE
Board of Education
We have audited Guerneville Elementary School District's compliance with the types of compliance
requirements described in the Standards and Procedures for Audits of California K-12 Local
Educational Agencies 2011-12 to the state laws and regulations listed below for the year ended
Compliance with the requirements of state laws and regulations is the
June 30, 2012.
responsibility of the District's management. Our responsibility is to express an opinion on
Guerneville Elementary School District's 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 Standards
and Procedures for Audits of California K-12 Local Educational Agencies 2011-12, prescribed in
the California Code of Regulations, Title 5 section 19810 and following. 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 Guerneville 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 Guerneville Elementary School District's compliance with
those requirements.
Procedures
in Education Audit
Appeals Panel's
Procedures
Audit Guide
Performed
Description
Attendance Accounting:
Attendance Reporting
Teacher Certification and Misassignments
Kindergarten Continuance
Independent Study
Continuation Education
23
10
Yes
Yes
Yes
No (see below)
Not Applicable
Instructional Time:
School Districts
County Offices of Education
6
3
Yes
Not Applicable
Instructional Materials:
General Requirements
8
Yes
Ratios of Administrative Employees to Teachers
1
Yes
Classroom Teacher Salaries
1
Yes
Early Retirement Incentive
4
Not Applicable
Gann Limit Calculation
1
Yes
School Accountability Report Card
3
Yes
Public Hearing Requirement - Receipt of Funds
1
Yes
6
3
3
51
P.O. Box 2196/ Folsom, CA 95763/ Phone (916) 966-3883/ Fax (916) 966-3815
Board of Education
Guerneville Elernentary School District
Page Two
Procedures
In Education Audit
Appeals Panel's
Audit Guide
Description
Procedures
Performed
Juvenile Court Schools
8
Not Applicable
Exclusion of Pupils - Pertussis Imrnunization
2
Yes
Class Size Reduction:
General Requirernents
Option One
7
3
O~n~
4
Yes
Yes
Not Applicable
Districts or Charter Schools With
Only One School Serving K-3
4
Not Applicable
After School Education and Safety Program:
General Requirements
After School
Before School
4
5
6
Yes
Yes
Not Applicable
Contemporaneous Records of Attendance
For Charter Schools
3
Not Applicable
Mode of Instruction for Charter Schools
1
Not Applicable
15
Not Applicable
Determination of Funding for Nonclassroom-Based
Instruction for Charter Schools
3
Not Applicable
Annual Instructional Minutes - Classroom Based
For Charter Schools
4
Not Applicable
Nonclassroom-Based Instruction/
Independent Study for Charter Schools
We did not perform tests for the independent study program because the ADA claimed by the
District does not exceed the threshold that requires testing.
In our opinion, Guerneville Elementary School District complied, in all material respects, with the
state laws and regulations referred to above for the year ended June 30, 2012, except as
described in the accompanying Schedule of Findings and Questioned Costs.
The District's responses to the findings identified in our audit are described in the accompanying
Schedule of Findings and Questioned Costs. We did not audit the responses and, accordingly, we
express no opinion on the responses.
This report is intended solely for the information and use of the District's Board, management,
California State Controller's Office, California Department of Finance, California Department of
Education, and pass-through entities, and is not intended to be and should not be used by anyone
other than these specified parties.
~RM1dA~~
December 7, 2012
52
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Board of Education
Guerneville Elernentary School District
We have audited the financial staternents of the governrnental activities, each rnajor fund, and the
aggregate rernaining fund inforrnation of the Guerneville Elementary School District, as of and for
the year ended June 30, 2012, which collectively comprise the District's basic financial statements,
and have issued our report thereon dated December 7, 2012. 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 Guerneville Elementary School District is responsible for establishing and
maintaining effective internal control over financial reporting. In planning and performing our audit,
we considered the 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 the District's internal control over
financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District's
internal control over financial reporting.
Our consideration of internal control over financial reporting 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 Findings and
Questioned Costs, we identified deficiencies in internal control over financial reporting that we
consider to be material weaknesses.
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 Findings and Questioned Costs to be material weaknesses, as noted
in Findings 12-1 and 12-2.
53
P.O. Box 2196/ Folsom, CA 95763 /Phone (916) 966-3883/ Fax (916) 966-3815
Board of Education
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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.
The District's responses to the findings identified in our audit are described in the accompanying
Schedule of Findings and Questioned Costs. We did not audit the responses and, accordingly, we
express no opinion on the responses.
This report is intended solely for the information and use of the District's Board, management,
California State Controller's Office, California Department of Finance, California Department of
Education, and pass-through entities, and is not intended to be and should not be used by anyone
other than these specified parties.
December 7,2012
54
FINDINGS AND QUESTIONED COSTS SECTION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION I • SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued:
Unqualified
Internal control over financial reporting:
Material weaknesses identified?
Significant deficiencies identified not considered
to be material weaknesses?
X
Noncompliance material to financial statements noted?
Yes
--- No
- - - Yes
- - Yes
X
None reported
X
No
- - - Yes
X
No
State Awards
Internal control over state programs:
Material weaknesses identified?
Significant deficiencies identified not considered
to be material weaknesses?
X
Type of auditor's report issued on compliance for
state programs:
Yes
_ _ _ None reported
Unqualified
55
SECTION II - FINANCIAL STATEMENT FINDINGS
12-1/30000
MATERIAL WEAKNESS
SEGREGATION OF DUTIES
Criteria:
An effective system of internal control requires that employees who
have access to district assets do not also have access to accounting
records that are used to maintain control over the assets. In
addition, all significant financial transactions or financial reporting
activities should be reviewed and approved by another informed
employee, who was not actively involved in the initial financial
transactions or financial reporting activities.
Condition:
An appropriate segregation of duties between employees who have
access to assets and those employees who maintain accounting
records used to manage the assets cannot always be maintained.
In addition, financial transactions and financial reporting activities are
not always reviewed and approved by another informed employee,
who was not actively involved in the initial financial transactions or
financial reporting activities.
Questioned Costs:
None.
Context:
The condition existed throughout fiscal year 2011-12.
Effect:
When an appropriate segregation of duties is not maintained, and
when financial transactions and financial reporting activities are not
independently reviewed and approved, there is more than a remote
likelihood that a material misstatement of the financial
statements may occur and not be prevented, or detected and
corrected on a timely basis by the District's system of internal
control.
Cause:
The District does not always have adequate staffing of specialized
personnel to ensure that an appropriate segregation of duties is
maintained, and financial transactions and financial reporting
activities are independently reviewed and approved.
Recommendation:
Due to the nature of school finance and the specific types of financial
transactions and financial reporting activities performed by the
District, management and the Governing Board should weigh the
cost of eliminating this control weakness against the benefits to be
received. If it is determined that the District cannot fully remediate
the control weakness, management should develop alternative
procedures, which may help to mitigate the financial reporting risk of
the District.
56
SECTION 11- FINANCIAL STATEMENT FINDINGS (CONTINUED)
SEGREGATION OF DUTIES (CONCLUDED)
District Response:
The District will weigh the cost of fully eliminating the control
weakness related to the segregation of duties of employees who
have access to district assets and accounting systems. Likewise, if
it is determined that the District cannot fully remediate the control
weakness, the District will work to develop alternative procedures
that can help mitigate the financial reporting risk of the District.
57
SECTION 11- FINANCIAL STATEMENT FINDINGS (CONCLUDED)
12 - 2/30000
MATERIAL WEAKNESS
PAYROLL
Criteria:
Payroll contracts should be reviewed and approved by the District's
Governing Board, prior to payment.
Condition:
The contract with the Superintendent ended on June 30, 2011 and
the District was unable to provide a Board approved contract for the
2011-12 fiscal year.
Questioned Cost:
None. The salary did not change from the 2010-11 fiscal year,
except for the five furlough days that affected all District
employees.
Context:
The conditions existed throughout fiscal year 2011-12.
Effect:
Errors or improprieties may occur and not be detected in a timely
manner.
Cause:
The contract with the Superintendent was not formally adopted by
the District's Governing Board.
Recommendation:
Payroll contracts should be reviewed and approved by the District's
Governing Board, prior to payment. No payment should be made
without the prior approval of the Governing Board.
District Response:
The District will include a category to review and approve payroll
contracts by the District's Governing Board in the monthly regular
board meeting agenda. Additionally, payments of payroll contracts
will not be made without the prior approval of the Governing Board.
58
SECTION'" - STATE AWARD FINDINGS AND QUESTIONED COSTS
12 - 3/72000
SIGNIFICANT DEFICIENCY
SCHOOL ACCOUNTABILITY REPORT CARD - FACILITIES
Criteria:
In accordance with guidance provided by the California Department
of Education (CDE), the disclosures regarding safety, cleanliness,
and adequacy of school facilities, which are required to be presented
in the school accountability report card, are to be based on the most
recent available data collected by the District, which should be
documented using a Facilities Inspection Tool that is retained for
audit purposes.
Condition:
The District was unable to locate the Facilities Inspection Tool that
was used to prepare the required disclosures regarding safety,
cleanliness, and adequacy of school facilities in the school
accountability report card.
Questioned Cost:
None.
Context:
Disclosures regarding safety, cleanliness, and adequacy of school
facilities included in the school accountability report card.
Effect:
The disclosures regarding safety, cleanliness, and adequacy of
school facilities, presented in the school accountability report card,
were not adequately supported in accordance with state guidelines.
Cause:
The District could not locate the Facilities Inspection Tool that was
used to prepare the school accountability report card.
Recommendation:
The District should establish appropriate procedures to ensure that
all future school accountability report card disclosures regarding
safety, cleanliness, and adequacy of school facilities, are supported
by a completed Facilities Inspection Tool that is retained for audit
purposes.
District Response:
The District will establish appropriate procedures that ensure all
school accountability report card disclosures regarding safety,
cleanliness, and adequacy of school facilities, are supported by a
completed Facilities Inspection Tool that is retained for audit
purposes.
59
SECTION III • STATE AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED)
12 - 4/40000
AFTER SCHOOL EDUCATION AND SAFETY CASES) PROGRAM
Criteria:
1.
In accordance with Education Code Section 8483 (a)(2), it is the
intent of the Legislature that elementary school pupils attend the
entire program every day that the program operates, with the
exception of absences allowed under the District's early release
policy. Since the District's program begins upon the conclusion of
the regular school day and ends at 6:00 p.m., each elementary pupil
is expected to attend the afterschool program until 6:00 p.m., unless
his/her absence is supported by a properly completed early release
form, which specifies an absence reason that is considered
allowable in accordance with the District's early release policy.
Accordingly, the District should develop and maintain appropriate
daily attendance records that identify each pupil's exact time of
arrival and departure; a comprehensive early release policy, which
identifies all early release absences that are considered allowable
for purposes of determining pupil eligibility, and early release forms
that identify the specific reasons for the absences and the specific
dates or time periods covered by the early release forms.
2.
The District should develop and maintain accurate attendance
records to support the attendance reported to the California
Department of Education.
Conditions:
Questioned Costs:
During our testing of the ASES program, we noted the following:
1.
The District did not have documentation to support the reason for the
early release of pupils on a consistent basis.
2.
The number of students served that was reported to the California
Department of Education did not agree to the supporting sign-inl
sign-out attendance sheets from the sites.
1-2.
The days of operation and number of students served that were
reported on the 1st Half and 2nd Half After School Base Attendance
Reports were overstated (understated) by the following amounts:
Days of
Operation
School Name
Guerneville Elementary
Monte Rio Elementary
60
1
o
1st
Half
(153)
1
SECTION 111- STATE AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED)
AFTER SCHOOL EDUCATION AND SAFETY (ASES) PROGRAM (CONTINUED)
Questioned Costs:
Days of
Operation
School Name
o
1
2nd
Half
(728)
4,925
The understatement of 153 and 728 at Guerneville Elementary were
due to formula errors in the worksheets used to accumulate the
number of students served. The overstatement of 4,925 at Monte
Rio Elementary was due to a combination of formula errors in the
worksheets used to accumulate the number of students served
(2,682) and lack of documentation to support the reason for the early
release of pupils (2,243).
The conditions existed throughout fiscal year 2011-12.
Context:
Effects:
1.
Program records maintained by the District do not adequately
substantiate compliance with Education Code Section 8483 (a)(2).
2.
The District overstated (understated) the days of operation and
number of student served on the 1sl Half and 2 nd Half After School
Base Attendance Reports, and the District's internal controls
procedures did not prevent or detect the errors.
The District has not adequately monitored the program to ensure
that it is being operated in accordance with all state requirements.
Cause:
Recommendations:
1.
The District should provide appropriate training and guidance to
program personnel. Training should include procedures to ensure
that the reason for the early release of pupils from the after school
program is properly documented in writing, as well as to ensure that
all supporting records are maintained in accordance with the State's
records retention requirements.
2.
The District should establish procedures to ensure that the numbers
reported to the California Department of Education on the
attendance reports agree to site attendance records. In addition, the
1sl Half and 2 nd Half After School Base Attendance Reports should
be revised to reflect the following:
61
SECTION III - STATE AWARD FINDINGS AND QUESTIONED COSTS (CONCLUDED)
AFTER SCHOOL EDUCATION AND SAFETY (ASES) PROGRAM (CONCLUDED)
Recommendations:
Days of
Operation
School Name
Days of
Operation
School Name
District Responses:
80
81
95
99
1st
Half
10,139
4,613
2nd
Half
11,693
1,400
1.
The District will provide ongoing training and guidance to the ASES
program personnel.
Specifically, the training will include
procedures for early release of pupils properly documented in
writing and maintenance of records in accordance with the State's
records retention manual.
2.
The District will establish procedures that ensure the numbers
reported to the California Department of Education attendance
reports agree with site records. The District will also revise the 1st
Half and 2 nd Half After School Base Attendance Reports as
recommended.
62
STATUS OF PRIOR YEAR RECOMMENDATIONS
Recommendations
Current Status
FINANCIAL STATEMENTS
11 -1/30000
DEFICIT SPENDING 1AVAILABLE
RESERVES
The District should take appropriate
action to reduce its program spending
down to a level, which can be supported
by the amount of revenue received by
the District.
Implemented
STATE AWARDS
11 - 2140000
CLASS SIZE REDUCTION
The District should require Form
J-7CSR to be independently reviewed
for accuracy and completeness prior to
submitting to the state. In addition, the
District should amend Form J-7 CSR to
reflect 82 pupils.
Implemented
63
Explanation If Not
Fully Implemented
APPENDIX B
GENERAL AND FINANCIAL INFORMATION
FOR THE GUERNEVILLE ELEMENTARY SCHOOL DISTRICT
GENERAL DISTRICT INFORMATION
The information in this and other sections concerning the District's operations and
operating budget 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 Series B Bonds is payable from the general fund of the District. The Series B Bonds are
payable from the proceeds of an ad valorem tax required to be levied by the County in an
amount sufficient for the payment thereof. See "SECURITY FOR THE SERIES B BONDS" in
the front half of the Official Statement.
General Information
The Town of Guerneville is a small tourist town located in Sonoma County (the
“County”) situated between the Russian River and the surrounding hills. The boundaries of the
Guerneville Elementary School District (the “District”) encompass an area of approximately 9
square miles within the unincorporated town of Guerneville, located 75 miles north of San
Francisco and 12 miles from the Sonoma coastline. The District is a elementary school district
providing education for students in grades K-8. The District currently operates one elementary
school and one community day school and has 29 employees. Total enrollment for the 2012-13
school year is 281 students. The District has been a “Basic Aid” school district since fiscal year
2011-12.
Basic Aid Status. Commencing in fiscal year 2011-12 and continuing in 2012-13, the
District’s local revenue, consisting of its share of local property taxes, have exceeded the
District’s deficited revenue limit and therefore, the District is considered a “Basic Aid District,”
meaning it is entitled to retain local property tax revenues which exceed its revenue limit. The
District in uncertain if it will continue to be a Basic Aid District in 2013-14 based on its revenue
limit and its share of local property taxes in 2013-14.
Administration
Governing Board. The District is governed by a five-member Governing Board, each
member of which is elected to a four-year term. Elections for positions to the Board are held
every two years, alternating between three and four available positions. Current members of the
Governing Board, together with their office and the date their term expires, are listed below:
Name
Donna Hines
Jamie Greule
Pam Kruse
Robin Leone
Nancy Saxe
Office
President
Member
Member
Member
Member
Term Expires
November 2014
November 2014
November 2014
November 2016
November 2016
B-1
Superintendent and Administrative Personnel. The Superintendent of the District,
appointed by the Board, is responsible for management of the day-to-day operations and
supervises the work of other District administrators. Elaine Carlson is currently serving as the
Superintendent. The District is currently interviewing for a new District Business Manager,
because the position became vacant on May 30, 2013, when the prior Business Manager
accepted another position in a different school district. The following is a short description of
Superintendent Carlson’s educational and professional background:
Elaine Carlson, Superintendent. Superintendent Carlson began her career at the
District as a teacher in 1990. She obtained her Professional Administrative
Services Credentials I and II from California State University, Sonoma. After
serving as Principal for five years, in 2010 she was appointed to the position of
Superintendent.
Recent Enrollment Trends
The following table shows recent enrollment history for the District with an estimate for
fiscal year 2013-14.
ANNUAL ENROLLMENT
Fiscal Years 2003-04 through 2013-14
School Year
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Enrollment
376
336
309
310
302
304
296
291
287
281
281
Percent Change
-(10.6)
(8.0)
0.3
(2.6)
0.7
(2.6)
(1.7)
(1.4)
(2.1)
0.0
*Estimate.
Source: Enrollment: State Department of Education; Guerneville Elementary School District for
2013-14.
The District has been experiencing declining enrollment, but based on variables such as
recent birth rates, the District expects enrollment to stabilize.
Employee Relations
The employees of the District are represented by various bargaining units, as follows:
Employee
Group
No. of FTE
Employees
Representation
Contract Expiration
Date
Certificated
13.0
California Teachers’ Association
10/1/13
Classified
15.8
California Schools Employees Association
10/1/13
B-2
District 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
Public Employees' Retirement System (“PERS”). See also Note 11 in Appendix A hereto.
STRS. All full-time certificated employees participate in STRS, a cost-sharing, multipleemployer contributory public employee retirement system. The plan provides retirement and
disability benefits and survivor benefits to beneficiaries. Benefit provisions are established by
State statutes, as legislatively amended, within the State Teacher’s Retirement Law. Active plan
members are required to contribute 8.0% of their salary and the District is required to contribute
a legislatively determined rate. The required employer contribution rate for fiscal year 2010-11
was 8.25% of annual payroll.
The District’s contribution to STRS for fiscal years 2009-10, 2010-11 and 2011-12 was
$87,520, $86,873, and $87,590 respectively. A STRS payment of $94,620 is budgeted for 201213.
PERS. All full-time and some part-time classified employees participate in PERS, an
agent multiple-employer contributory public employee retirement system that acts as a common
investment and administrative agent for participating public entities within the State of California.
The District is part of a "cost-sharing" pool within PERS. Active plan members are required to
contribute 7.0% of their salary and the District is required to contribute an actuarially determined
rate (11.417% for fiscal year 2012-13). One actuarial valuation is performed for those employers
participating in the pool, and the same contribution rate applies to each.
The District’s contribution to PERS for fiscal years 2009-10, 2010-11 and 2011-12 was
$40,228, $33,752, and $26,628 respectively. A PERS payment of $32,995 is budgeted for 201213.
At its April 17, 2013 meeting, the PERS Board of Administration approved a
recommendation to change the PERS amortization and smoothing policies. Prior to this change,
PERS employed an amortization and smoothing policy which spread investment returns over a
15-year period with experience gains and losses paid for over a rolling 30-year period. After this
change, PERS will employ an amortization and smoothing policy that will pay for all gains and
losses over a fixed 30-year period with the increases or decreases in the rate spread directly
over a 5-year period.
The new amortization and smoothing policy will be used for the first time in the June 30,
2013 actuarial valuations. These valuations will be performed in the fall of 2014 and will set
employer contribution rates for the Fiscal Year 2015-16. The District cannot predict how this
change in amortization and smoothing policies will affect its contribution levels.
State Pensions Trusts. Both the PERS and STRS systems are operated on a
statewide basis. District contribution rates to PERS can vary annually depending on changes in
actuarial assumptions and other factors, such as liability. Contributions to STRS can only be
changed legislatively. STRS has a substantial State unfunded actuarial liability, being $71.0
billion as of June 30, 2012. Since this liability has not been broken down by the state agency,
information is not available showing the District's share.
B-3
Both STRS and PERS issue separate comprehensive financial reports that include
financial statements and required supplemental information. Copies of such reports may be
obtained from STRS and PERS, respectively, as follows: (i) STRS, P.O. Box 15275,
Sacramento, California 95851-0275; (ii) PERS, P.O. Box 942703, Sacramento, California
94229-2703. More information regarding STRS and PERS can also be obtained at their
websites, www.calstrs.com and www.calpers.ca.gov, respectively. However, information in the
financial reports and on the websites is not incorporated in this Official Statement by reference.
See also the following paragraph on recent pension reform legislation.
Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, Governor
Brown signed AB 340, a bill that will enact the California Public Employees’ Pension Reform Act
of 2013 (“PEPRA”) and that will also amend various sections of the California Education and
Government Codes. AB 340 (i) increases the retirement age for new State, school, and city and
local agency employees depending on job function, (ii) caps the annual PERS and STRS
pension benefit payouts, (iii) addresses numerous abuses of the system, and (iv) requires State,
school, and certain city and local agency employees to pay at least half of the costs of their
PERS pension benefits. PEPRA will apply to all public employers except the University of
California, charter cities and charter counties (except to the extent they contract with PERS.)
The provisions of AB 340 will go into effect on January 1, 2013 with respect to new
State, school, and city and local agency employees hired on that date and after; existing
employees who are members of employee associations, including employee associations of the
District, will have a five-year window to negotiate compliance with AB 340 through collective
bargaining. If no deal is reached by January 1, 2018, a city, public agency or school district
could force employees to pay their half of the costs of PERS pension benefits, up to 8 percent of
pay for civil workers and 11 percent or 12 percent for public safety workers.
PERS has predicted that the impact of AB 340 on employers, including the District and
other employers in the STRS system, and employees will vary, based on each employer’s
current level of benefits. To the extent that the new formulas lower retirement benefits, employer
contribution rates could decrease over time as current employees retire and employees subject
to the new formulas make up a larger percentage of the workforce. This change would, in some
circumstances, result in a lower retirement benefit for employees than they currently earn.
Additionally, PERS has noted that changes arising from AB 340 could ultimately have an
adverse impact on public sector recruitment in areas that have historically experienced
recruitment challenges due to higher pay for similar jobs in the private sector.
With respect to STRS, for employees hired after January 1, 2013, future members will
pay the greater of either (1) at least 50 percent of the normal cost of their retirement plan,
rounded to the nearest one-quarter percent, or (2) the contribution rate paid by current
members. The member contribution rate could be increased from this level through collective
bargaining or may be adjusted base don other factors. Public employers will pay at least the
normal cost rate, after subtracting the member’s contribution. The District is unable to predict
the amount of future contributions it will have to make to STRS as a result of the implementation
of AB 340 (being its future contributions for the normal costs of new employees), and as a result
of negotiations with its employee associations, or, notwithstanding the adoption of AB 340,
resulting from any legislative changes regarding STRS employer contributions that may be
adopted in the future.
More information about AB 340 can be accessed through the PERS’s web site at
www.calpers.ca.gov/index.jsp?bc=/member/retirement/pension-reform-impacts.xml&pst=ACT&
B-4
pca=ST and through the STRS web site at http://www.calstrs.com/Newsroom/whats_new/
AB340_detailed_impact_analysis.pdf. The references to these internet websites are shown for
reference and convenience only; the information contained within the websites may not be
current and has not been reviewed by the District and is not incorporated herein by reference.
Other Post-Employment Retirement Benefits
The District currently has in place a plan of providing Other Post Employment Health
Care Benefits (“OPEB”) to its certificated retirees. The District implemented GASB Statement
No. 45 for fiscal year ended June 30, 2010.
Plan Description. With respect to certificated employees only, the District has an OPEB
program for certificated employees who retire from active status at a minimum age of 56 with at
least 15 years of service with the District. The District subsidizes 100% of benefits from age 56
to age 58; 75% of benefits from age 59 to age 61; and 60% of benefits from age 62 to age 65.
These benefits are not available as of the age of 65 years. The retirees may participate in any
health plan available to the District, but are responsible for paying any excess costs above the
District subsidy.
Annual OPEB Cost and Net OPEB Obligation. The District’s annual OPEB cost
(expense) is calculated based on the annual required contribution (“ARC”), an amount
actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC
represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost
each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years.
The District currently pays for OPEB on a “pay-as-you-go” basis, meaning the District pays the
costs of such benefits for current retirees. This annual cost was estimated to be $31,108 as of
April 1, 2011, as described in the actuarial report summarized in the following paragraphs. The
actuarial determined ARC was $35,067 as of April 1, 2011.
Actuarial Liability as of April 1, 2011. The District engaged Total Compensation
Systems, Inc. to calculate the District’s actuarial accrued liability as of April 1, 2011, based on
employees as of March, 2011, which was determined to be $350,293 as of such date. As of
April 1, 2011 District had 13 active employees and 4 retired employees.
B-5
The initial UAAL was amortized using a closed amortization period of 25 years. The
table below shows the annual amount necessary to amortize the UAAL over a period of 30
years at 5% interest. (Thirty years is the longest amortization period allowable under GASB 43
and 45.) GASB 43 and 45 allow amortizing the UAAL using either payments that stay the same
as a dollar amount, or payments that are a flat percentage of covered payroll over time. The
figures below reflect the flat dollar amount method.
Actuarial Accrued Liability as
of April 1, 2011
Total
Certificated
Management
Active: Pre-65
Post-65
$187,196
$0
$187,196
$0
$0
$0
Subtotal
$187,196
$187,196
$0
Retiree: Pre-65
Post-65
$31,443
$131,654
$31,443
$0
$0
$131,654
Subtotal
$163,097
$31,443
$131,654
Subtot Pre-65
Subtot Post-65
$218,639
$131,654
$218,639
$0
$0
$131,654
Grand Total
Unamortized Initial UAAL
$350,293
$261,082
$218,639
$131,654
Residual AAL
Residual UAAL
Amortization at 5.0%
over 30 Years
$89,211
$3,951
Source: Total Compensation Systems Inc. Actuarial Report for the District as of April 1, 2011.
The sum of normal cost and UAAL amortization costs is called the Annual Required
Contribution (“ARC”) and is shown below.
Annual Required Contribution (ARC)
Year Beginning
April 1, 2011
Normal Cost
Initial UAAL Amortization
Residual UAAL Amortization
Total
$12,155
$18,921
$3,951
ARC
$35,027
Source: Total Compensation Systems Inc. Actuarial Report for the District as of April 1, 2011.
The normal cost remains as long as there are active employees who may some day
qualify for District-paid retiree health benefits. This normal cost would increase each year
based on covered payroll.
B-6
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the
Plan, and the net OPEB obligation for the last 3 fiscal years was as follows:
Fiscal Year Ended
06/30/2010
06/30/2011
06/30/2012
Annual OPEB Cost
$23,997
24,822
35,105
% Contributed
23.6%
119%
23.6%
Net OPEB Obligation
$18,339
13,632
21,779
Source: District Audit Report for Fiscal Year Ended June 20, 2012.
Insurance
The District is self-insured for workers’ compensation, health, vision and dental
programs. The District accounts for and finances its uninsured risks of loss in the self insurance
and general fund. The District provides coverage for up to a maximum of $275,000 for each
workers’ compensation claim and $275,000 for each health insurance claim. The District
purchases commercial insurance for claims in excess of coverage provided by the general fund
and for all other risks of loss.
Insurance – Joint Powers Agreements
The District participates in two joint powers agreement (“JPAs”). The Redwood Empire
Schools’ Insurance Group provides for property and liability, workers’ compensation, and dental
insurance coverage. The West County Transportation Agency provides for pupil transportation.
The JPAs arrange for and/or provide coverage for members. The JPAs are governed by
a board consisting of a representative from each member district. Each member district pays a
premium commensurate with the level of coverage requested and share surpluses and deficits
proportionately to their participation in the JPAs.
B-7
DISTRICT FINANCIAL INFORMATION
The information in this and other sections concerning the District's operations and
operating budget 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 Series B Bonds is payable from the general fund of the District. The Series B Bonds are
payable from the proceeds of an ad valorem tax required to be levied by the County in an
amount sufficient for the payment thereof.
Accounting Practices
The accounting practices of the District conform to generally accepted accounting
principles in accordance with policies and procedures of the California School Accounting
Manual. This manual, according to Section 41010 of the California Education Code, is to be
followed by all California school districts.
District accounting is organized on the basis of fund groups, with each group consisting
of a separate set of self-balancing accounts containing assets, liabilities, fund balances,
revenues and expenditures. The major fund classification is the general fund which accounts
for all financial resources not requiring a special fund placement. The District's fiscal year
begins on July 1 and ends on June 30.
District expenditures are accrued at the end of the fiscal year to reflect the receipt of
goods and services in that year. Revenues generally are recorded on a cash basis, except for
items that are susceptible to accrual (measurable and/or available to finance operations).
Current taxes are considered susceptible to accrual. Revenues from specific state and federally
funded projects are recognized when qualified expenditures have been incurred. State block
grant apportionments are accrued to the extent that they are measurable and predictable. The
State Department of Education sends the District updated information from time to time
explaining the acceptable accounting treatment of revenue and expenditure categories.
The Governmental Accounting Standards Board (“GASB”) published its Statement No.
34 “Basic Financial Statements – and Management’s Discussion and Analysis – for State and
Local Governments” on June 30, 1999. Statement No. 34 provides guidelines to auditors, state
and local governments and special purpose governments such as school districts and public
utilities, on new requirements for financial reporting for all governmental agencies in the United
States. Generally, the basic financial statements and required supplementary information should
include (i) Management’s Discussion and Analysis; (ii) financial statements prepared using the
economic measurement focus and the accrual basis of accounting, (iii) fund financial statements
prepared using the current financial resources measurement focus and the modified accrual
method of accounting and (iv) required supplementary information.
Basic Aid District. Because the District is a Basic Aid District, the District does not
receive a revenue limit entitlement from the State, but instead keeps its share of local property
taxes. The District became a Basic Aid district in fiscal year 2011-12 and has continued to be
such since that time. In fiscal year 2011-12 and in the current fiscal year (2012-13), the District
received local property taxes over its State revenue limit. These funds provide the primary
source for all instructional programs and the resources to pay for all operating costs in the
District’s general fund. While the District does not derive its revenue limit funds from the State,
funds for certain special purpose programs, or “categorical aid” are derived from the State. See
also “-State Funding of Education and Revenue Limitations” below.
B-8
Financial Statements
General. 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 State school fund apportionments, taxes, use of money and property, and aid
from other governmental agencies. The District's June 30, 2012 Audited Financial Statements
were prepared by Stephen Roatch Accountancy Corporation, Folsom, California and are
attached hereto as Appendix A. Audited financial statements for the District for prior fiscal years
are on file with the District and available for public inspection at the Office of the Superintendent
of the District, Guerneville Elementary School District, 14630 Armstrong Woods Road,
Guerneville, California 95446, telephone (707) 869-2864. The District has not requested, and
the auditor has not provided, any review or update of such Financial Statements in connection
with inclusion in this Official Statement. Copies of financial statements will be mailed to
prospective investors and their representatives upon written request to the District. This District
may impose a charge for copying, mailing and handling.
General Fund Revenues, Expenditures and Changes in Fund Balance. The
following table shows the audited income and expense statements for the District for the fiscal
years 2009-10 through 2011-12, along with budgeted and 2nd Interim Report figures for 201213.
B-9
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
Fiscal Years 2009-10 through 2011-12 (Audited),
2012-13 (Adopted Budget and 2nd Interim Report)
Revenues
Federal Revenues
Other state revenues
Other local revenues
Total Revenues
Expenditures
Instruction
Supervision of instruction
School site administration
Other pupil services
Other general administration
Plant services
Certificated Salaries
Classified Salaries
Employee Benefits
Books and Supplies
Contract Services & Operating Exp.
Other Outgo
Total Expenditures
Excess of Revenues Over/(Under)
Expenditures
Audited
2009-10
$1,370,614
311,727
649,377
238,342
2,570,060
Audited
2010-11
$1,416,607
279,956
680,785
241,751
2,619,099
Audited
2011-12
$1,482,803
261,901
760,369
265,378
2,770,451
2,080,737
-99,369
52,228
158,695
254,013
1,999,801
369
91,927
51,899
186,830
232,655
1,974,401
62
89,369
67,935
152,439
230,075
69,410
66,770
2,711,812
118,574
2,682,055
82,436
2,666,127
(141,752)
(62,956)
104,324
90,553
(90,953)
-(400)
-(9,699)
-(9,699)
-----
Net change in fund balance
(142,152)
(72,655)
104,324
Fund Balance, July 1 (1)
Fund Balance, June 30
698,030
$555,878
Other Financing Sources (Uses)
Transfers in
Transfers out
Contributions
Total Other Financing Sources (Uses)
1,219,728
$1,147,073
1,147,073
$1,251,397
Adopted
Budget
2012-13
$1,230,472
198,440
686,704
176,172
2,291,788
Second
Interim
2012-13
$1,537,535
205,339
628,735
276,361
2,647,970
963,432
415,994
403,049
58,937
546,263
90,873
2,478,548
1,045,837
421,846
475,625
67,395
520,183
90,873
2,621,759
(186,760)
--(186,760)
820,511
$633,751
26,211
69,410
--69,410
95,621
710,124
$805,745
(1) The District's prior year fund balance for the General Fund has been restated as of June 30, 2011, to conform to GASB
Statement No. 54's definition of governmental funds.
Source: District Audit Reports; and Second Interim Report for 2012-13.
Reserves. The District is required to maintain a reserve for economic uncertainties at
least equal to five percent of general fund expenditures. In addition to its ending fund balances,
the District maintains Fund 17 as a special reserve fund. Ending balances plus the additional
special reserve fund have resulted in a reserve fund which is well above the 5 percent required
reserve, being approximately 46 percent of expenditures in 2011-12 and expected to be 53
percent of expenditures in 2012-13.
B-10
District Budget and Interim Financial Reporting
Budgeting the Interim Reporting Procedures. State law requires school districts to
maintain a balanced budget in each fiscal year. The State Department of Education imposes a
uniform budgeting and accounting format for school districts.
Under current law, a school district governing board must adopt and file with the county
superintendent of schools a tentative budget by July 1 in each fiscal year. The District is under
the jurisdiction of the Sonoma County Superintendent of Schools (the "County
Superintendent").
The County Superintendent must review and approve or disapprove the budget no later
than August 15. The County Superintendent is required to examine the adopted budget for
compliance with the standards and criteria adopted by the State Governing Board and identify
technical corrections necessary to bring the budget into compliance with the established
standards. If the budget is disapproved, it is returned to the District with recommendations for
revision. The District is then required to revise the budget, hold a public hearing thereon, adopt
the revised budget and file it with the County Superintendent no later than October 13. Pursuant
to State law, the County Superintendent has available various remedies by which to impose and
enforce a budget that complies with State criteria, depending on the circumstances, if a budget
is disapproved. After approval of an adopted budget, the school district's administration may
submit budget revisions for governing board approval.
Subsequent to approval, the County Superintendent will monitor each district under its
jurisdiction throughout the fiscal year pursuant to its adopted budget to determine on an ongoing
basis if the district can meet its current or subsequent year financial obligations. If the County
Superintendent determines that a district cannot meet its current or subsequent year
obligations, the County Superintendent will notify the district's governing board of the
determination and may then do either or both of the following: (a) assign a fiscal advisor to
enable the district to meet those obligations or (b) if a study and recommendations are made
and a district fails to take appropriate action to meet its financial obligations, the County
Superintendent will so notify the State Superintendent of Public Instruction, and then may do
any or all of the following for the remainder of the fiscal year: (i) request additional information
regarding the district's budget and operations; (ii) after also consulting with the district's board,
develop and impose revisions to the budget that will enable the district to meet its financial
obligations; and (iii) stay or rescind any action inconsistent with such revisions. However, the
County Superintendent may not abrogate any provision of a collective bargaining agreement
that was entered into prior to the date upon which the County Superintendent assumed
authority.
A State law adopted in 1991 ("A.B. 1200") imposed additional financial reporting
requirements on school districts, and established guidelines for emergency State aid
apportionments. Under the provisions of A.B. 1200, each school district is required to file interim
certifications with the County Superintendent (on December 15, for the period ended October
31, and by mid-March for the period ended January 31) as to its ability to meet its financial
obligations for the remainder of the then-current fiscal year and, based on current forecasts, for
the subsequent fiscal year. The County Superintendent reviews the certification and issues
either a positive, negative or qualified certification. A positive certification is assigned to any
school district that will meet its financial obligations for the current fiscal year and subsequent
two fiscal years. A negative certification is assigned to any school district that is deemed unable
to meet its financial obligations for the remainder of the fiscal year or subsequent fiscal year. A
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qualified certification is assigned to any school district that may not meet its financial obligations
for the current fiscal year or two subsequent fiscal years.
Under California law, any school district and office of education that has a qualified or
negative certification in any fiscal year may not issue, in that fiscal year or in the next
succeeding fiscal year, certificates of participation, tax anticipation notes, revenue bonds or any
other debt instruments that do not require the approval of the voters of the district, unless the
applicable county superintendent of schools determines that the district’s repayment of
indebtedness is probable.
District’s Budget Approval/Disapproval and Certification History. During the past
five years, each of the District’s adopted budgets have been approved by the County
Superintendent and the District has received positive certifications on all of its interim reports.
Copies of the District’s budget, interim reports and certifications may be obtained upon
request from the District Office at 14630 Armstrong Woods Road, Guerneville, California 95446,
Phone: (559) 327-9000. The District may impose charges for copying, mailing and handling.
Effect of State Reductions in Education Funding on District. As a result of the
State’s budgeting difficulties (see “STATE FUNDING OF EDUCATION; RECENT STATE
BUDGETS” below), beginning in 2010-11 the District responded by working with it labor unions
to negotiate furlough days, reducing FTE certificated and classified staff in response to declining
enrollment, and other cost-saving strategies. The District has also taken advantage of
categorical flexibility in order to balance its budgets. With respect to its 2012-13 Budget, the
District budgeted assuming that the Governor’s proposed tax initiative (Proposition 30) would
not pass. Specifically, five furlough days were built into the 2012-13 and 2013-14 budgets
(each furlough day is equal to $8,043 in savings to the District). Due to the fact that Proposition
30 did pass, the District implemented only one furlough day in 2012-13, and plans for no
furlough days in 2013-14. The District continues to be cautious with its budget and projects one
retirement in 2013-14 and another in 2014-15, and currently plans not to fill one of these
positions.
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State Funding of Education - Revenue Limits
Annual State apportionments of basic and equalization aid to school districts for general
purposes are computed up to a revenue limit per unit of average daily attendance (“ADA”).
Such apportionments will, generally speaking, amount to the difference between the District's
revenue limit and the District's local property tax allocation. Revenue limit calculations are
adjusted annually in accordance with a number of factors designed primarily to provide cost of
living increases and to equalize revenues among California school districts.
A schedule of the District’s ADA during the past four fiscal years, with projections for the
current and following fiscal years, is shown below.
AVERAGE DAILY ATTENDANCE
Fiscal Years 2008-09 through 2013-14 (projected)
Fiscal Year
2008-09
2009-10
2010-11
(1)
2011-12
(1)
2012-13
(2)
2013-14
Revenue
Limit
ADA
291.40
280,03
276.41
275.40
274.69
264.08
Annual Change
in ADA
-(1.6)
(1.9)
(1.7)
(0.3)
(3.9)
Base
Revenue Limit
$1,712,281
1,755,848
1,718,407
1,724,349
1,769,292
1,727,625
Deficited
Revenue Limit
$1,580,030
1,435,411
1,409,730
1,370,859
1,375,235
1,399,428
Local
Revenue
$1,284,039
1,269,662
1,228,964
1,419,223
1,423,669
1,224,447
(1) Commencing in fiscal year 2011-12 and continuing in 2012-13, the District’s local revenue, consisting of its share of local property
taxes, have exceeded the District’s deficited revenue limit and therefore, the District is considered a “Basic Aid District,” meaning it is
entitled to retain local property tax revenues which exceed its revenue limit. The District in uncertain if it will continue to be a Basic
Aid District in 2013-14 based on its revenue limit and its share of local property taxes in 2013-14.
Source: Guerneville Elementary School District.
Districts in the State which are revenue limit districts receive a significant portion of their
funding from State appropriations. As a result, decreases in State revenues may affect
appropriations made by the Legislature to school districts. See “STATE FUNDING OF
EDUCATION; RECENT STATE BUDGETS” below.
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Revenue Sources
The District categorizes its general fund revenues into four primary sources:
PERCENTAGE OF TOTAL DISTRICT GENERAL FUND REVENUES BY SOURCE
Revenue Source
(1)
Revenue limit sources
(2)
Federal revenues
Other State revenues
Other local revenues
Totals
Audited
2009-10
53.3%
12.1
25.3
9.3
100.0
Audited
2010-11
54.1%
10.7
26.0
9.2
100.0
Audited
2011-12*
53.5%
9.5
27.4
9.6
100.0
nd
2 interim
2012-13*
58,1%
7.8
23.7
10.4
100.0
*
District in Basic Aid status in 2011-12 and 2012-13, resulting from an increase in local property tax revenues as a result of the
dissolution of redevelopment agencies in California. The District is uncertain if its local revenues will exceed it revenue limit
entitlement for 2013-14.
(1) Consists of a mix of State apportionments of basic and equalization aid and local property tax revenues.
(2) Increase in 2009-10 through 2010-11 due to additional federal programs established in 2009.
Each of these revenue sources is described below.
Revenue Limit Sources. Since fiscal year 1973-74, California school districts have
operated under general purpose revenue limits established by the State Legislature. In general,
revenue limits are calculated for each school district by multiplying (1) the average daily
attendance for such district by (2) a base revenue limit per unit of ADA. The revenue limit
calculations are adjusted annually in accordance with a number of factors designated primarily
to provide cost of living increases and to equalize revenues among all California school districts
of the same type.
Funding of the revenue limit is provided by a mix of (1) local property taxes and (2) State
apportionments of basic and equalization aid. Generally, the State apportionments will amount
to the difference between the District's revenue limit and its local property tax revenues.
Beginning in 1978-79, Proposition 13 and its implementing legislation provided for each
county to levy (except for levies to support prior voter-approved indebtedness) and collect all
property taxes, and prescribed how levies on county-wide property values are to be shared with
local taxing entities within each county.
The principal component of local revenues is the school district’s property tax revenues,
i.e., the district’s share of the local 1% property tax, received pursuant to Sections 75 and
following and Sections 95 and following of the California Revenue and Taxation Code.
Education Code Section 42238(h) itemizes the local revenues that are counted towards the
base revenue limit before calculating how much the State must provide in equalization aid. The
more local property taxes a district receives, the less State equalization aid it is entitled to;
ultimately, a school district whose local property tax revenues exceed its base revenue limit is
entitled to receive no State equalization aid, and receives only its special categorical aid and the
"basic aid" of $120 per student per year guaranteed by Article IX, Section 6 of the Constitution.
Such districts are known colloquially as "basic aid districts". The District was a basic aid district
in 2011-12, and continues to be basic aid in 2012-13.
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Federal Revenues. The federal government provides funding for several District
programs, including special education programs, programs under No Child Left Behind, the
Individuals With Disabilities Education Act, and specialized programs such as Drug Free
Schools.
Other State Revenues. As discussed above, the District receives State apportionment
of basic and equalization aid in an amount equal to the difference between the District's revenue
limit and its property tax revenues. In addition to such apportionment revenue, the District
receives substantial other State revenues.
These other State revenues are primarily restricted revenues funding items such as
Economic Impact Aid, Class Size Reduction Program, Mandated Cost Reimbursement, and
After School Education and Safety.
The District receives State aid from the California State Lottery (the "Lottery"), which
was established by a constitutional amendment approved in the November 1984 general
election. Lottery revenues must be used for the education of students and cannot be used for
non-instructional purposes such as real property acquisition, facility construction, or the
financing of research. Moreover, State Proposition 20 approved in March 2000 requires that
50% of the increase in Lottery revenues over 1997-98 levels must be restricted to use on
instruction material.
For additional discussion of State aid to school districts, see “-State Funding of
Education.”
Other Local Revenues. In addition to property taxes, the District receives additional
local revenues from items such as interest earnings and other local sources.
On November 6, 2012, the District issued $2,100,000 General Obligation Bonds,
Election of 2012, Series A (the “Series A Bonds”) pursuant to the 2012 Authorization. See
“DEBT SERVICE SCHEDULE” in the body of this Official Statement for the debt service due on
the Series A Bonds.
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Capital Leases
The District leases building improvements under capitalized lease agreements. A
summary of lease purchase payment obligations of the District is shown below.
CAPITAL LEASE PAYMENTS
Year Ending
June 30
2013
2014
2015
2016
2017
2018-22
Total payments
Annual
Lease
$ 67,736
67,736
67,736
64,224
64,225
256,897
$588,554
Investment of District Funds
In accordance with Government Code Section 53600 et seq., the Sonoma County
Treasurer manages funds deposited with it by the District. The County is required to invest
such funds in accordance with California Government Code Sections 53601 et seq. In addition,
counties are required to establish their own investment policies which may impose limitations
beyond those required by the Government Code. See “APPENDIX G - SONOMA COUNTY
INVESTMENT POLICY AND QUARTERLY REPORT FOR QUARTER ENDING JUNE 30,
2012.”
Effect of State Budget on Revenues
Public school districts in California are dependent on revenues from the State for a large
portion of their operating budgets. California school districts generally receive the majority of
their operating revenues from various State sources. The primary source of funding for school
districts is the revenue limit, which is a combination of State funds and local property taxes (see
“—State Funding of Education – Revenue Limits” above). State funds typically make up the
majority of a district’s revenue limit. School districts also receive funding from the State for
various categorical programs.
The availability of State funds for public education is a function of constitutional
provisions affecting school district revenues and expenditures (see “CONSTITUTIONAL AND
STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS”
below), the condition of the State economy (which affects total revenue available to the State
general fund), and the annual State budget process.
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STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS
State Funding of Education
General. The State requires that from all State revenues there first shall be set apart
the moneys to be applied for support of the public school system and public institutions of higher
education. Public school districts in California are dependent on revenues from the State for a
large portion of their operating budgets. California school districts receive an average of about
55 percent of their operating revenues from various State sources. The primary source of
funding for school districts is the revenue limit, which is a combination of State funds and local
property taxes (see “– State Funding of Education – Revenue Limits” above). State funds
typically make up the majority of a district’s revenue limit. School districts also receive
substantial funding from the State for various categorical programs.
The availability of State funds for public education is a function of constitutional
provisions affecting school district revenues and expenditures (see “CONSTITUTIONAL AND
STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS”
below), the condition of the State economy (which affects total revenue available to the State
general fund), and the annual State budget process. Decreases in State revenues may
significantly affect appropriations made by the legislature to school districts.
The following information concerning the State’s budgets for the current and most recent
preceding years has been compiled from publicly-available information provided by the State.
Neither the District, the County, nor the Underwriter is responsible for the information relating to
the State’s budgets provided in this section. Further information is available from the Public
Finance Division of the State Treasurer’s Office.
The Budget Process. The State’s fiscal year begins on July 1 and ends on June 30.
The annual budget is proposed by the Governor by January 10 of each year for the next fiscal
year (the “Governor’s Budget”). Under State law, the annual proposed Governor’s Budget
cannot provide for projected expenditures in excess of projected revenues and balances
available from prior fiscal years. Following the submission of the Governor’s Budget, the
Legislature takes up the proposal.
Under the State Constitution, money may be drawn from the State Treasury only through
an appropriation made by law. The primary source of the annual expenditure authorizations is
the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act
must be approved by a majority vote of each House of the Legislature. The Governor may
reduce or eliminate specific line items in the Budget Act or any other appropriations bill without
vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds
majority vote of each House of the Legislature.
Appropriations also may be included in legislation other than the Budget Act. Bills
containing appropriations (including for K-14 education) must be approved by a majority vote in
each House of the Legislature, unless such appropriations require tax increases, in which case
they must be approved by a two-thirds vote of each House of the Legislature, and be signed by
the Governor. Continuing appropriations, available without regard to fiscal year, may also be
provided by statute or the State Constitution.
Funds necessary to meet an appropriation need not be in the State Treasury at the time
such appropriation is enacted; revenues may be appropriated in anticipation of their receipt.
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Recent State Budgets
Certain information about the State budgeting process and the State Budget is available
through several State of California sources. A convenient source of information is the State’s
website, where recent official statements for State bonds are posted. The references to internet
websites shown below are shown for reference and convenience only, the information contained
within the websites may not be current and has not been reviewed by the District and is not
incorporated herein by reference.
•
The California State Treasurer Internet home page at www.treasurer.ca.gov,
under the heading “Bond Information”, posts various State of California
Official Statements, many of which contain a summary of the current State
Budget, past State Budgets, and the impact of those budgets on school
districts in the State.
•
The California State Treasurer’s Office Internet home page at
www.treasurer.ca.gov, under the heading “Financial Information”, posts the
State’s audited financial statements. In addition, the Financial Information
section includes the State’s Rule 15c2-12 filings for State bond issues. The
Financial Information section also includes the Overview of the State
Economy and Government, State Finances, State Indebtedness, Litigation
from the State’s most current Official Statement, which discusses the State
budget and its impact on school districts.
•
The California Department of Finance’s Internet home page at
www.dof.ca.gov, under the heading “California Budget”, includes the text of
proposed and adopted State Budgets.
•
The State Legislative Analyst’s Office prepares analyses of the proposed and
adopted State budgets. The analyses are accessible on the Legislative
Analyst’s Internet home page at www.lao.ca.gov under the heading “Subject
Area – Budget (State)”.
State IOUs and Deferrals of Education Funding. In recent years, fiscal stress and
difficulties in achieving a balanced State budget have resulted in actions which include the State
issuing IOUs (defined below) to its creditors, and the deferral of school funding.
On July 2, 2009, as a result of declines in State revenues commencing in fiscal years
2008-09, the State Controller began to issue registered warrants (or “IOUs”) for certain lower
priority State obligations in lieu of warrants (checks) which could be immediately cashed. The
registered warrants, the issuance of which did not require the consent of recipients, bore
interest. With enactment of an amended budget in late July, 2009, the State was able to call all
its outstanding registered warrants for redemption on September 4, 2009. The issuance of state
registered warrants in 2009 was only the second time the State has issued state registered
warrants to such types of state creditors since the 1930s.
Furthermore, commencing in fiscal year 2008-09, to better manage its cash flow in light
of declining revenues, the State has 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
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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 2011-12.
Some of these statutory deferrals were made permanent, and others were implemented only for
one fiscal year.
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
Department of Finance has projected that multi-billion dollar budget gaps will occur annually for
several years in the future, although the 2012-13 Budget described below includes measures
which are intended to address these budgetary difficulties.
Information on State Economic Challenges, Prior Year State Budgets and Related
Events. The State’s financial condition and budget policies affect communities, local public
agencies and school districts throughout California. The State of California is experiencing
significant financial and budgetary stress. Exacerbating the State’s challenges, as the State
entered recession in 2008, annual revenues generally were less than annual expenses, creating
a “structural” budget deficit. This structural deficit is due in part to overreliance on temporary
budgetary remedies in prior State Budget years, including one-time revenues, internal
borrowing, payment deferrals, accounting shifts and expenditure reduction proposals that have
not materialized.
In recent years, the State Budget was also, repeatedly, not passed and signed in a
timely manner. Frequently, school district budgets have been revised after the delivery of
delayed State Budgets to reflect necessary changes in revenues and expenditures. Delays in
the delivery of State budgets cause an element of uncertainty for local governments, such as
school districts. Delayed payments from the State to the District, which are more common
during periods in which the State faces economic challenges, also subject the District to
additional risk.
In recent years, Governor Edmund G. Brown Jr. has employed a strategy of proposing
revenue raising measures coupled with automatic expenditure and service cuts, which cuts go
into effect if the revenue raising measures are not approved by the State Legislature or State
voters, into his State budget packages. The State’s 2011-12 Budget (the “2011-12 Budget”)
relied on $4 billion of additional tax revenue, which when not realized, automatically triggered
nearly $1 billion further cuts to universities, welfare, courts and schools (the “Trigger Cuts”).
“Tier 1 Trigger Cuts” would be triggered if, by January 2012, State revenues fell short of
projections by $1-2 billion. Tier 1 Trigger Cuts related to cuts in university, social services and
library funding and would total approximately $600 million. “Tier 2 Trigger Cuts” would be
triggered if, by January 2012, revenues were projected to fall short by more than $2 billion. Tier
2 Trigger Cuts related to K-12 revenue limit funding and home-to-school transportation and
were to total approximately $1.9 billion.
On December 13, 2011, Governor Brown announced the State would fall $2.2 billion
short of the revenue forecast contained in the 2011-12 Budget, and that $980 million in Trigger
Cuts, comprised of all Tier 1 Trigger Cuts and a portion of Tier 2 Trigger Cuts, would be
implemented. Effective January 1, 2012, Trigger Cuts to funding for University of California,
California State University, community colleges, developmental services, local libraries and
state-subsidized child care and K-12 school bus service funding, among others, became
effective. Effective February 1, 2012, Trigger Cuts to general revenue limit funding for K-12
school districts totaling $79.6 million were implemented.
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The 2011-12 Budget was also premised on $2.8 billion in deferrals to K-12 schools and
community colleges and $1.7 billion to be directed from State redevelopment agency funds
pursuant to ABx1 27. ABx1 27 was passed together with ABx1 26, which restricted
redevelopment agency actions to create new debt and then dissolved them. On December 29,
2011, the State Supreme Court issued its decision in California Redevelopment Assoc. v.
Matosantos, a case brought to determine the constitutionality of ABx1 26 and ABx1 27, ruling
that ABx1 26 was constitutional and ABx1 27 was not. By February 1, 2012 all redevelopment
agencies were to cease operations and dismantle, and no additional payments from
communities with redevelopment agencies to fund school expenditures are thereafter
constitutionally permissible. Other challenges or delays relating to the implementation of these
statutes cannot be predicted at this time.
Moreover, the 2011-12 Budget included decreases in Proposition 98 funding to $48.7
billion, including $32.8 billion from the State general fund, which reflected a decrease from the
prior year of $1.1 billion. This decrease was a net figure reflective of all budgetary actions taken
with respect to the State’s share of Proposition 98 funding, including increases in baseline
revenues, redirection of certain sales tax revenues related to the realignment of public safety
programs, and the rebenching of the Proposition 98 minimum funding guarantee. The 2011-12
Budget also made a significant, one-time modification to State budgeting requirements for
school districts, requiring them to project the same level of revenue per student in 2011-12 as in
2010-11, as well as to maintain staffing and program levels commensurate with such level of
funding. A related provision of the 2011-12 Budget provided that school districts would only be
required to budget for the current year, and will not be required to demonstrate that they can
meet their financial obligations for the subsequent two fiscal years (2012-13 and 2013-14).
Finally, the 2011-12 Budget contained the numerous significant measures with respect
to K-12 education, including: (i) an additional apportionment deferral of $1.2 billion in education
spending in order to maintain programmatic funding at the fiscal year 2010-11 level, (ii) a
decrease of $62.3 million to part-day preschool spending to reflect a reduction of income
eligibility levels to 70% of the State median Income and across-the-board reductions to provider
contracts, (iii) $11 million in supplemental categorical funding to charter schools that begin
operations between 2008-09 and 2011-12, (iv) $3.2 million of increased funding for clean
technology and renewable energy job training, career technical education and the Dropout
Prevention Program, each of which was designed to provide at-risk high school students with
occupational training in areas such as conservation, renewable energy and pollution reduction,
(v) a decrease of $180.4 million to child care and development programs, including reductions
to license-exempt provider rates, reductions of income eligibility levels to 70% of the State
median Income and across-the-board reductions to provider contracts, (vi) a decrease of $2.1
million to reflect elimination of funding for the California Longitudinal Teacher Integrated Data
System (CALTIDES), which program was intended to provide a central State information
depository regarding the teaching workforce, and (vii) projected savings of $1.6 million through
the elimination of the Office of the Secretary of Education.
2012-13 State Budget. On June 15, 2012, the Legislature passed a $92 billion General
Fund State Budget that closed the State’s then-remaining $15.7 billion deficit and rebuilt a $1
billion General Fund reserve (the “2012-13 State Budget”). The 2012-13 State Budget relied
on a plan to submit to the voters on November 6, 2012 the Schools and Local Public Safety
Protection Act, a $6.9 billion tax increase, known as Proposition 30 (the “Proposition 30”).
Proposition 30, which obtained the requisite majority vote, enacts temporary increases on highincome earners by raising income taxes by up to three percent on earnings over $250,000 for
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seven years, and increases the state sales tax by one-quarter of one cent for four years. The
2012-13 Budget also contains reductions in expenditures from prior years spending totaling $8.1
billion, including reductions caused by elimination of the Healthy Families program and by
reforms relating to the CalWORKs, Medi-Cal, Judiciary and Cal Grant programs. The 2012-13
Budget expects $1.5 billion in savings will be generated as the result of the transfer of cash
assets previously held by redevelopment agencies to cities, counties and special districts to
fund core public services and to schools to offset State General Fund costs. An additional $1.9
billion in savings will arise due to prepayment of the State’s Proposition 98 funding as required
by a court settlement. Governor Brown signed the 2012-13 Budget on June 27, 2012.
The complete 2012-13 State Budget is available from the California Department of
Finance website at www.dof.ca.gov. The District can take no responsibility for the continued
accuracy of this internet address or for the accuracy, completeness or timeliness of information
posted there, and such information is not incorporated in this Official Statement by such
reference. The information referred to above should not be relied upon in making an investment
decision with respect to the Series 2012 Bonds.
The execution of 2012-13 Budget may be affected by numerous factors, including but
not limited to: (i) national, State and international economic conditions, (ii) litigation risk
associated with proposed spending reductions, (iii) failure to generate expected savings as a
result of the transfer of cash assets previously held by redevelopment agencies and (iv) other
factors, all or any of which could cause the revenue and spending projections made in 2012-13
Budget to be unattainable. The District cannot predict the impact that the 2012-13 Budget, or
subsequent budgets, will have on its own finances and operations. Additionally, the District
cannot predict the accuracy of any projections made in the State’s 2012-13 Budget.
2013-14 State Budget. On January 10, 2013, Governor Brown presented his Proposed
State Budget for the 2013-13 Fiscal Year (the “2013-14 State Budget”), the first balanced
budget presented in many years. The 2013-14 State Budget proposes a multi-year plan that is
balanced, maintains a $1 billion reserve, and pays down budgetary debt from past years.
Overall State General Fund spending is projected to grow by 5 percent, from $93 billion in Fiscal
Year 2012-13 to $97.7 billion in Fiscal Year 2013-14. The majority of the spending growth is in
education and health care. Under the 2013-14 State Budget, funding levels for K-12 schools
will increase by almost $2,700 per student through 2016-17, including an increase of more than
$1,100 per student in 2013-14 over 2011-12 levels, which increased funding is tied to new
accountability measures. Funding is also increased for the University of California and
California State University higher education systems. The 2013-14 Budget includes a $350
million allocation from the State’s General Fund to begin to pay for the implementation of
federally-required expansions of State health care coverage.
The 2013-14 State Budget includes a proposal known as the Local Control Funding
Formula, which proposes changing the State funding system for school districts, charter schools
and county offices of education. The proposal attempts to address what is characterized in the
2013-14 State Budget as inequities in the distribution of education funding, and includes, among
other changes, consolidating most categorical programs with existing revenue limit structure to
provide a new student formula phased in over seven years, and implements supplemental and
concentration grants to English learners and economically disadvantaged students. The District
cannot predict the direct impact such legislation would have on its finances, and the form it may,
or may not take, in the final 2013-14 Adopted Budget.
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2013-14 May Revision. On May 14, 2013, Governor Brown released his 2013-14 May
Revision to the 2013-14 State Budget (the “May Revision”). The May Revision continues to
project a balanced budget with a $1.1 billion reserve (generated in a large part from temporary
Proposition 30 revenues), and maintains the fundamentals of the 2013-13 Proposed Budget.
The May Revision reflects changes in revenues from the 2013-14 Proposed State Budget
primarily because of (i) a downward revision in the short-term economic outlook due to the
elimination of the federal 2% payroll tax reduction; (ii) $2.9 billion in additional Proposition 98
funding in the current year driven by higher General Fund revenues; (iii) $467 million in higher
Medicare costs; and (iv) reduced borrowing costs for the State.
The May Revision includes an additional $48 million in CalWorks funding to support job
growth and an additional $72 million to county probation departments to fund reduction of prison
populations. The May Revise includes total funding of $70 billion ($39.9 billion General Fund
and $30.1 billion other funds) for K-12 education, and makes minor changes to the Local
Control Funding Formula discussed above. The May Revise projects that the debts, deferrals,
and budgetary obligations that amounted to $45 billion in 2011 would be reduced to $27 billion
in 2013-14 and to below $5 billion by the end of 2016-17.
The complete 2013-14 Proposed State Budget and May Revise is available from the
California Department of Finance website at www.dof.ca.gov. The District can take no
responsibility for the continued accuracy of this internet address or for the accuracy,
completeness or timeliness of information posted there, and such information is not
incorporated in this Official Statement by such reference. The information referred to above
should not be relied upon in making an investment decision with respect to the Series B Bonds.
The execution of 2013-14 Proposed State Budget may be affected by numerous factors,
including but not limited to: (i) shifts of costs from the federal government to the State, (ii)
national, State and international economic conditions, (ii) litigation risk associated with proposed
spending reductions, (iii) rising health care costs and (iv) other factors, all or any of which could
cause the revenue and spending projections made in 2013-14 State Budget to be unattainable.
The District cannot predict the impact that the 2013-14 State Budget, or subsequent budgets,
will have on its own finances and operations. Additionally, the District cannot predict the
accuracy of any projections made in the State’s 2013-14 State Budget.
Uncertainty Regarding Future State Budgets. The District cannot predict what actions
will be taken in future years by the State Legislature and the Governor to address the State’s
current or future budget deficits. Future State budgets will be affected by national and state
economic conditions and other factors over which the District has no control. The District
cannot predict what impact any future budget proposals will have on the financial condition of
the District. To the extent that the State budget process results in reduced revenues to the
District, the District will be required to make adjustments to its budgets.
The State has not entered into any contractual commitment with the District, the County,
or the Owners of the Refunding Bonds to provide State budget information to the District or the
owners of the Refunding Bonds. Although they believe the State sources of information listed
above are reliable, neither the District nor the Underwriter assumes any responsibility for the
accuracy of the State Budget information set forth or referred to in this Official Statement or
incorporated herein. However, the Refunding Bonds are secured by ad valorem taxes levied
and collected on taxable property in the District, without limit as to rate or amount, and are not
secured by a pledge of revenues of the District or its general fund.
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Legal Challenges to State Funding of Education
The application of Proposition 98 and other statutory regulations has been the subject of
various legal challenges in recent years, and is likely to be further challenged in the future. For
a discussion of how the provisions of Proposition 98 have been applied to school funding see “State Funding of Education" and "-Recent State Budgets” above.
2010 Robles-Wong Litigation. On May 20, 2010, a plaintiff class of numerous current
California public school students and several school districts, together with the California
Congress of Parents, Teachers & Students, the Association of California School Administrators
and the California School Boards Association filed suit in Alameda County Superior Court
challenging the system of financing for public schools in California as unconstitutional. In Maya
Robles-Wong, et al. v. State of California, plaintiffs seek declaratory and injunctive relief,
including a permanent injunction compelling the State to abandon the existing system of public
school finance. On July 16, 2010, the California Teachers’ Association filed a Complaint in
Intervention, making the same allegations and seeking the same declaratory and injunctive
relief. On January 14, 2011, the court dismissed certain of the causes of action, including
causes of action that alleged a constitutional right to a particular level of education funding and
violations of equal protection of the law, based on certain State constitutional provisions. On
July 26, 2011, the Superior Court rejected the plaintiff’s amended complaint as not stating an
equal protection claim. On January 25, 2012, the plaintiffs filed an appeal in the 1st Appellate
District. The District cannot predict the ultimate outcome of the Robles-Wong litigation.
However, if successful, the lawsuit could result in changes to the implementation of school
finance in the State of California.
2011 CSBA Litigation. The California School Boards Association, the Association of
California School Administrators, the Los Angeles Unified School District, the San Francisco
Unified School District and the Turlock Unified School District announced on August 28, 2011
that they were filing a lawsuit (the “CSBA Lawsuit”) in the Superior County of the City and
County of San Francisco, seeking to restore more than $2 billion that had been designated to
California public schools under Proposition 98, but was cut from the 2011-12 State Budget. The
Superior Court has rejected the CSBA Lawsuit, however the plaintiffs may appeal the decision.
On July 27, 2012, the plaintiffs filed an appeal in the 1st Appellate District. The District cannot
predict the ultimate outcome of the CSBA Lawsuit.
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CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT
REVENUES AND APPROPRIATIONS
Principal of and interest on the Series B Bonds are payable from the proceeds of an ad
valorem tax levied by the County for the payment thereof. Articles XIIIA, XIIIB, XIIIC, and XIIID
of the State Constitution, Propositions 62, 98, 111 and 218, and certain other provisions of law
discussed below, are included in this section to describe the potential effect of these
Constitutional and statutory measures on the ability of the District to levy taxes and spend tax
proceeds for operating and other purposes, and it should not be inferred from the inclusion of
such materials that these laws impose any limitation on the ability of the District to levy taxes for
payment of the Series B Bonds. The tax levied by the County for payment of the Series B
Bonds was approved by the District's voters in compliance with Article XIIIA and all applicable
laws.
Article XIIIA of the California Constitution
Basic Property Tax Levy. On June 6, 1978, California voters approved Proposition 13
("Proposition 13"), which added Article XIIIA to the State Constitution ("Article XIIIA"). Article
XIIIA limits the amount of any ad valorem tax on real property to 1% of the full cash value
thereof, except that additional ad valorem taxes may be levied to pay debt service on (i)
indebtedness approved by the voters prior to July 1, 1978, (ii) (as a result of an amendment to
Article XIIIA approved by State voters on June 3, 1986) bonded indebtedness for the acquisition
or improvement of real property which has been approved on or after July 1, 1978 by two-thirds
of the voters on such indebtedness (which provided the authority for the issuance of the
Refunded Bonds), and (iii) (as a result of an amendment to Article XIIIA approved by State
voters on November 7, 2000) bonded indebtedness incurred by a school district or community
college district for the construction, reconstruction, rehabilitation or replacement of school
facilities or the acquisition or lease of real property for school facilities, approved by 55% of the
voters of the district, but only if certain accountability measures are included in the proposition.
Article XIIIA defines full cash value to mean "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 have occurred after the
1975 assessment". This full cash value may be increased at a rate not to exceed 2% per year
to account for inflation. The District’s bonds issued pursuant to the 2001 Authorization, 2004
Authorization, and 2012 Authorization, including the Series B Bonds, were approved by a 55%
vote as described in (iii) of this paragraph.
Article XIIIA has subsequently been amended to permit reduction of the "full cash value"
base in the event of declining property values caused by damage, destruction or other factors,
to provide that there would be no increase in the "full cash value" base in the event of
reconstruction of property damaged or destroyed in a disaster and in other minor or technical
ways.
Both the United States Supreme Court and the California State Supreme Court have
upheld the general validity of Article XIIIA.
Legislation Implementing Article XIIIA. Legislation has been enacted and amended a
number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no
longer permitted to levy directly any property tax (except to pay voter-approved indebtedness).
The 1% property tax is automatically levied by the county and distributed according to a formula
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among taxing agencies. The formula apportions the tax roughly in proportion to the relative
shares of taxes levied prior to 1979.
Increases of assessed valuation resulting from reappraisals of property due to new
construction, change in ownership or from the annual adjustment not to exceed 2% are
allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.”
Any such allocation made to a local agency continues as part of its allocation in future years.
Inflationary Adjustment of Assessed Valuation. As described above, the assessed
value of a property may be increased at a rate not to exceed 2% per year to account for
inflation. On December 27, 2001, the Orange County Superior Court, in County of Orange v.
Orange County Assessment Appeals Board No. 3, held that where a home’s taxable value did
not increase for two years, due to a flat real estate market, the Orange County assessor violated
the 2% inflation adjustment provision of Article XIIIA, when the assessor tried to "recapture" the
tax value of the property by increasing its assessed value by 4% in a single year. The
assessors in most California counties, including the County, use a similar methodology in
raising the taxable values of property beyond 2% in a single year. The State Board of
Equalization has approved this methodology for increasing assessed values. On appeal, the
Appellate Court held that the trial court erred in ruling that assessments are always limited to no
more than 2% of the previous year’s assessment. On May 10, 2004 a petition for review was
filed with the California Supreme Court. The petition has been denied by the California
Supreme Court. As a result of this litigation, the “recapture” provision described above may
continue to be employed in determining the full cash value of property for property tax purposes.
Unitary Property
Some amount of property tax revenue of the District is derived from utility property which
is considered part of a utility system with components located in many taxing jurisdictions
(“unitary property”). Under the State Constitution, such property is assessed by the State
Board of Equalization (“SBE”) as part of a “going concern” rather than as individual pieces of
real or personal property. State-assessed unitary and certain other property is allocated to the
counties by SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing
jurisdictions (including the District) according to statutory formulae generally based on the
distribution of taxes in the prior year.
Constitutional Appropriations Limitation
Article XIIIB (“Article XIIIB”) of the State Constitution, as subsequently amended by
Propositions 98 and 111, respectively, limits the annual appropriations of the State and of any
city, county, school district, authority or other political subdivision of the State to the level of
appropriations of the particular governmental entity for the prior fiscal year, as adjusted for
changes in the cost of living and in population and for transfers in the financial responsibility for
providing services and for certain declared emergencies. For fiscal years beginning on or after
July 1, 1990, the appropriations limit of each entity of government shall be the appropriations
limit for the 1986-87 fiscal year adjusted for the changes made from that fiscal year under the
provisions of Article XIIIB, as amended.
The appropriations of an entity of local government subject to Article XIIIB limitations
include the proceeds of taxes levied by or for that entity and the proceeds of certain state
subventions to that entity. “Proceeds of taxes” include, but are not limited to, all tax revenues
and the proceeds to the entity from (a) regulatory licenses, user charges and user fees (but only
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to the extent that these proceeds exceed the reasonable costs in providing the regulation,
product or service), and (b) the investment of tax revenues.
Appropriations subject to limitation do not include (a) refunds of taxes, (b) appropriations
for debt service, (c) appropriations required to comply with certain mandates of the courts or the
federal government, (d) appropriations of certain special districts, (e) appropriations for all
qualified capital outlay projects as defined by the legislature, (f) appropriations derived from
certain fuel and vehicle taxes and (g) appropriations derived from certain taxes on tobacco
products.
Article XIIIB includes a requirement that all revenues received by an entity of
government other than the State in a fiscal year and in the fiscal year immediately following it in
excess of the amount permitted to be appropriated during that fiscal year and the fiscal year
immediately following it shall be returned by a revision of tax rates or fee schedules within the
next two subsequent fiscal years.
Article XIIIB also includes a requirement that 50% of all revenues received by the State
in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted
to be appropriated during that fiscal year and the fiscal year immediately following it shall be
transferred and allocated to the State School Fund under Section 8.5 of Article XVI of the State
Constitution.
Article XIIIC and Article XIIID of the California Constitution
On November 5, 1996, the voters of the State of California approved Proposition 218,
popularly known as the “Right to Vote on Taxes Act.” Proposition 218 added to the California
Constitution Articles XIIIC and XIIID (respectively, “Article XIIIC” and “Article XIIID”), 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.
According to the “Title and Summary” of Proposition 218 prepared by the California
Attorney General, Proposition 218 limits “the authority of local governments to impose taxes and
property-related 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, and prohibits any local agency from
imposing, extending or increasing any special tax beyond its maximum authorized rate without a
two-thirds vote; and also provides that the initiative power will not be limited in matters of
reducing or repealing local taxes, assessments, fees and charges. Article XIIIC further 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 California Constitution and special taxes approved
by a two-thirds vote under Article XIIIA, Section 4.
On November 2, 2010, Proposition 26 was approved by State voters, which amended
Article XIIIC to expand the definition of “tax” to include “any levy, charge, or exaction of any kind
imposed by a local government” except the following: (1) a charge imposed for a specific benefit
conferred or privilege granted directly to the payor that is not provided to those not charged, and
which does not exceed the reasonable costs to the local government of conferring the benefit or
granting the privilege; (2) a charge imposed for a specific government service or product
provided directly to the payor that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of providing the service or product; (3) a
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charge imposed for the reasonable regulatory costs to a local government for issuing licenses
and permits, performing investigations, inspections and audits, enforcing agricultural marketing
orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for
entrance to or use of local government property, or the purchase, rental, or lease of local
government property; (5) a fine, penalty, or other monetary charge imposed by the judicial
branch of government or a local government, as a result of a violation of law; (6) a charge
imposed as a condition of property development; and (7) assessments and property-related
fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the
local government bears the burden of proving by a preponderance of the evidence that a levy,
charge, or other exaction is not a tax, that the amount is no more than necessary to cover the
reasonable costs of the governmental activity, and that the manner in which those costs are
allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits
received from, the governmental activity.
Article XIIID deals with assessments and property-related fees and charges, and
explicitly provides that nothing in Article XIIIC or XIIID will be construed to affect existing laws
relating to the imposition of fees or charges as a condition of property development.
Proposition 218 does not affect the ad valorem property taxes to be levied by the County
to pay debt service on the Series B Bonds.
Proposition 62
A statutory initiative (“Proposition 62”) was adopted by the voters at the November 4,
1986, general election which (a) requires that any new or higher taxes for general governmental
purposes imposed by local governmental entities such as the District be approved by a twothirds vote of the governmental entity’s legislative body and by a majority vote of the voters of
the governmental entity voting in an election on the tax, (b) requires that any special tax
(defined as taxes levied for other than general governmental purposes) imposed by a local
governmental entity be approved by a two-thirds vote of the voters of the governmental entity
voting in an election on the tax, (c) restricts the use of revenues from a special tax to the
purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of
ad valorem taxes on real property by local governmental entities except as permitted by
Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real
property by local governmental entities, and (f) requires that any tax imposed by a local
governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting
in an election on the tax within two years of the adoption of the initiative or be terminated by
November 15, 1988.
California appellate court cases have overturned the provisions of Proposition 62
pertaining to the imposition of taxes for general government purposes. However, the California
Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Sonoma County
Transportation Authority v. Guardino.
This decision reaffirmed the constitutionality of
Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme
Court’s decision, such as what remedies exist for taxpayers subject to a tax not in compliance
with Proposition 62, and whether the decision applies to charter cities. The District has not
experienced any substantive adverse financial impact as a result of the passage of this initiative.
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Proposition 98
On November 8, 1988, California voters approved Proposition 98, a combined initiative
constitutional amendment and statute called the “Classroom Instructional Improvement and
Accountability Act” (the “Accountability Act”). Certain provisions of the Accountability Act
have, however, been modified by Proposition 111, discussed below, the provisions of which
became effective on July 1, 1990. The Accountability Act changes State funding of public
education below the university level and the operation of the State’s appropriations limit. The
Accountability Act guarantees State funding for K-12 school districts and community college
districts (hereinafter referred to collectively as “K-14 school districts”) at a level equal to the
greater of (a) the same percentage of general fund revenues as the percentage appropriated to
such districts in 1986-87, and (b) the amount actually appropriated to such districts from the
general fund in the previous fiscal year, adjusted for increases in enrollment and changes in the
cost of living. The Accountability Act permits the Legislature to suspend this formula for a oneyear period.
The Accountability Act also changes how tax revenues in excess of the State
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 school districts. Any such
transfer to K-14 school districts would be excluded from the appropriations limit for K-14 school
districts and the K-14 school district appropriations limit 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 school 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 K 14
school districts is 4% of the minimum State spending for education mandated by the
Accountability Act.
Proposition 111
On June 5, 1990, the voters approved Proposition 111 (Senate Constitutional
Amendment No. 1) called the “Traffic Congestion Relief and Spending Limit Act of 1990”
(“Proposition 111”) which further modified Article XIIIB and Sections 8 and 8.5 of Article XVI of
the State Constitution with respect to appropriations limitations and school funding priority and
allocation.
The most significant provisions of Proposition 111 are summarized as follows:
Annual Adjustments to Spending Limit. The annual adjustments to the Article XIIIB
spending limit were liberalized to be more closely linked to the rate of economic growth. Instead
of being tied to the Consumer Price Index, the “change in the cost of living” is now measured by
the change in California per capita personal income. The definition of “change in population”
specifies that a portion of the State’s spending limit is to be adjusted to reflect changes in school
attendance.
Treatment of Excess Tax Revenues. “Excess” tax revenues with respect to Article
XIIIB are now determined based on a two-year cycle, so that the State can avoid having to
return to taxpayers excess tax revenues in one year if its appropriations in the next fiscal year
are under its limit. In addition, the Proposition 98 provision regarding excess tax revenues was
modified. After any two-year period, if there are excess State tax revenues, 50% of the excess
are to be transferred to K-14 school districts with the balance returned to taxpayers; under prior
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law, 100% of excess State tax revenues went to K-14 school districts, but only up to a maximum
of 4% of the schools’ minimum funding level. Also, reversing prior law, any excess State tax
revenues transferred to K-14 school districts are not built into the school districts’ base
expenditures for calculating their entitlement for State aid in the next year, and the State’s
appropriations limit is not to be increased by this amount.
Exclusions from Spending Limit. Two exceptions were added to the calculation of
appropriations which are subject to the Article XIIIB spending limit. First, there are excluded all
appropriations for “qualified capital outlay projects” as defined by the Legislature. Second, there
are excluded any increases in gasoline taxes above the 1990 level (then nine cents per gallon),
sales and use taxes on such increment in gasoline taxes, and increases in receipts from vehicle
weight fees above the levels in effect on January 1, 1990. These latter provisions were
necessary to make effective the transportation funding package approved by the Legislature
and the Governor, which expected to raise over $15 billion in additional taxes from 1990 through
2000 to fund transportation programs.
Recalculation of Appropriations Limit. The Article XIIIB appropriations limit for each
unit of government, including the State, is to be recalculated beginning in fiscal year 1990-91. It
is based on the actual limit for fiscal year 1986-87, adjusted forward to 1990-91 as if
Proposition 111 had been in effect.
School Funding Guarantee. There is a complex adjustment in the formula enacted in
Proposition 98 which guarantees K-14 school districts a certain amount of State general fund
revenues. Under prior law, K-14 school districts were guaranteed the greater of (1) 40.9% of
State general fund revenues (the “first test”) or (2) the amount appropriated in the prior year
adjusted for changes in the cost of living (measured as in Article XIIIB by reference to per capita
personal income) and enrollment (the “second test”). Under Proposition 111, schools will
receive the greater of (1) the first test, (2) the second test, or (3) a third test, which will replace
the second test in any year when growth in per capita State general fund revenues from the
prior year is less than the annual growth in California per capita personal income (the “third
test”). Under the third test, schools will receive the amount appropriated in the prior year
adjusted for change in enrollment and per capita State general fund revenues, plus an
additional small adjustment factor. If the third test is used in any year, the difference between
the third test and the second test will become a “credit” to schools which will be paid in future
years when State general fund revenue growth exceeds personal income growth.
Proposition 1A and Proposition 22
On November 2, 2004, California voters approved Proposition 1A, which amended the
State constitution to significantly reduce the State's authority over major local government
revenue sources. Under Proposition 1A, the State cannot (i) reduce local sales tax rates or
alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from
local governments to schools or community colleges, (iii) change how property tax revenues are
shared among local governments without two-thirds approval of both houses of the State
Legislature or (iv) decrease Vehicle License Fee revenues without providing local governments
with equal replacement funding. Under Proposition 1A, beginning, in 2008-09, the State may
shift to schools and community colleges a limited amount of local government property tax
revenue if certain conditions are met, including: (i) a proclamation by the Governor that the shift
is needed due to a severe financial hardship of the State, and (ii) approval of the shift by the
State Legislature with a two-thirds vote of both houses. Under such a shift, the State must
repay local governments for their property tax losses, with interest, within three years.
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Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and
property tax revenues among local governments within a county. Proposition 1A also amended
the State Constitution to require the State to suspend certain State laws creating mandates in
any year that the State does not fully reimburse local governments for their costs to comply with
the mandates. This provision does not apply to mandates relating to schools or community
colleges or to those mandates relating to employee rights.
Proposition 22, a constitutional initiative entitled the “Local Taxpayer, Public Safety, and
Transportation Protection Act of 2010,” approved on November 2, 2010, superseded many of
the provision of Proposition 1A. This initiative amends the State constitution to prohibit the
legislature from diverting or shifting revenues that are dedicated to funding services provided by
local government or funds dedicated to transportation improvement projects and services.
Under this proposition, the State is not allowed to take revenue derived from locally imposed
taxes, such as hotel taxes, parcel taxes, utility taxes and sales taxes, and local public transit
and transportation funds. Further, in the event that a local governmental agency sues the State
alleging a violation of these provisions and wins, then the State must automatically appropriate
the funds needed to pay that local government. This Proposition was intended to, among other
things, stabilize local government revenue sources by restricting the State’s control over local
property taxes. Proposition 22 did not prevent the California State Legislature from dissolving
State redevelopment agencies pursuant to AB 1X26, as confirmed by the decision of the
California Supreme Court decision in California Redevelopment Association v. Matosantos
(2011).
Because Proposition 22 reduces the State’s authority to use or reallocate certain
revenue sources, fees and taxes for State general fund purposes, the State will have to take
other actions to balance its budget, such as reducing State spending or increasing State taxes,
and school and college districts that receive Proposition 98 or other funding from the State will
be more directly dependent upon the State’s general fund.
Application of Constitutional and Statutory Provisions; Legal Challenges
The application of Proposition 98 and other statutory regulations has become
increasingly difficult to predict accurately in recent years. For a discussion of how the provisions
of Proposition 98 have been applied to school funding see “STATE FUNDING OF EDUCATION;
RECENT STATE BUDGETS.” In addition, legal challenges to education funding in California
have been made in the past and may be made in the future. The District cannot predict the
outcomes of any legal challenges or how such lawsuits could impact the District. See also
above under the heading “STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS –
Legal Challenge to State Funding of Education.”
Future Initiatives
Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID of the California Constitution and
Propositions 98, 111 and 22 were each adopted as measures that qualified for the ballot under
the State’s initiative process. From time to time other initiative measures could be adopted
further affecting District revenues or the District’s ability to expend revenues. The nature and
impact of these measures cannot be anticipated by the District.
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APPENDIX C
GENERAL INFORMATION ABOUT SONOMA COUNTY
The following information concerning the Guerneville and Sonoma County is included
only for the purpose of supplying general information regarding the area of the District. The
Bonds are not a debt of Guerneville, the County, the State or any of its political subdivisions,
and neither the County, the State nor any of its political subdivisions is liable therefor.
General
Guerneville. The community of Guerneville is an unincorporated town, located on the
Russian River in the central portion of Sonoma County (the "County”). Guerneville is centered
at the crossroads of U.S. Highway 101 and State Route 12. The area became popular with
wealthy vacationers from San Francisco in the late 19th century. The San Francisco and North
Pacific Railroad linked the town to the Ferries of San Francisco Bay in 1877. Even with the
demise of train service in the late 1930s, the area's resorts remained popular with vacationers
who came by automobile through the 1950s. Guerneville is well known for its natural beauty,
relaxed attitude, proximity to wine-tasting and redwood forests, and liberal atmosphere. It was
founded by the Guerne family in the 1850s.
The County. One of California's original 27 counties (incorporated in 1850), the County
is the northernmost of the nine greater San Francisco Bay Area counties. Bordered on the north
and east by Mendocino, Lake, and Napa counties and to the west and south by the Pacific
Ocean, Marin County, and San Pablo Bay, its area encompasses 1,598 square miles.
Geographically, Sonoma County is divided almost equally into mountainous regions,
rolling hills and valley land. Three narrow valleys, separated by mountains, run northwest to
southeast. Elevations range from sea level to 4,262 feet at Mt. Saint Helena, where Sonoma,
Napa, and Lake counties converge.
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Population
The historic population estimates of the towns and cities that are in the County, as of
January 1 of the past five years are shown in the following table:
COUNTY OF SONOMA
Population
Cloverdale
Cotati
Healdsburg
Petaluma
Rohnert Park
Santa Rosa
Sebastopol
Sonoma
Windsor
Unincorporated
County Total
2009
8,542
7,232
11,203
57,344
40,938
165,405
7,250
10,471
26,565
143,672
478,622
2010
8,594
7,258
11,249
57,791
40,952
167,302
7,380
10,605
26,751
145,079
482,961
2011
8,623
7,271
11,420
58,033
40,818
168,034
7,387
10,658
26,803
146,035
485,082
2012
8,641
7,286
11,458
58,245
40,902
169,070
7,415
10,680
27,041
146,934
487,672
2013
8,669
7,310
11,509
58,804
41,034
170,093
7,445
10,731
27,132
147,696
490,423
Source: California State Department of Finance, Demographic Research Unit
Employment
The County’s major employers are set forth below.
COUNTY OF SONOMA
Major Employers- As of January 2013
Employer Name
Alcatel-Lucent
Amy's Kitchen Inc
Army National Guard Recruiter
Arterial Vascular Engineering
Clover Stornetta Farms Inc
Fairmont-Sonoma Mission
Friedman Brothers Hardware
JDS Uniphase
Korbel Champagne Cellars
Lucky’s
Macy’s
Petaluma Valley Hospital
Santa Rosa Memorial Hospital
Santa Rosa Police Dept
Sonoma County Fire & Emergency
Sonoma County Radio Maint. Shop
Sonoma County of Education
Sonoma County Radio Mntnc Shop
Sonoma County Sheriff Dept
Sonoma Developmental Ctr
Sonoma Valley Hospital
Sutter Medical Center
Walmart
Location
Petaluma
Santa Rosa
Santa Rosa
Santa Rosa
Petaluma
Sonoma
Not Available
Santa Rosa
Guerneville
Santa Rosa
Santa Rosa
Petaluma
Santa Rosa
Santa Rosa
Santa Rosa
Santa Rosa
Santa Rosa
Santa Rosa
Santa Rosa
Eldridge
Sonoma
Santa Rosa
Windsor
Industry
Telephone & Telegraph Apparatus (Mfrs)
Frozen Food Processors (Mfrs)
State Government-National Security
Engineering
Dairy Products-Wholesale
Hotels & Motels
Storage
Optical Instruments & Lenses (Mfrs)
Wineries (Mfrs)
Retail Grocers
Department Stores
Hospitals
Hospitals
Police Departments
Government Offices-County
County Government-Education Programs
Sheriff
Cognitive Disability-Dev Disability Svcs
Hospitals
Hospitals
Department Stores
Source: California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS)
st
Employer Database, 2013 1 Edition.
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The unemployment rate in the County was 7.3% in March 2013, down from a revised
7.6% in February 2013, and below the year-ago estimate of 9.4%. This compares with an
unadjusted unemployment rate of 9.4% for California and 7.6% for the nation during the same
period. The table below shows average annual employment by industry group in the County
from 2008 through 2012.
COUNTY OF SONOMA
Civilian Labor Force, Employment and Unemployment, Unemployment by Industry
(Annual Averages, 2008 through 2012)
(1)
Civilian Labor Force
Employment
Unemployment
Unemployment Rate
(2)
Wage and Salary Employment
Agriculture
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Finance and Insurance
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Government
State Government
Local Government
(3)
Total, All Industries
2008
260,100
245,200
14,900
5.7%
2009
256,600
231,900
24,700
9.6%
2010
256,300
229,500
26,800
10.5%
2011
2012
256,400
256,900
231,200
234,900
25,200
22,000
9.8%
8.6%
5,800
200
12,800
22,000
7,700
23,100
4,400
2,800
5,600
22,100
24,200
21,000
6,400
1,700
5,000
23,700
191,400
5,800
100
9,800
20,200
6,800
21,500
4,000
2,600
5,100
18,300
24,100
20,100
6,100
1,700
5,000
22,600
176,300
5,700
100
8,900
19,900
6,600
21,500
3,900
2,500
4,900
18,800
24,100
20,100
5,900
1,800
4,700
20,300
172,300
5,800
200
8,600
20,200
6,600
22,000
3,800
2,500
4,700
18,000
24,500
20,500
6,100
1,600
4,700
22,100
174,700
5,800
200
8,600
19,600
6,900
22,500
3,900
2,600
4,600
17,900
25,100
21,900
6,300
1,500
4,700
21,500
176,300
(1)
Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(2)
Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(3)
Totals may not add due to rounding.
Source: State of California Employment Development Department.
Effective Buying Income
“Effective buying income” (“EBI”) is a classification developed exclusively by Sales &
Marketing Management magazine to distinguish it from other sources reporting income
statistics. EBI is defined as “money income” less personal tax and non-tax payments - a
number often referred to as “disposable” or “after tax” income. Money income is the aggregate
of wages and salaries, net farm and non-farm self employment income, interest, dividends, not
rental and royalty income, Social Security and railroad retirement income, other retirement and
disability ‘income, public assistance income, unemployment compensation, Veterans
Administration Payments, alimony and child support, military family allotments, net winnings
from gambling and other periodic income. Money income does not include money received
from the sale of property (unless the recipient is engaged in the business of selling property);
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the value of “in-kind” income such as food stamps, public housing subsidies, medical care,
employer contributions for persons, etc.; withdrawal of bank deposits; money borrowed; tax
refunds; exchange of money between relatives living in the same household; gifts and lumpsum inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed
by deducting from money income all personal income taxes (federal, state and local), personal
contributions to social insurance (Social Security and federal retirement payroll deductions), and
taxes on owner-occupied non-business real estate.
The following table summarizes the total effective buying income for the City, the
County, the State and the United States for the period 2008 through 2012:
COUNTY OF SONOMA
Effective Buying Income
Year
Median Household
Effective Buying
Income
Area
2008 Guerneville
Sonoma County
California
United States
$40,945
52,027
48,203
41,792
2009 Guerneville
Sonoma County
California
United States
$40,884
52,146
48,952
42,303
2010- Guerneville
Sonoma County
California
United States
$39,862
52,992
49,736
43,252
2011 Guerneville
Sonoma County
California
United States
$39,439
50,323
47,177
41,368
2012 Guerneville
Sonoma County
California
United States
n/a
$45,164
47,307
41,358
Source: The Nielsen Company (US), Inc.
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Commercial Activity
In 2009, the State Board of Equalization converted the business codes of sales and use
tax permit holders to North American Industry Classification System codes. As a result of the
coding change, retail stores data for 2009 and after is not comparable to that of prior years.
Total taxable sales during calendar year 2011 in the County were reported to be $9.69
billion, a 7.3% increase over the total taxable sales of $6,49 billion reported during calendar
year 2010. The valuations of taxable transactions in the County are presented in the following
table.
COUNTY OF SONOMA
Taxable Transactions
(Figures in Thousands)
Calendar Years 2007 through 2011
Year
2007
2008
(1)
2009
(1)
2010
(1)
2011
Retail Stores
Taxable
Transactions
$5,404,597
5,009,164
4,413,001
4,583,802
4,895,477
Retail Permits
on July 1
6,352
6,581
10,645
10,559
10,799
Total Permits on
July 1
17,638
17,764
16,810
16,715
16,972
Total Outlets
Taxable
Transactions
$7,877,195
7,369,109
6,263,829
6,485,949
6,962,114
(1)
Not comparable to prior years. “Retail” category now includes “Food Services.”
Source: State of California, Board of Equalization.
Construction Activity
Building activity for the years 2008 through 2012 in the County is shown in the following
table:
COUNTY OF SONOMA
Total Building Permit Valuations
(Figures in Thousands)
2008
2009
2010
2011
2012
Permit Valuation
New Single-family
New Multi-family
Res. Alterations/Additions
Total Residential
$142,928.4
5,915.2
60,566.8
209,410.5
$ 93,260.5
12,433.0
38,404.4
144,097.9
$68,353.1
19,869.4
54,555.7
142,778.3
$114,931.4
16,401.6
63,334.6
194,667.6
$81,742.3
50,309.2
41,061.7
173,113.2
New Commercial
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
53,072.9
3,619.1
36,591.7
87,097.7
180,381.4
5,343.8
1,191.1
18,725.8
43,318.6
68,579.3
1,482.3
0.0
23,433.4
65,119.6
90,035.2
5,855.3
0.0
4,902.2
69,301.5
80,059.0
43,428.1
2,001.3
0.0
76,946.1
122,375.5
359
71
430
280
190
470
443
184
627
New Dwelling Units
Single Family
Multiple Family
TOTAL
546
45
591
Source: Research Board, Building Permit Summary.
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279
318
597
Transportation
All modes of commercial transportation are available in the County. The Petaluma River
is capable of handling water barge freight from the San Francisco Bay to Petaluma.
Northwestern Pacific Railroad provides rail transportation with the County with connections to
major rail interchanges. The Sonoma County Airport, located just outside the City of Santa
Rosa, handles commercial and private air traffic, with Horizon-Alaska Airlines providing regional
air transportation. Seven private airfields serve the County as well. In addition, highways
dissect the County; the major freeway is U.S. Highway 101 which runs from Marin and San
Francisco Counties in the south to Mendocino County in the north. State Highway 12 is the
major east-west thoroughfare from Bodega Bay on the western coastline to Sonoma on the
east.
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APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
[LETTERHEAD OF JONES HALL]
________ __, 2013
Governing Board
14630 Armstrong Woods Road
Guerneville, California 95446
OPINION:
$__________ Guerneville Elementary School District (Sonoma County,
California) General Obligation Bonds Election of 2012, Series B
Members of the Governing Board:
We have acted as bond counsel to the Guerneville Elementary School District (the
“District”) in connection with the issuance by the District of $_________ principal amount of
Guerneville Elementary School District (Sonoma County, California) General Obligation Bonds
Election of 2012, Series B, dated the date hereof (the “Bonds”), under the provisions of Article
4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the “Act”),
and a resolution of the Board adopted on May 20, 2013 (the “Bond Resolution”). We have
examined the law and such certified proceedings and other papers as we deemed necessary to
render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of
the Board contained in the Resolution and in the certified proceedings and other certifications
furnished to us, without undertaking to verify such facts by independent investigation.
Based upon our examination, we are of the opinion, under existing law, as follows:
1.
The District is a duly created and validly existing elementary school district with
the power to issue the Bonds, and to perform its obligations under the Bond Resolution and the
Bonds.
2.
The Resolution has been duly adopted by the Board, and constitutes a valid and
binding obligation of the District enforceable upon the District.
3.
The Bonds have been duly authorized, executed and delivered by the District,
and are valid and binding general obligations of the District.
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4.
The Board of Supervisors of Sonoma County is required under the Act to levy an
ad valorem tax upon the property in the District, unlimited as to rate or amount, for the payment
of principal of and interest on the Bonds.
5.
The interest on the Bonds is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations; it should be noted, however, that for the purpose
of computing the alternative minimum tax imposed on corporations (as defined for federal
income tax purposes), such interest is taken into account in determining certain income and
earnings certain income and earnings, and the Bonds are "qualified tax-exempt obligations"
within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the
“Code”) such that, in the case of certain financial institutions (within the meaning of section
265(b)(5) of the Code), a deduction for federal income tax purposes is allowed for 80% of that
portion of such financial institution's interest expense allocable to interest payable on the Bonds.
The opinions set forth in the preceding sentence are subject to the condition that the District
comply with all requirements of the Code that must be satisfied subsequent to the issuance of
the Bonds in order that interest thereon be, or continue to be, excluded from gross income for
federal tax purposes. The District has covenanted to comply with each such requirement.
Failure to comply with certain of such requirements may cause the inclusion of interest on the
Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance
of the Bonds. We express no opinion regarding other federal tax consequences arising with
respect to the Bonds.
6.
The interest on the Bonds is exempt from personal income taxation imposed by
the State of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the
Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject
to the exercise of judicial discretion in appropriate cases.
Respectfully submitted,
A Professional Law Corporation
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$_________________
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and
delivered by the Guerneville Elementary School District (the “District”) in connection with the
execution and delivery of the captioned bonds (the “Bonds”). The Bonds are being executed
and delivered pursuant to a resolution adopted by the Governing Board of the District on May
20, 2013 (the “Resolution”). The Bank of New York Mellon Trust Company, N.A., is initially
acting as paying agent for the Bonds, as agent for the County of Sonoma (the “Paying Agent”).
The District hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the District for the benefit of the holders and beneficial owners of the
Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c212(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Bond
Resolution, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section 2, the following capitalized terms shall have the following
meanings:
“Annual Report” means any Annual Report provided by the District pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the date not later than nine months after the end of each
fiscal year of the District (currently June 30th), or March 30, the first being March 30, 2014.
“Dissemination Agent” means, initially, the District, or any successor Dissemination
Agent designated in writing by the District and which has filed with the District and the Paying
Agent a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a) 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.
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“Official Statement” means the final official statement executed by the District in
connection with the issuance of the Bonds.
“Paying Agent” means, initially, The Bank of New York Mellon Trust Company, Los
Angeles, California, as agent for the County of Sonoma, or any successor thereto.
“Participating Underwriter” means the original Underwriter of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
“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.
Section 3. Provision of Annual Reports.
(a)
The District shall, or shall cause the Dissemination Agent to, not later than the
Annual Report Date, commencing not later than March 30, 2014 with the report for the 2012-13
fiscal year, provide to the MSRB in an electronic format as prescribed by the MSRB, an Annual
Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not
later than 15 Business Days prior to the Annual Report Date, the District shall provide the
Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days
prior to the Annual Report Date the Dissemination Agent (if other than the District) has not
received a copy of the Annual Report, the Dissemination Agent shall contact the District to
determine if the District is in compliance with the previous sentence. The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may
include by reference other information as provided in Section 4 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 Annual Report Date, if not available by that
date. 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(c). The District shall provide a written certification with
each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report
constitutes the Annual Report required to be furnished by the District hereunder.
(b)
If the District does not provide (or cause the Dissemination Agent to provide) an
Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination
Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in
substantially the form attached as Exhibit A, with a copy to the Paying Agent and Participating
Underwriter.
(c)
With respect to each Annual Report, the Dissemination Agent shall:
(i)
determine each year prior to the Annual Report Date the
then-applicable rules and electronic format prescribed by the
MSRB for the filing of annual continuing disclosure reports;
and
(ii)
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, and
stating the date it was provided.
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Section 4. Content of Annual Reports. The District’s Annual Report shall contain or
incorporate by reference the following:
(a) Audited financial statements prepared in accordance with generally accepted
accounting principles as promulgated to apply to governmental entities from time to time by the
Governmental Accounting Standards Board. If the District’s audited financial statements are not
available by the Annual Report Date, 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) Unless otherwise provided in the audited financial statements filed on or before the
Annual Report Date, financial information and operating data with respect to the District for the
preceding fiscal year, substantially similar to that provided in the corresponding tables in the
Official Statement:
(i)
The District’s adopted Budget;
(ii) Assessed value of taxable property in the jurisdiction of the
District as shown on the most recent equalized assessment roll;
(iii) Changes, if any, in the operation of Sonoma County’s Teeter
Plan affecting the District;
(iv) Changes, if any, in the operation of Sonoma County Investment
Pool which would affect the District’s access to property taxes
used to pay debt service on the Bonds;
(v) Property tax collection delinquencies for the District, for the most
recently completed Fiscal Year, if the District is no longer a
participant in Sonoma County’s Teeter Plan;
(vi) In addition to any of the information expressly required to be
provided under paragraphs (i) through (vi), of this Section, the
District shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the
light of the circumstances under which they are made, not
misleading.
(c)
In addition to any of the information expressly required to be provided under this
Disclosure Certificate, the District shall provide such further material information, if any, as may
be necessary to make the specifically required statements, in the light of the circumstances
under which they are made, not misleading.
(d)
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,
which are available to the public on the MSRB’s internet web site or filed with the Securities and
Exchange Commission. The District shall clearly identify each such other document so included
by reference.
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Section 5. Reporting of Significant Events.
(a)
The District shall give, or cause to be given, notice of the occurrence of any of
the following Listed Events with respect to the Bonds:
(1)
Principal and interest payment delinquencies.
(2)
Non-payment related defaults, if material.
(3)
Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4)
Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5)
Substitution of credit or liquidity providers, or their failure to perform.
(6)
Adverse tax opinions, the issuance by the Internal Revenue Service
of proposed or final determinations of taxability, Notices of Proposed
Issue (IRS Form 5701-TEB) or other material notices or
determinations with respect to the tax status of the security, or other
material events affecting the tax status of the security.
(7)
Modifications to rights of security holders, if material.
(8)
Bond calls, if material, and tender offers.
(9)
Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the District.
(13) The consummation of a merger, consolidation, or acquisition involving the
District or the sale of all or substantially all of the assets of the District, other
than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material.
(14) Appointment of a successor or additional trustee or the change of name of
a trustee, if material.
(b)
Whenever the District obtains knowledge of the occurrence of a Listed Event, the
District shall, or shall cause the Dissemination Agent (if not the District) to, file a notice of such
occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely
manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9)
above need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to holders of affected Bonds under the Bond Resolution.
(c)
The District acknowledges that the events described in subparagraphs (a)(2),
(a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain
the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with
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respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The District shall cause a notice to be filed as set forth in paragraph (b) above with respect to
any such event only to the extent that it determines the event’s occurrence is material for
purposes of U.S. federal securities law. Whenever the District obtains knowledge of the
occurrence of any of these Listed Events, the District will as soon as possible determine if such
event would be material under applicable federal securities law. If such event is determined to
be material, the District will cause a notice to be filed as set forth in paragraph (b) above.
(d)
For purposes of this Disclosure Certificate, any event described in paragraph
(a)(12) above is considered to occur when any of the following occur: the appointment of a
receiver, fiscal agent, or similar officer for the District in a proceeding under the United States
Bankruptcy Code or in any other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of the assets or business
of the District, or if such jurisdiction has been assumed by leaving the existing governing body
and officials or officers in possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of reorganization,
arrangement, or liquidation by a court or governmental authority having supervision or
jurisdiction over substantially all of the assets or business of the District.
Section 6. Identifying Information for Filings with the MSRB. All documents
provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying
information as prescribed by the 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. 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(c).
Section 8. 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 Dissemination Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be the District. Any Dissemination
Agent may resign by providing 30 days’ written notice to the District and the Paying Agent.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of
this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a)
if the amendment or waiver relates to the provisions of Sections
3(a), 4 or 5(a), 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
type of business conducted;
(b)
the undertakings herein, as proposed to be amended or waived,
would, in the opinion of nationally recognized bond counsel, have complied with
the requirements of the Rule at the time of the primary offering of the Bonds,
after taking into account any amendments or interpretations of the Rule, as well
as any change in circumstances; and
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(c)
the proposed amendment or waiver either (i) is approved by
holders of the Bonds in the manner provided in the Bond Resolution for
amendments to the Bond Resolution with the consent of holders, or (ii) does not,
in the opinion of nationally recognized bond counsel, materially impair the
interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first annual financial information filed
pursuant hereto containing the amended operating data or financial information shall explain, in
narrative form, the reasons for the amendment and the impact of the change in the type of
operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the District to meet its obligations. To the
extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c).
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, the Participating Underwriter or any holder or beneficial owner 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 Bond Resolution, and the sole remedy under this Disclosure Certificate in
the event of any failure of the District to comply with this Disclosure Certificate shall be an action
to compel performance.
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Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
(a)
The Dissemination Agent shall have only such duties as are specifically set forth
in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination
Agent, its officers, directors, employees and agents, harmless against any loss, expense and
liabilities which they 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 will have no duty or obligation to
review any information provided to it by the District hereunder, and shall not be deemed to be
acting in any fiduciary capacity for the District, the Bondholders or any other party. The
obligations of the District under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the District for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and
shall be reimbursed for all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the District, the Dissemination Agent, the Participating Underwriter and holders and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Date: ___________, 2013
GUERNEVILLE
DISTRICT
By:
Name:
Title:
Acceptance of Duties as Dissemination Agent;
ISOM ADVISORS, A Division of Urban Futures
By:
Title:
E-7
ELEMENTARY
SCHOOL
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
Guerneville Elementary School District (the “District”)
Name of Bond Issue:
Guerneville Elementary School District General Obligation Bonds,
Date of Issuance:
___________, 2013
NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with
respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated
as of _______, 2013. The District anticipates that the Annual Report will be filed by
_____________.
Dated:
DISSEMINATION AGENT:
By:
Its:
cc: District, Paying Agent and Participating Underwriter
E-8
APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and
record keeping with respect to beneficial ownership interests in the Bonds, payment of principal,
interest and other payments on the Series B Bonds to DTC Participants or Beneficial Owners,
confirmation and transfer of beneficial ownership interest in the Series B Bonds and other
related transactions by and between DTC, the DTC Participants and the Beneficial Owners is
based solely on information provided by DTC. Accordingly, no representations can be made
concerning these matters and neither the DTC Participants nor the Beneficial Owners should
rely on the foregoing information with respect to such matters, but should instead confirm the
same with DTC or the DTC Participants, as the case may be.
Neither the District nor the Paying Agent take any responsibility for the information
contained in this Section.
No assurances can be given that DTC, DTC Participants or Indirect Participants will
distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with
respect to the Series B Bonds, (b) Bonds representing ownership interest in or other
confirmation or ownership interest in the Series B Bonds, or (c) redemption or other notices sent
to DTC or Cede & Co., its nominee, as the registered owner of the Series B Bonds, or that they
will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act
in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with
the Securities and Exchange Commission and the current "Procedures" of DTC to be followed
in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities
depository for the securities (in this Appendix, the “Bonds”). The Bonds will be issued as fullyregistered 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 will be issued for each maturity of the Bonds, in the aggregate principal amount of such
maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any
maturity exceeds $500 million, one certificate will be issued with respect to each $500 million of
principal amount and an additional certificate will be issued with respect to any remaining
principal amount of such issue.
2. 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
F-1
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. The information
contained on this Internet site is not incorporated herein by reference.
3. Purchases of 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 Bonds representing their ownership interests in Bonds,
except in the event that use of the book-entry system for the Bonds is discontinued.
4. To facilitate subsequent transfers, all 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 Bonds with DTC
and their registration in the name of Cede & Co. or such other 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.
5. 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 Bonds may
wish to take certain steps to augment 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 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 the notices be provided directly to them.
6. Redemption notices will 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.
7. Neither DTC nor Cede & Co. (nor such 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 District as soon as
F-2
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).
8. Redemption proceeds, distributions, and interest 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
receipt of funds and corresponding detail information from 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 nor
its nominee, Paying Agent, or 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 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.
9. DTC may discontinue providing its services as securities depository with respect to
the Bonds at any time by giving reasonable notice to District or Paying Agent. Under such
circumstances, in the event that a successor securities depository is not obtained, Bonds are
required to be printed and delivered.
10. 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.
11. The information in this section concerning DTC and DTC’s book-entry system has
been obtained from sources that District believes to be reliable, but District takes no
responsibility for the accuracy thereof.
F-3
APPENDIX G
SONOMA COUNTY INVESTMENT POLICY AND QUARTERLY REPORT
FOR QUARTER ENDING MARCH 31, 2013
G-1
COUNTY OF SONOMA STATEMENT OF INVESTMENT POLICY
TABLE OF CONTENTS Page
1.
Policy Statement …………………………………………………………………………………… 1 2.
Standards of Care …………………………………………………………………………………... 1 3.
Investment Objectives ……………………………………………………………………………… 1 (a)
Safety of Capital .…………………………………………………………………………. 1
(b)
Liquidity ……………………………………………………………………………….…. 1
(c)
Maximum Rate of Return ………………………………………………………………… 2 4.
Implementation …………………………………………………………………………………… 2 5.
Participants ………………………………………………………………………………………...
2
(a)
Statutory Participants ……………………………………………………………………. 2 (b)
Voluntary Participants …………………………………………………………………… 2 6.
Authorized Persons ………………………………………………………………………………… 3 7.
Authorized Investments ……………………………………………………………………………. 3 8.
Prohibited Investments …………………………………………………………………………….. 3 9.
Investment Criteria ………………………………………………………………………………… 4 10.
Bankers’ Acceptance ……………………………………………………………………………..
11.
Commercial Paper …………………………………………………………………………………. 5 12.
Repurchase and Reverse Repurchase Agreements/Securities Lending Agreements …………….
13.
Mutual Funds and Money Market Mutual Funds …………………………………………………. 5 14.
Joint Powers Agreement …………………………………………………………………………… 6 15.
Collateral …………………………………………………………………………………………… 6
16.
Criteria for the Selection of Broker/Dealers and Financial Institutions …………………………… 6 17.
Withdrawal Requests ………………………………………………………………………………. 7 5
5
(a)
Statutory Participants ……………………………………………………………………. 7 (b)
Voluntary Participants …………………………………………………………………… 7 18.
Delivery & Safekeeping …………………………………………………………………………..
19.
Apportionment of Interest & Costs ………………………………………………………………… 7 20.
Review, Monitoring and Reporting of the Portfolio ………………………………………………
21.
Limits on Honoraria, Gifts and Gratuities ………………………………………………………… 8 22.
Audits ……………………………………………………………………………………………… 8
23.
Exception to Policy ………………………………………………………………………………… 8 24.
Investment of Bond Proceeds ……………………………………………………….…………….. 9 25.
Disaster Recovery Plan …………………………………………………………………………….. 9 26.
Glossary of Terms …………………………………………………………………………………. 10 Revised 6/19/2012
ii
7
8
COUNTY OF SONOMA STATEMENT OF INVESTMENT POLICY Under the authority delegated to the County Treasurer by the Board of Supervisors to invest and
reinvest all of the funds in the County Treasury and, in accordance with the California Government
Code, the following sets forth the investment policy of the County of Sonoma:
1.
POLICY STATEMENT
The purpose of this Investment Policy (Policy) is to establish cash management and investment
guidelines for the County Treasurer, who is responsible for the stewardship of the Sonoma County
Pooled Investment Fund. Each transaction and the entire portfolio must comply with California
Government Code Section 53601, et. seq., Section 53635, et. seq., and this policy. All portfolio
activities will be judged by the standards of the Policy and ranking of investment objectives.
2.
STANDARDS OF CARE
The County Treasurer is the Trustee of the Pooled Investment Fund and, therefore, a fiduciary
subject to the prudent investor standard. The County Treasurer, employees involved in the
investment process and the members of the Treasury Oversight Committee (Oversight Committee)
shall refrain from all personal business activity that could conflict with the management 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 County Treasurer shall act with the care, skill,
prudence and diligence to meet the aims of the investment objectives listed in the Policy.
3.
INVESTMENT OBJECTIVES
The Pooled Investment Fund shall be prudently invested in order to earn a reasonable return, while
awaiting application for governmental purposes. The specific objectives for the Pooled Investment
Fund are ranked in order of importance:
[a] SAFETY OF CAPITAL - The preservation of capital is the primary objective.
Each transaction shall seek to ensure that capital losses are avoided, whether they be
from securities default or erosion of market value.
[b] LIQUIDITY - As a second objective, the Pooled Investment Fund should remain
sufficiently flexible to ensure the County Treasurer meets all operating requirements,
which may be reasonably anticipated in any depositor’s fund.
Revised 6/19/2012 1
[c] 4.
MAXIMUM RATE OF RETURN - As the third objective, the Pooled Investment
Fund should be designed to attain a rate of return through budgetary and economic
cycles, consistent with the risk limitations, prudent investment principles and cash
flow characteristics identified herein.
IMPLEMENTATION
In order to provide direction to those responsible for management of the Pooled Investment Fund,
the County Treasurer has established this Policy and presented it to the Treasury Oversight
Committee and the Board of Supervisors, and has provided the report to the legislative body of local
agencies that participate in the Pooled Investment Fund.
The Policy defines investible funds; authorized instruments; credit quality required; maximum
maturities and concentrations; collateral requirements; qualifications of broker-dealers and financial
institutions doing business with, or on behalf of, the County; limits on gifts and honoraria; the
reporting requirements; the Treasury Oversight Committee; the manner of appropriating costs; and
the criteria to request withdrawal of funds.
5.
P
ARTICIPANTS
[a] STATUTORY PARTICIPANTS - General Participants are those government
agencies within the County of Sonoma for which the Sonoma County Treasurer is
statutorily designated as the Custodian of Funds.
[b] VOLUNTARY PARTICIPANTS - Other local agencies, such as Special Districts
and Cities for which the Treasurer is not the statutory designated Custodian of Funds,
may participate in the Pooled Investment Fund. Such participation is subject to the
consent of the County Treasurer and must be in accordance with the California Code
Section 53684, et seq. The agency must approve in writing the Sonoma County
Pooled Investment Fund as an authorized investment and accept the County of
Sonoma Investment Policy.
Revised 6/19/2012 2
6.
AUTHORIZED PERSONS
The Sonoma County Board of Supervisors, by resolution, has delegated investment responsibility for
the Sonoma County Investment Program to the Auditor-Controller/Treasurer-Tax Collector. Daily
management responsibility of the investment program has been assigned to the Assistant Treasurer.
The Treasury Manager or the Revenue and Debt Manager are also authorized to initiate investment
transactions.
All investment decisions shall be made with care, skill, prudence and diligence, under the
circumstances then prevailing, that a prudent person acting as a trustee in a like capacity and
familiarity would use in the conduct of funds of a like character, and with like aims, to safeguard the
principal and maintain the liquidity needs of depositors.
7.
AUTHORIZED INVESTMENTS
Authorized investments shall match the general categories established by the California Government
Code Sections 53601, et. seq. and 53635, et. seq. Authorized investments shall also include, in
accordance with California Government Code Section 16429.1, investments into the State Local
Agency Investment Fund (LAIF). No investment shall be made in any security with a maturity
greater than five years, unless the Board of Supervisors has granted express authority to make that
investment. As the California Government Code is amended, this Policy shall likewise become
amended.
8.
PROHIBITED INVESTMENTS
No investments shall be authorized 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 strips derived
from a pool of mortgages.
Revised 6/19/2012
3
9.
INVESTMENT CRITERIA Investment Type
Maximum
Maturity
Maximum %
of Pool
Rating
U.S Treasury and Agency Securities
(§53601 (b & f))
5 years
100
N/A
Bonds and Notes issued by local agencies
(§53601 (e))
5 years
100
N/A
Registered State Warrants and Municipal Notes and
Bonds
(§53601 (c, d & e))
5 years
100
N/A
Bankers’ Acceptances (See Section 10)
(§53601 (g))
180 days
40
N/A
Commercial Paper (See Section 11)
(§53601 (h) and (§53635 (a))
270 days
40
A-1/F-1/P-1
Negotiable Certificates of Deposit
(§53601 (i))
5 years
30
N/A
Repurchase Agreements (See Section 12)
(§53601 (j))
1 year
100
N/A
Reverse Repurchase Agreements and Securities
Lending Agreements (See Section 12)
(§53601 (j))
92 days
20
N/A
Medium Term Corporate Notes
(§53601 (k))
5 years
30
A
N/A
20
Aaa & AAAm
or Section 13
5 years
20
AA
Joint Powers Agreement (See Section 14)
(§53601 (p))
N/A
20
N/A
Local Agency Investment Fund (LAIF)
(§16429.1)
N/A
As limited by
LAIF
N/A
Investment Trust of California (CalTRUST)
(§6509.7)
N/A
As limited by
CalTRUST
N/A
Mutual Funds & Money Market Mutual Funds
(§53601 (l))
Collateralized Mortgage Obligations
(§53601 (o))
Collateralized Time Deposits
(§53649et seq.)
Revised 6/19/2012
5 years
4
N/A
N/A
10.
BANKERS’ ACCEPTANCE
No more than 30 percent of the agency’s surplus funds may be invested in the Bankers’ Acceptances
of any one commercial bank pursuant to this section.
11.
C
OMMERCIAL PAPER
All commercial paper issuers must maintain an “A-1” rating by Standard & Poor’s Corporation, a
“P-1" rating by Moody’s Investor Service, or a “F-1” rating by Fitch Financial Services, issued by
corporations operating within the United States, and having total assets in excess of five hundred
million dollars (500,000,000.00). As used in this policy, “corporation” includes a limited liability
company.
No more than 10% of the total assets of the investments held by a local agency may be invested in
any one issuer’s Commercial Paper.
12. REPURCHASE AND REVERSE REPURCHASE AGREEMENTS / SECURITIES
LENDING AGREEMENTS
Under California Government Code Section 53601, Paragraph (j) and Section 53635, the County
Treasurer may enter into repurchase agreements and reverse repurchase agreements / securities
lending agreements. The maximum maturity of repurchase agreements shall be one year. The
maximum maturity of a reverse repurchase agreement shall be 92 days, and the proceeds of reverse
repurchase agreements / securities lending agreements may not be invested beyond the expiration of
the agreement. The reverse repurchase agreements / securities lending agreements must be “matched
to maturity.”
13. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS
A Mutual Fund managed by an investment adviser registered or exempt from registration with the
Securities and Exchange Commission with not less than five years’ experience investing in the
securities and obligations authorized by Government Code Section 53601, subdivisions (a) to (k),
inclusive, or subdivisions (m) to (o) and with assets under management in excess of five hundred
million dollars ($500,000,000.00).
No more than 10% of the agency’s funds may be invested in any one Mutual Fund.
Revised 6/19/2012 5
14.
JOINT POWERS AGREEMENT
With approval of the Board of Supervisors, the Treasurer is allowed to enter into a Joint Powers
Agreement with governments whose policies are consistent with or more restrictive than Sonoma
County’s Statement of Investment Policy.
15.
C
OLLATERAL
Repurchase agreements executed with approved broker-dealers must be collateralized with either:
(1) U.S. Treasuries or Agencies with a market value of 102% for collateral marked to market daily;
or (2) money market instruments which are on the approved list of the County and which meet the
qualifications of the Policy, with a market value of 102%. Use of mortgage-backed securities for
collateral is not permitted. For purposes of investing the daily excess bank balance, the collateral
provided by the County's depository bank can include mortgage-backed securities valued at 100%.
16. CRITERIA FOR THE SELECTION OF BROKER/DEALERS AND FINANCIAL
INSTITUTIONS
All transactions initiated on behalf of the Pooled Investment Fund and Sonoma County shall be
executed through either government security dealers reporting as primary dealers to the Market
Reports Division of the Federal Reserve Bank of New York, financial institutions that directly issue
their own securities which have been placed on the Approved List of Broker/Dealers and Financial
Institutions or broker/dealers in the State of California approved by the County Treasurer based on
the reputation and expertise of the company and individuals employed . All brokers/dealers and
financial institutions must have a strong industry reputation and open lines of credit with other
dealers. Further, these firms must have an investment grade rating from at least one national rating
service, if applicable.
Broker/dealers and financial institutions which have exceeded the political contribution limits within
a four year period to the County Treasurer or any member of the governing board of a local agency
or any candidate for those offices, are prohibited from the Approved List of Broker/Dealers and
Financial Institutions.
Each broker/dealer or financial institution will be sent a copy of this Policy and a list of those
persons authorized to execute investment transactions. Each firm must acknowledge receipt of such
materials to qualify for the Approved List of Broker/Dealers and Financial Institutions.
Each broker/dealer and financial institution authorized to do business with Sonoma County shall, at
least annually, supply the County Treasurer with financial statements.
Revised 6/19/2012 6
17.
18. WITHDRAWAL REQUESTS
[a]
STATUTORY PARTICIPANTS - The County Treasurer will honor all requests to
withdraw funds for normal cash flow purposes that are approved by the Sonoma
County Auditor-Controller at a one dollar net asset value. Any requests to withdraw
funds for purposes other than cash flow, such as for external investing, shall be
subject to the consent of the County Treasurer. In accordance with California
Government Code Section 27136, et seq., such requests for withdrawals must first be
made in writing to the County Treasurer. These requests are subject to the County
Treasurer’s consideration of the stability and predictability of the Pooled Investment
Fund, or the adverse effect on the interests of the other depositors in the Pooled
Investment Fund. Any withdrawal for such purposes shall be at the market value of
the Pooled Investment Fund as of the date of the withdrawal.
[b]
VOLUNTARY PARTICIPANTS - For outside participants who utilize
Government Code Section 53684, where the County Treasurer does not serve as the
agency’s treasurer, any withdrawal request, with the exception of normal cash flow
withdrawals, shall submit the request for withdrawal to the County Treasurer to
determine the timing of the payout, in order that the withdrawal will not adversely
affect the interests of the other depositors in the County Treasury Investment Fund.
Withdrawals will be paid based upon the market value of the Pooled Investment
Fund. If the Treasurer deems appropriate, the deposits may be returned at any time.
DELIVERY & SAFEKEEPING
Delivery of all securities shall be either to the County Treasurer or to a third party custodian. No
securities shall be held in the safekeeping of a broker / dealer unless it is collateral for a reverse
repurchase agreement.
19. APPORTIONMENT OF INTEREST & COSTS
Interest shall be apportioned to all pool participants quarterly, based upon the ratio of the average
daily balance of each individual fund to the average daily balance of all funds in the Investment
Pool. The amount of interest apportioned shall be determined using the accrual method of
accounting, whereby interest will be apportioned for the quarter in which it was actually earned.
The Treasurer shall deduct from the gross interest earnings those budgeted administrative costs
relating to the management of the Treasury, including salaries and other compensation, banking
costs, equipment costs, supplies, the cost of information services, audit and any other costs as
provided by Section 27013 of the Government Code. The deduction shall be adjusted to actual cost
in the fourth quarter of the fiscal year and/or the first quarter of the following fiscal year.
Revised 6/19/2012 7
20.
REVIEW, MONITORING AND REPORTING OF THE PORTFOLIO
Quarterly, the County Treasurer will provide to the Treasury Oversight Committee, the Board of
Supervisors, and to any local agency participant a report on the Pooled Investment Fund. The report
will list the type of investments, name of issuer, maturity date, par amount and dollar amount of the
investment. For the total Pooled Investment Fund, the report will list average maturity, the market
value and the pricing source. Additionally, the report will show any funds under the management of
contracting parties, a statement of compliance to the Investment Policy and a statement of the pooled
fund’s ability to meet the expected expenditure requirements for the next six months.
Annually, the County Treasurer shall provide to the Treasury Oversight Committee a Statement of
Investment Policy. Additionally, the County Treasurer will render a copy of the Statement of
Investment Policy to the Board of Supervisors and to the legislative body of the local agencies that
participate in the Pool.
21.
LIMITS ON HONORARIA, GIFTS AND GRATUITIES
In accordance with California Government Code Section 27133 (d), et seq., this Policy hereby
establishes limits for the County Treasurer, individuals responsible for management of the
portfolios, and members of the Oversight Committee. Any individual who receives an aggregate
total of gifts, honoraria and gratuities in excess of $50 in a calendar 12 month time period from a
broker/dealer, bank or service provider to the Pooled Investment Fund must report the gifts, dates
and firms to the County Treasurer and complete the appropriate state forms.
No individual may receive aggregate gifts, honoraria and gratuities in a calendar twelve (12) month
time period in excess of the limits established by the Fair Political Practices Commission (FPPC).
Any violation must be reported to the FPPC on an annual basis.
22.
AUDITS
The Treasury Oversight Committee shall initiate an annual audit to ensure the County’s Investment
Portfolio is in compliance with its policy and state law.
23.
EXCEPTION TO POLICY
The County Treasurer, except as prohibited by state law, can make exceptions to the investment
purchasing limits when he deems it in the best interest of all of the pool participants. All exceptions
will be reported in the quarterly report. Any State of California legislative action that further restricts
allowable maturities, investment type, or percentage allocations will become effective immediately.
Revised 6/19/2012
8
24.
INVESTMENT OF BOND PROCEEDS
The County Treasurer shall invest bond proceeds using the standards of the County of Sonoma’s
Investment Policy. The bond proceeds will be invested in securities permitted by the bond
documents. If the bond documents are silent, the bond proceeds will be invested in securities
permitted by the County of Sonoma’s Investment Policy.
25.
DISASTER RECOVERY PLAN
The County Treasurer’s Disaster Recovery Plan includes contact information for the Treasury
staff and key county personnel, as well as contact information for authorized banks and brokers.
Copies of the plan have been distributed to the investment staff: Assistant Treasurer, Treasury
Manager, and Revenue and Debt Manager.
In the event we are unable to conduct normal business operations, the investment staff shall
interact with one another by home phone, cell phone, or e-mail to decide on an alternate location
from which to conduct daily operations. If unable to contact one another, the investment staff
shall establish contact with one another through the County Office of Emergency Services.
Revised 6/19/2012
9
GLOSSARY OF TERMS
ACCRUED INTEREST
Interest that has accumulated but has not yet been paid from the most recent interest payment date or
issue date to a certain date.
BANKERS’ ACCEPTANCES
A time bill of exchange drawn on and accepted by a commercial bank to finance the exchange of
goods. When a bank “accepts” such a bill, the time draft becomes, in effect, a predated, certified
check payable to the bearer at some future specified date. Little risk is involved for the investor
because the commercial bank assumes primary liability once the draft is accepted.
BASIS POINT
One basis point is equal to 1/100 of one percent. For example, if interest rates increase from 4.25%
to 4.50%, the difference is referred to as a 25-basis-point increase.
BOOK VALUE
The value of a held security as carried in the records of an investor. May differ from current market
value of the security.
BROKER/DEALER
Any person engaged in the business of effecting transactions in securities in this state for the account
of others or for her/his own account. Broker/dealer also includes a person engaged in the regular
business of issuing or guaranteeing options with regard to securities not of her/his own issue.
COMMERCIAL PAPER
Short-term, unsecured promissory notes issued in either registered or bearer form and usually backed
by a line of credit with a bank. Maturities do not exceed 270 days and generally average 30-45 days.
COUPON RATE
The annual rate of interest payable on a security expressed as a percentage of the principal amount.
CREDIT RISK
The risk to an investor that an issuer will default in the payment of interest and/or principal on a
security.
CURRENT YIELD
The annual income from an investment divided by the current market value. Since the mathematical
calculation relies on the current market value rather than the investor’s cost, current yield is
unrelated to the actual return the investor will earn if the security is held to maturity.
Revised 6/19/2012
10
CUSIP NUMBERS
CUSIP is an acronym for Committee on Uniform Security Identification Procedures. CUSIP
numbers are identification numbers assigned each maturity of a security issue and usually printed on
the face of each individual security in the issue. The CUSIP numbers are intended to facilitate
identification and clearance of securities.
DISCOUNT
The amount by which the par value of a security exceeds the price paid for the security.
EARNINGS APPORTIONMENT
The quarterly interest distribution to the Pool Participants where the actual investment costs incurred
by the Treasurer are deducted from the interest earnings of the Pool.
FAIR VALUE
The amount at which an investment could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale.
FEDERAL FUNDS
Funds placed in Federal Reserve banks by depository institutions in excess of current reserve
requirements. These depository institutions may lend Fed funds to each other overnight or on a
longer basis. They may also transfer funds among each other on a same-day basis through the
Federal Reserve banking system. Fed funds are considered to be immediately available funds.
FEDERAL FUNDS RATE
Interest rate at which banks lend federal funds to each other.
FEDERAL OPEN MARKET COMMITTEE (FOMC)
This committee sets Federal Reserve guidelines regarding purchases and sales of government
securities in the open market as a means of influencing the volume of bank credit and money.
FLOATING RATE NOTE
A debt security whose interest rate is reset periodically (monthly, quarterly, annually) and is based
on a market index (e.g. Treasury bills, LIBOR, etc.).
INTEREST
The amount earned while owning a debt security, generally calculated as a percentage of the
principal amount.
LOCAL AGENCY INVESTMENT FUND (LAIF)
The State of California investment pool in which money of local agencies is pooled as a method for
managing and investing local funds.
MARKET VALUE
The price at which a security is trading and could presumably be purchased or sold.
Revised 6/19/2012
11
MATURITY
The date upon which the principal of a security becomes due and payable to the holder.
MONEY MARKET MUTUAL FUND
A mutual fund with investments directed in short-term money market instruments only, which can
be withdrawn daily without penalty.
PAR
The stated maturity value, or face value, of a security.
PAR VALUE
The stated or face value of a security expressed as a specific dollar amount marked on the face of the
security; the amount of money due at maturity. Par value should not be confused with market value.
PREMIUM
The amount by which the price paid for a security exceeds the security’s par value.
PRIME RATE
A preferred interest rate charged by commercial banks to their most creditworthy customers. Many
interest rates are keyed to this rate.
REPURCHASE AGREEMENT OR RP OR REPO
An agreement consisting of two simultaneous transactions whereby the investor purchases securities
from a bank or dealer and the bank or dealer agrees to repurchase the securities at the same price on
a certain future date. The interest rate on a RP is that which the dealer pays the investor for the use
of his funds. Reverse repurchase agreements are the mirror image of the RPs when the bank or
dealer purchases securities from the investor under an agreement to sell them back to the investor.
SECURITIES LENDING
A transaction wherein the Treasurer’s Pool transfers its securities to broker/dealers and other entities
for collateral which may be cash or securities and simultaneously agrees to return the collateral for
the same securities in the future.
SETTLEMENT DATE
The date on which the purchase or sale of securities is executed. For example, in a purchase
transaction, the day securities are physically delivered or wired to the buyer in exchange for cash is
the settlement date.
TRADE DATE
The date and time corresponding to an investor’s commitment to buy or sell a security.
WEIGHTED AVERAGE MATURITY
The remaining average maturity of all securities held in a portfolio.
Revised 6/19/2012
12
QUARTERLY REPORT AND CERTIFICATION OF THE COUNTY TREASURER For Quarter Ending March 31, 2013 The Government Code requires the County Treasurer to render a Quarterly Report to the
County Administrator, the Board of Supervisors, the County Auditor, the Treasury Oversight
Committee, and the participants of the Treasury Pool.
The Quarterly Report shall state compliance of the portfolio to the County Investment Policy and
denote the ability of the pool to meet its pool's expenditures for the next six months, or provide
an explanation as to why sufficient money shall or may not be available.
COMPLIANCE CERTIFICATION
I certify that the investments of the Sonoma County Investment Pool are in compliance
with the County Investment Policy.
I further certify that the pool has sufficient cash flow available to meet all budgeted
expenditure requirements for the next six months.
~l!:(JfY(
Treasurer
County of Sonoma
SONOMA COUNTY POOLED INVESTMENT PROGRAM For Quarter Ending March 31, 2013 BEGINNING FUND BALANCE (01/01/2013)
$1,493,778,741
ENDING FUND BALANCE
$1,478,334,975
AVERAGE DAILY FUND BALANCE
$1,464,487,265
TOTAL INTEREST EARNED (after fees)
$2,721,772
INTEREST RATE (after fees)
0.754
INTEREST RATE (before fees)
0.828
TOTAL FUNDS MANAGED BY TREASURY
TOTAL TREASURY BALANCE
(including deferred compensation, tobacco
endowment, special TRAN investments,
active bank accounts and money in transit)
2
$1,769,288,021
SONOMA COUNTY QUARTERLY INVESTMENT REPORT Quarter Ending March 31, 2013 INVESTMENT POOL YIELD:
The yield during this quarter is .828% before fees and .754% after fees.
MARKET VALUE:
The market value of the portfolio as of March 31, 2013, is at 100.12% of cost. The
market values are down from the last Quarterly Report. Market values were obtained
from Sungard Financial Systems and Bloomberg.
REVERSE REPURCHASE AGREEMENTS:
The pool has no reverse repurchase agreements.
WEIGHTED AVERAGE MATURITY:
The weighted average days to maturity is 1,155 days. Excluding SCEIP investments, the weighted average days to maturity is 1,028 days. CHARTS:
Chart 1:
Chart 2:
The composition of the Investment Pool by the type of investment.
Interest earnings of the Sonoma County Investment Pool compared to
FED FUNDS and Local Agency Investment Fund.
DETAILED LISTING OF INVESTMENTS:
A detailed listing of all investments for the Pooled Investment Fund is located at the end
of this report.
3
SONOMA COUNTY'S POOLED INVESTMENTS AS OF 3/31/2013
67.14%
9.81%
1.13%
2.31%
16.31%
3.30%
OTHER GOVERNMENT POOLS & JPA's 3.30%
OTHER GOVERNMENTS 67.13%
TREASURY BILLS AND NOTES 9.81%
CASH, CHECKS, AND WARRANTS 1.14%
MONEY MARKET MUTUAL FUNDS 2.31%
CORPORATE BONDS AND NOTES 16.31%
4
SONOMA COUNTY TREASURER INVESTMENT POOL QUARTERLY YIELD COMPARISON
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
Pool
Jun-08
3.25%
Sep-08
3.04%
Dec-08
2.84%
Mar-09
2.06%
Jun-09
1.75%
Sep-09
1.19%
Dec-09
0.94%
Mar-10
1.03%
Jun-10
0.93%
Sep-10
0.94%
Dec-10
0.70%
Mar-11
0.74%
Jun-11
0.70%
Sep-11
0.99%
Dec-11
1.00%
Mar-12
1.04%
Jun-12
0.99%
Sep-12
0.93%
Dec-12
0.83%
Mar-13
0.83%
Fed Fund
2.00%
2.00%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
LAIF
3.11%
2.78%
2.53%
1.92%
1.52%
0.90%
0.60%
0.56%
0.56%
0.51%
0.47%
0.52%
0.38%
0.39%
0.39%
0.39%
0.36%
0.35%
0.32%
0.28%
*This does not include special TRAN investments & deferred compensation
Source: County of Sonoma, Office of the Auditor-Controller-Treasurer-Tax Collector
5
BOOK VALUE
$1,577,738
CHECKS AND WARRANTS IN TRANSIT
$111,899
CASH IN VAULT
$14,973,821
CASH IN BANK
$145,081,198
TREASURY BILLS AND NOTES
$0
BANKERS ACCEPTANCES
$992,459,188
OTHER GOVERNMENTS
$0
COMMERCIAL PAPER
$241,139,298
CORPORATE BONDS AND NOTES
NEGOTIABLE CERTIFICATES OF DEPOSIT
$0
OTHER GOVERNMENT POOLS AND JPA'S
$48,802,597
MONEY MARKET MUTUAL FUNDS
$34,189,236
$1,478,334,975
TOTAL
6
SONOMA COUNTY TREASURY POOLED INVESTMENT INVENTORY
AS OF MARCH 31, 2013
Description
Maturity Date
Purchase Date
Coupon Rate
Trading Yield
Current Par /
Shares
Current Book /
Shares
TREASURY NOTES
05/15/2013
04/15/2011
1.37500
.80641
10,000,000.00
TREASURY NOTES
05/31/2013
06/01/2011
.50000
.45673
40,000,000.00
40,002,825.35
TREASURY NOTES
07/15/2013
02/02/2012
1.00000
.20131
20,000,000.00
20,045,900.28
TREASURY NOTES
07/31/2013
02/03/2012
.37500
.20183
10,000,000.00
10,005,734.44
TREASURY NOTES
07/15/2014
10/19/2012
.62500
.28248
15,000,000.00
15,066,024.26
TREASURY NOTES
07/31/2014
10/26/2012
.12500
.29389
20,000,000.00
19,955,122.48
TREASURY NOTES
05/15/2015
11/27/2012
.25000
.31363
15,000,000.00
14,981,064.42
TREASURY NOTES
06/15/2015
11/27/2012
.37500
.32110
15,000,000.00
15,017,751.39
145,000,000.00
145,081,198.24
SUBTOTAL TREASURY BILLS AND NOTES
9.81%
10,006,775.62
SCTA SERIES 2012-1
06/01/2013
04/19/2012
1.25000
1.25000
112,500.00
112,500.00
FHLMC
06/21/2013
04/08/2010
1.87500
1.96599
6,000,000.00
5,998,836.93
FEDERAL FARM CREDIT BANK
06/25/2013
05/25/2010
1.37500
1.47900
10,000,000.00
9,997,646.86
HRMS 2012-1
06/30/2013
07/01/2012
1.25000
1.25000
2,775,000.00
2,775,000.00
AIRPORT NOTE 2013-2
06/30/2013
07/01/2012
1.17000
1.17000
310,000.00
310,000.00
AIRPORT NOTE 2013-1
06/30/2013
07/01/2012
1.17000
1.17000
500,000.00
500,000.00
FAIR 2013-1
06/30/2013
07/01/2012
1.17000
1.17000
1,200,000.00
1,200,000.00
FEDERAL HOME LOAN BANK
11/27/2013
11/14/2011
.37500
.42339
10,000,000.00
9,996,838.70
12/23/2013
12/23/2010
1.30000
1.30614
5,000,000.00
4,999,781.58
9,992,611.54
04/21/2014
08/31/2011
.24600
.32068
10,000,000.00
SCEIP 2009A-5
09/02/2014
08/03/2009
3.00000
3.00000
950.36
950.36
SCEIP 2009B-5
09/02/2014
09/01/2009
3.00000
3.00000
2,168.05
2,168.05
10/16/2014
11/02/2012
.25000
.30030
10,000,000.00
9,993,372.83
FHLMC
11/25/2014
10/06/2011
.75000
.76104
5,000,000.00
4,999,105.52
FEDERAL NATL MTG ASSN
12/23/2014
12/23/2011
.82500
.82500
5,000,000.00
5,000,000.00
12/26/2014
12/26/2012
.32000
.32000
5,000,000.00
5,000,000.00
FHLMC
02/13/2015
02/13/2012
.55000
.55000
5,000,000.00
5,000,000.00
04/15/2015
11/28/2012
.41000
.41000
10,000,000.00
10,004,897.22
04/24/2015
08/06/2012
.45000
.45000
15,000,000.00
15,000,000.00
04/30/2015
04/30/2012
.65000
.65000
10,000,000.00
10,000,000.00
FHLMC
05/22/2015
05/22/2012
.60000
.60337
10,000,000.00
9,999,286.76
06/18/2015
12/26/2012
.32000
.36463
10,000,000.00
9,990,879.25
07/29/2015
02/06/2013
.34000
.40083
10,000,000.00
9,986,558.12
07/30/2015
02/04/2013
.37500
.37500
5,000,000.00
5,000,208.33
07/30/2015
03/21/2013
.37500
.37500
5,000,000.00
5,002,656.25
08/10/2015
02/10/2012
.59000
.61893
15,000,000.00
14,989,886.44
08/28/2015
02/28/2013
.40000
.40000
10,000,000.00
10,000,000.00
SCEIP 2009C-5
09/02/2015
11/02/2009
3.00000
3.00000
16,134.89
16,134.89
SCEIP 2009D-5
09/02/2015
12/01/2009
3.00000
3.00000
1,714.52
1,714.52
SCEIP 2010A-5
09/02/2015
01/04/2010
3.00000
3.00000
9,269.09
9,269.09
SCEIP 2010B-5
09/02/2015
03/01/2010
3.00000
3.00000
38,216.18
38,216.18
SCEIP 2010C-5
09/02/2015
04/01/2010
3.00000
3.00000
6,233.26
6,233.26
SCEIP 2010D-5
09/02/2015
06/30/2010
3.00000
3.00000
2,746.10
2,746.10
FHLMC
09/25/2015
02/04/2013
.50000
.50000
10,000,000.00
10,000,000.00
10/15/2015
12/26/2012
.42000
.42000
10,000,000.00
10,000,000.00
12/10/2015
12/10/2012
.25220
.25220
10,000,000.00
10,000,000.00
FHLMC
12/18/2015
03/18/2013
.40000
.42748
10,000,000.00
9,992,604.48
12/21/2015
12/21/2012
.41000
.42679
10,000,000.00
9,995,461.18
12/28/2015
12/28/2012
.45000
.45000
10,000,000.00
10,000,000.00
02/22/2016
08/30/2012
.60000
.60290
10,000,000.00
9,999,168.36
02/24/2016
03/05/2012
.80000
.87705
3,120,000.00
3,113,168.66
/ /
03/23/2016
07/31/2012
/ /
.62500
.62500
20,000,000.00
,
,
20,000,000.00
,
,
7
Description
Maturity Date
Purchase Date
Coupon Rate
Trading Yield
Current Par /
Shares
Current Book /
Shares
03/28/2016
03/28/2013
.50000
.51682
10,000,000.00
9,995,018.25
FHLMC
04/04/2016
10/04/2012
.60000
.60000
5,850,000.00
5,850,000.00
12,200,000.00
04/11/2016
04/11/2012
1.04000
1.04000
12,200,000.00
04/11/2016
04/11/2012
1.04000
1.04000
5,000,000.00
5,000,000.00
04/20/2016
04/20/2011
.27320
.27830
10,000,000.00
9,998,474.27
05/02/2016
08/02/2012
.59000
.61708
10,000,000.00
9,991,743.97
05/09/2016
05/09/2012
.90000
.90000
10,000,000.00
10,000,000.00
FHLMC
06/14/2016
12/14/2011
1.25000
1.25000
5,000,000.00
5,000,000.00
10,000,000.00
06/27/2016
09/28/2012
.62000
.62000
10,000,000.00
06/27/2016
09/27/2012
.59000
.59000
5,000,000.00
5,000,000.00
06/27/2016
09/28/2012
.59000
.59000
15,650,000.00
15,650,000.00
07/19/2016
07/24/2012
.71000
.71000
20,000,000.00
20,000,000.00
08/15/2016
08/15/2011
2.00000
2.00000
5,000,000.00
5,000,000.00
08/15/2016
08/15/2011
2.00000
2.00000
5,000,000.00
5,000,000.00
08/15/2016
02/15/2013
.60000
.62893
10,000,000.00
9,990,352.39
FHLMC
09/14/2016
03/14/2013
.65000
.65000
10,000,000.00
10,000,000.00
09/26/2016
03/26/2013
.65000
.65000
10,000,000.00
10,000,000.00
09/26/2016
09/27/2012
.68000
.68000
12,875,000.00
12,875,000.00
10/17/2016
11/30/2012
.62500
.62500
14,795,000.00
14,806,044.88
10/24/2016
07/24/2012
.89000
.89000
5,000,000.00
5,000,000.00
10/24/2016
11/09/2012
.62500
.63140
10,000,000.00
10,000,351.56
10/25/2016
01/25/2013
.65000
.65000
6,530,000.00
6,530,000.00
10/28/2016
10/28/2011
1.37500
1.37500
10,000,000.00
10,000,000.00
10,347,563.97
11/21/2016
12/04/2012
.62000
.63278
10,350,000.00
12/05/2016
12/05/2012
.61000
.61000
11,000,000.00
11,000,000.00
12/20/2016
06/20/2012
1.02000
1.02000
10,000,000.00
10,000,000.00
01/25/2017
01/25/2013
.70000
.70000
2,750,000.00
2,750,000.00
FHLMC
03/21/2017
03/21/2013
.80000
.80000
10,000,000.00
10,000,000.00
03/24/2017
09/24/2012
.50000
.50225
10,000,000.00
9,999,115.10
04/24/2017
04/24/2012
.50200
.50200
15,000,000.00
15,000,000.00
FHLMC
05/15/2017
05/15/2012
1.25000
1.25000
10,000,000.00
10,000,000.00
05/16/2017
05/16/2012
1.32000
1.32000
6,000,000.00
6,000,000.00
06/05/2017
12/05/2012
.77000
.78360
25,000,000.00
24,986,068.17
FHLMC
06/07/2017
06/07/2012
1.15000
1.15000
10,000,000.00
10,000,000.00
06/20/2017
06/20/2012
1.00000
1.00000
8,765,000.00
8,765,000.00
06/28/2017
06/28/2012
1.12500
1.12500
15,000,000.00
15,000,000.00
FHLMC
07/24/2017
07/24/2012
1.12500
1.13532
20,000,000.00
19,991,374.58
08/07/2017
08/07/2012
.97000
.97000
15,000,000.00
15,000,000.00
08/09/2017
08/09/2012
1.00000
1.00514
15,000,000.00
14,996,732.59
FHLMC
08/14/2017
08/29/2012
1.00000
1.00000
10,000,000.00
10,000,000.00
08/14/2017
08/14/2012
.62500
.62500
10,000,000.00
10,000,000.00
08/16/2017
08/16/2012
.75000
.75408
10,000,000.00
9,998,249.71
08/23/2017
08/23/2012
.95000
.95000
10,000,000.00
10,000,000.00
08/28/2017
08/28/2012
1.10000
1.10000
5,000,000.00
5,000,000.00
08/30/2017
11/30/2012
.90000
.90000
12,500,000.00
12,500,000.00
09/06/2017
09/06/2012
1.08000
1.08000
7,425,000.00
7,425,000.00
FHLMC
09/12/2017
09/17/2012
1.00000
1.00000
10,000,000.00
10,000,000.00
10/10/2017
10/10/2012
.90000
.90000
10,000,000.00
10,000,000.00
10/16/2017
10/16/2012
1.00000
1.00000
10,000,000.00
10,000,000.00
10/23/2017
10/26/2012
.90000
.92054
10,000,000.00
9,991,611.21
10/30/2017
02/27/2013
.85000
.89928
10,760,000.00
10,743,117.80
/ /
11/08/2017
11/09/2012
/ /
.62500
.63518
10,000,000.00
,
,
9,995,565.38
,
,
8
Description
Maturity Date
Purchase Date
Coupon Rate
Trading Yield
Current Par /
Shares
Current Book /
Shares
11/15/2017
11/15/2012
1.05000
1.05000
10,000,000.00
10,000,000.00
11/20/2017
11/20/2012
.85000
.85000
10,000,000.00
10,000,000.00
11/27/2017
11/27/2012
.90000
.90000
15,000,000.00
15,000,000.00
11/28/2017
11/28/2012
.92000
.92000
20,000,000.00
20,000,000.00
12/13/2017
12/13/2012
.80000
.80000
10,000,000.00
10,000,000.00
12/13/2017
12/13/2012
.70000
.72550
10,000,000.00
9,988,246.17
FHLMC
12/20/2017
12/20/2012
.92000
.92000
13,810,000.00
13,810,000.00
12/28/2017
12/28/2012
.95000
.95000
15,000,000.00
15,000,000.00
FHLMC
01/11/2018
01/11/2013
1.00000
1.00822
15,000,000.00
14,994,262.86
FHLMC
01/16/2018
01/16/2013
1.05000
1.05000
20,000,000.00
20,000,000.00
01/30/2018
01/30/2013
1.00000
1.00000
10,000,000.00
10,000,000.00
SCEIP 2009A-10
09/02/2019
07/01/2009
3.00000
3.00000
96,002.47
96,002.47
SCEIP 2009B-10
09/02/2019
08/03/2009
3.00000
3.00000
111,013.01
111,013.01
SCEIP 2009C-10
09/02/2019
09/01/2009
3.00000
3.00000
72,298.00
72,298.00
SCEIP 2009D-10
09/02/2019
10/01/2009
3.00000
3.00000
618,164.14
618,164.14
SCEIP 2009E-10
09/02/2020
11/02/2009
3.00000
3.00000
111,447.29
111,447.29
SCEIP 2009F-10
09/02/2020
12/01/2009
3.00000
3.00000
110,473.69
110,473.69
SCEIP 2010A-10
09/02/2020
01/04/2010
3.00000
3.00000
161,883.52
161,883.52
SCEIP 2010B-10
09/02/2020
02/01/2010
3.00000
3.00000
78,986.49
78,986.49
139,120.46
SCEIP 2010C-10
09/02/2020
03/01/2010
3.00000
3.00000
139,120.46
SCEIP 2010D-10
09/02/2020
04/01/2010
3.00000
3.00000
96,159.03
96,159.03
SCEIP 2010E-10
09/02/2020
05/03/2010
3.00000
3.00000
40,387.15
40,387.15
SCEIP 2010F-10
09/02/2020
06/01/2010
3.00000
3.00000
166,602.41
166,602.41
SCEIP 2010G-10
09/02/2020
06/30/2010
3.00000
3.00000
150,307.39
150,307.39
SCEIP 2010H-10
09/02/2020
08/02/2010
3.00000
3.00000
195,574.53
195,574.53
SCEIP 2010I-10
09/02/2020
09/01/2010
3.00000
3.00000
50,838.36
50,838.36
SCEIP 2010J-10
09/02/2021
10/01/2010
3.00000
3.00000
94,730.62
94,730.62
SCEIP 2010L-10
09/02/2021
12/01/2010
3.00000
3.00000
249,650.17
249,650.17
SCEIP 2011A-10
09/02/2021
01/03/2011
3.00000
3.00000
35,691.13
35,691.13
SCEIP 2011B-10
09/02/2021
02/01/2011
3.00000
3.00000
83,309.12
83,309.12
SCEIP 2011C-10
09/02/2021
03/01/2011
3.00000
3.00000
75,954.19
75,954.19
SCEIP 2011D-10
09/02/2021
04/01/2011
3.00000
3.00000
254,943.96
254,943.96
SCEIP 2011E-10
09/02/2021
05/02/2011
3.00000
3.00000
108,776.72
108,776.72
SCEIP 2011F-10
09/02/2021
06/01/2011
3.00000
3.00000
154,655.17
154,655.17
SCEIP 2011G-10
09/02/2021
06/30/2011
3.00000
3.00000
56,540.74
56,540.74
SCEIP 2011H-10
09/02/2021
08/01/2011
3.00000
3.00000
155,442.60
155,442.60
SCEIP 2011I-10
09/02/2021
09/01/2011
3.00000
3.00000
107,227.50
107,227.50
SCEIP 2010K-10
09/21/2021
11/01/2010
3.00000
3.00000
83,058.80
83,058.80
SCEIP 2011J-10
09/02/2022
10/03/2011
3.00000
3.00000
12,244.34
12,244.34
SCEIP 2011K-10
09/02/2022
11/01/2011
3.00000
3.00000
115,131.77
115,131.77
SCEIP 2011L-10
09/02/2022
12/01/2011
3.00000
3.00000
28,395.55
28,395.55
SCEIP 2012A-10
09/02/2022
01/03/2012
3.00000
3.00000
25,368.47
25,368.47
13,779.58
SCEIP 2012B-10
09/02/2022
02/01/2012
3.00000
3.00000
13,779.58
SCEIP 2012C-10
09/02/2022
03/01/2012
3.00000
3.00000
11,939.13
11,939.13
SCEIP 2012D-10
09/02/2022
04/02/2012
3.00000
3.00000
30,007.61
30,007.61
99,843.96
SCEIP 2012F-10
09/02/2022
06/01/2012
3.00000
3.00000
99,843.96
SCEIP 2012G-10
09/02/2022
06/29/2012
3.00000
3.00000
7,616.35
7,616.35
SCEIP 2012H-10
09/02/2022
08/01/2012
3.00000
3.00000
62,725.26
62,725.26
SCEIP 2012I-10
09/02/2022
09/04/2012
3.00000
3.00000
13,092.08
13,092.08
SCEIP 2012J-10
09/02/2023
11/01/2012
3.00000
3.00000
91,921.49
91,921.49
SCEIP 2012K-10
09/02/2023
12/03/2012
3.00000
3.00000
9,374.99
9,374.99
SCEIP 2013A-10
/ /
09/02/2023
01/02/2013
/ /
3.00000
3.00000
10,429.58
,
10,429.58
,
9
Description
Maturity Date
Purchase Date
Coupon Rate
Trading Yield
Current Par /
Shares
Current Book /
Shares
SCEIP 2013B-10
09/02/2023
02/01/2013
3.00000
3.00000
15,129.55
SCEIP 2013C-10
09/02/2023
03/01/2013
3.00000
3.00000
61,282.47
15,129.55
61,282.47
SCEIP 2009B-20
09/02/2029
06/01/2009
3.00000
3.00000
212,350.23
212,350.23
SCEIP 2009C-20
09/02/2029
07/01/2009
3.00000
3.00000
299,223.48
299,223.48
SCEIP 2009D-20
09/02/2029
08/03/2009
3.00000
3.00000
652,213.81
652,213.81
SCEIP 2009E-20
09/02/2029
09/01/2009
3.00000
3.00000
3,246,372.89
3,246,372.89
SCEIP 2009F-20
09/02/2029
10/01/2009
3.00000
3.00000
1,269,670.64
1,269,670.64
SCEIP 2009G-20
09/02/2030
11/02/2009
3.00000
3.00000
1,316,956.29
1,316,956.29
SCEIP 2009H-20
09/02/2030
12/01/2009
3.00000
3.00000
2,146,169.46
2,146,169.46
SCEIP 2010A-20
09/02/2030
01/04/2010
3.00000
3.00000
2,308,939.23
2,308,939.23
SCEIP 2010B-20
09/02/2030
02/01/2010
3.00000
3.00000
1,486,419.54
1,486,419.54
SCEIP 2010C-20
09/02/2030
03/01/2010
3.00000
3.00000
1,528,547.68
1,528,547.68
SCEIP 2010D-20
09/02/2030
04/01/2010
3.00000
3.00000
1,641,536.59
1,641,536.59
SCEIP 2010E-20
09/02/2030
05/03/2010
3.00000
3.00000
1,240,837.14
1,240,837.14
SCEIP 2010F-20
09/02/2030
06/01/2010
3.00000
3.00000
1,612,988.24
1,612,988.24
SCEIP 2010G-20
09/02/2030
06/30/2010
3.00000
3.00000
1,265,193.50
1,265,193.50
SCEIP 2010H-20
09/02/2030
08/02/2010
3.00000
3.00000
1,540,531.45
1,540,531.45
SCEIP 2010I-20
09/02/2030
09/01/2010
3.00000
3.00000
1,358,092.81
1,358,092.81
SCEIP 2010J-20
09/02/2031
10/01/2010
3.00000
3.00000
825,687.35
825,687.35
SCEIP 2010K-20
09/02/2031
11/01/2010
3.00000
3.00000
1,115,492.67
1,115,492.67
SCEIP 2010L-20
09/02/2031
12/01/2010
3.00000
3.00000
1,357,904.70
1,357,904.70
SCEIP 2011A-20
09/02/2031
01/03/2011
3.00000
3.00000
1,150,586.07
1,150,586.07
SCEIP 2011B-20
09/02/2031
02/01/2011
3.00000
3.00000
1,084,916.16
1,084,916.16
SCEIP 2011C-20
09/02/2031
03/01/2011
3.00000
3.00000
926,813.08
926,813.08
SCEIP 2011D-20
09/02/2031
04/01/2011
3.00000
3.00000
902,073.71
902,073.71
SCEIP 2011E-20
09/02/2031
05/02/2011
3.00000
3.00000
689,104.59
689,104.59
SCEIP 2011F-20
09/02/2031
06/01/2011
3.00000
3.00000
607,700.72
607,700.72
SCEIP 2011G-20
09/02/2031
06/30/2011
3.00000
3.00000
1,208,550.59
1,208,550.59
992,617,325.91
992,459,187.78
SUBTOTAL OTHER GOVERNMENTS
67.13%
GE CAP CORP MTN
05/01/2013
03/13/2012
4.80000
.65097
5,000,000.00
5,016,945.65
GE CAP CORP MTN
05/01/2013
02/09/2012
4.80000
.83738
10,000,000.00
10,032,409.39
14,998,402.45
GE CAP CORP MTN
05/08/2013
01/25/2012
.44300
.55493
15,000,000.00
WACHOVIA CORP MTN
08/01/2013
08/10/2012
5.70000
.58847
23,000,000.00
23,391,105.96
GE CAP CORP MTN
09/16/2013
01/17/2012
1.87500
1.28533
25,000,000.00
25,066,799.35
5,062,436.98
GE CAP CORP MTN
01/07/2014
11/14/2012
2.10000
.47043
5,000,000.00
GE CAP CORP MTN
05/13/2014
04/16/2012
5.90000
1.20025
5,000,000.00
5,258,125.11
GE CAP CORP MTN
05/13/2014
08/14/2012
5.90000
.73011
2,168,000.00
2,292,086.74
GE CAP CORP MTN
06/09/2014
04/16/2012
5.65000
1.22034
5,000,000.00
5,259,016.05
WELLS FARGO CO MTN
10/01/2014
03/13/2012
3.75000
1.18027
5,000,000.00
5,189,212.86
WELLS FARGO CO MTN
10/01/2014
03/21/2012
3.75000
1.15002
5,000,000.00
5,191,533.14
WELLS FARGO CO MTN
10/01/2014
01/27/2012
3.75000
1.28800
5,000,000.00
5,180,943.67
GE CAP CORP MTN
11/14/2014
03/13/2012
3.75000
1.05036
5,000,000.00
5,214,933.59
GE CAP CORP MTN
01/09/2015
05/22/2012
2.15000
1.57699
5,000,000.00
5,049,509.38
GE CAP CORP MTN
06/29/2015
05/22/2012
3.50000
1.71695
5,000,000.00
5,193,870.94
WELLS FARGO CO MTN
07/01/2015
02/06/2013
1.50000
.78515
7,100,000.00
7,223,472.02
WELLS FARGO CO MTN
06/15/2016
03/28/2013
3.67600
1.03498
10,000,000.00
10,843,239.38
15,000,000.00
TOYOTA
06/20/2016
12/20/2012
.65000
.65000
15,000,000.00
IBM MTN
07/22/2016
05/08/2012
1.95000
1.12018
5,000,000.00
5,133,658.58
WELLS FARGO CO MTN
12/15/2016
04/09/2012
2.62500
2.00008
10,000,000.00
10,219,916.18
GE CAP CORP MTN
/ /
04/27/2017
05/23/2012
/ /
2.30000
2.50006
5,000,000.00
,
,
4,961,875.00
,
,
10
Description
Maturity Date
Purchase Date
Coupon Rate
Trading Yield
Current Par /
Shares
Current Book /
Shares
GE CAP CORP MTN
04/27/2017
11/06/2012
2.30000
1.41507
5,000,000.00
5,176,980.57
WELLS FARGO CO MTN
05/08/2017
11/06/2012
2.10000
1.36301
5,000,000.00
5,146,246.35
CATEPILLAR
11/06/2017
12/03/2012
1.25000
1.10708
5,000,000.00
5,036,578.54
GE CAP CORP MTN
12/07/2017
12/07/2012
1.00000
1.00000
25,000,000.00
25,000,000.00
TOYOTA
12/20/2017
12/20/2012
1.00000
1.00000
20,000,000.00
20,000,000.00
237,268,000.00
241,139,297.88
31,577,255.18
SUBTOTAL CORPORATE NOTES AND BONDS
16.31%
CAMP
04/01/2013
07/08/2002
.14160
.14160
31,577,255.18
FEDERATED MUTUAL FUND
07/01/2013
09/30/2011
.08360
.08360
2,611,980.90
2,611,980.90
34,189,236.08
34,189,236.08
SUBTOTAL MONEY MARKET MUTUAL FUNDS
LOCAL AGENCY INVESTMENT FUND
2.31%
48,802,597.24
48,802,597.24
SUBTOTAL GOVERNMENT POOLS AND JPA'S
3.30%
48,802,597.24
48,802,597.24
CASH IN BANK
1.01%
14,973,821.19
14,973,821.19
CHECK AND WARRANTS IN TRANSIT
0.11%
1,577,737.84
1,577,737.84
CASH IN VAULT
0.01%
111,899.17
111,899.17
GRAND TOTAL
04/01/2013
11/04/2002
.27700
.27700
,
,
,
1,474,540,617.43
100%
11
1,478,
,
,334,975.42
,

2200000* GUERNEVILLE ELEMENTARY SCHOOL

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