THE BOARD OF EDUCATION OF THE REGIONAL SCHOOL

This is a Preliminary Official Statement and the information contained herein is subject to completion, amendment or other change without notice. The securities described herein may not be sold nor may offers to buy be accepted prior to the time the Official
Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the 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 applicable securities laws of any such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED JUNE 15, 2016
THE BOARD OF EDUCATION OF THE REGIONAL SCHOOL DISTRICT INCLUDING
THE SCHOOL DISTRICTS OF MANALAPAN TOWNSHIP
AND ENGLISHTOWN BOROUGH
MONMOUTH COUNTY, NEW JERSEY
$__________* REFUNDING SCHOOL BONDS, SERIES 2016
(Book-Entry Bonds) (Callable)
Dated: Date of Delivery
Due: October 1, as shown on
the inside cover page
This Official Statement has been prepared by The Board of Education of the Regional School District including the School Districts of Manalapan
Township and Englishtown Borough, a school district of the State of New Jersey (the “Board” when referring to the governing body and
the “School District” when referring to the legal entity or the territorial boundaries governed by the Board) to provide information on its
$__________* Refunding School Bonds, Series 2016 (the “Bonds”). Select information is presented on this cover page and the following page
for the convenience of the user. To make an informed decision regarding the Bonds, a prospective investor should read this Official Statement
in its entirety.
Bond Rating S&P: “AA” (See “Credit Rating” herein).
Federal
Tax Exemption Assuming continuing compliance by the School District with certain covenants described herein, under
current law, interest on the Bonds is exempt from federal income taxation. Interest on the Bonds is not included when
calculating the federal alternative minimum tax on individuals. However, interest on the Bonds is included when
calculating the federal alternative minimum tax on corporations.
State Tax Exemption Interest and any gain from the sale of the Bonds are not includable as gross income under the New
Jersey Gross Income Tax Act.
Redemption
The Bonds are subject to redemption prior to their state maturities as more fully described herein.
Security
The Bonds are valid and legally binding general obligations of the School District and, unless paid from other sources,
are payable from ad valorem taxes to be levied upon all the taxable property within the School District without limitation
as to rate or amount. Further, the Bonds are secured under the provisions of the New Jersey School Bond Reserve Act
(N.J.S.A. 18A:56-17, et seq.).
Purpose
Proceeds from the sale and issuance of the Bonds will be used by the Board as described herein.
Denominations
Increments of $5,000, plus integral multiples of $1,000 in excess thereof.
Interest Payment Dates
October 1, 2016 and semiannually thereafter on the April 1 and October 1 in each year until maturity.
Interest Rates See inside cover.
Bond Counsel
Waters, McPherson, McNeill, P.C.
Closing
On or about July 8, 2016.
Book-Entry
System
The Depository Trust Company, New York, New York.
Issuer Contact
Veronica Wolf, Business Administrator / Board Secretary
(732) 786-2514
* Preliminary, subject to change.
THE BOARD OF EDUCATION OF THE REGIONAL SCHOOL DISTRICT INCLUDING THE
SCHOOL DISTRICTS OF MANALAPAN TOWNSHIP AND ENGLISHTOWN BOROUGH
MONMOUTH COUNTY, NEW JERSEY
MEMBERS OF THE BOARD
Dotty Porcaro, Board President
Joanne Schechter, Vice President
Gerald Bruno
Brian Graime
Annamarie Galante
Christine Parisi
Lori Semel
Joe Tringali
Michele Stipelman
SUPERINTENDENT
John J. Marciante, Jr., Ph.D.
BUSINESS ADMINSTRATOR / BOARD SECRETARY
Veronica Wolf
BOARD ATTORNEY
Cleary Giacobbe Alfieri Jacobs, LLC
Matawan, New Jersey
BOARD AUDITOR
Jump, Perry and Company, L.L.P.
Toms River, New Jersey
MUNICIPAL ADVISOR
Phoenix Advisors, LLC
Bordentown, New Jersey
BOND COUNSEL
Waters, McPherson, McNeill, P.C.
Secaucus, New Jersey
No dealer, broker, salesperson or other person has been authorized by the Board 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 representations must not be relied upon as having been authorized by the Board. This
Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer,
solicitation or sale. 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, create
any implication that there has been no change in the affairs of the Board since the date hereof.
The information which is set forth herein has been provided by the Board and by other sources, but the
information provided by such other sources is not guaranteed as to accuracy or completeness by the Board.
References in this Official Statement to the State of New Jersey statutes, laws, rules, regulations, resolutions,
agreements, reports and documents do not purport to be comprehensive or definitive. All references to such
documents are qualified in their entirety by reference to the particular document, the full text of which may
contain qualifications of or exceptions to statements made herein. Copies of such above-mentioned documents
may be inspected at the offices of the Board during normal business hours. This Official Statement is submitted
in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part,
for any other purpose.
The order and the placement of materials in this Official Statement, including the appendices, are not
deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the
appendices, must be considered in its entirety.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities law as applied to the facts and circumstances of this
transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET, SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
Page
INTRODUCTION .........................................................................................................................................1
THE SCHOOL DISTRICT AND THE BOARD .........................................................................................1
DESCRIPTION OF THE BONDS ................................................................................................................2 Terms and Interest Payment Dates ............................................................................................................2 Denominations and Place of Payment .......................................................................................................2 Redemption ...............................................................................................................................................2 Book-Entry System ...................................................................................................................................3 Discontinuance of Book Entry System .....................................................................................................5 AUTHORIZATION AND PURPOSE ..........................................................................................................5 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .............................................................6 Taxing Power ............................................................................................................................................6 New Jersey School Bond Reserve Act ......................................................................................................6 ESTIMATED SOURCES AND USES OF FUNDS .....................................................................................7 GENERAL INFORMATION REGARDING NEW JERSEY SCHOOL DISTRICTS ................................7 State’s Role in Public Education ...............................................................................................................7 Structure of New Jersey School Districts ..................................................................................................8 STATE AID TO SCHOOL DISTRICTS ......................................................................................................8 General ......................................................................................................................................................8 Quality Education Act of 1990..................................................................................................................9 Comprehensive Educational Improvement and Financing Act of 1996 ...................................................9 Educational Facilities Construction and Financing Act ..........................................................................11 School Funding Reform Act of 2008 ......................................................................................................11 FEDERAL AID TO SCHOOL DISTRICTS ...............................................................................................12 SUMMARY OF CERTAIN STATUTORY PROVISIONS RELATING TO SCHOOL DISTRICTS AND SCHOOL DEBT ....................................................................................12 Levy and Collection of Taxes .................................................................................................................12 School Budgets........................................................................................................................................13 Limitation of increase in the Net Current Expense Budget.....................................................................13 Uniform System of Bookkeeping ............................................................................................................13 Annual Audits .........................................................................................................................................14 Bonds and Notes .....................................................................................................................................14 Refunding Bonds .....................................................................................................................................14 Debt Limit ...............................................................................................................................................14 Exceptions to Debt Limit ........................................................................................................................15
Capital Lease Financing …………………………………………………………………………………………..…….. 15
Energy Savings Obligations …………………………………………………………………………………………… 15
Related Constitutional and Statutory Provisions .....................................................................................15 BANKRUPTCY ..........................................................................................................................................16 NO DEFAULT ............................................................................................................................................16 ABSENCE OF MATERIAL LITIGATION ...............................................................................................16 TAX MATTERS .........................................................................................................................................17 Federal .....................................................................................................................................................17 State .........................................................................................................................................................18 SECONDARY MARKET DISCLOSURE .................................................................................................18 CREDIT RATING.......................................................................................................................................19 UNDERWRITING ......................................................................................................................................19 VERIFICATION OF MATHEMATICAL ACCURACY...........................................................................20 LEGALITY .................................................................................................................................................20 FINANCIAL STATEMENTS .....................................................................................................................21 i
MUNICIPAL ADVISOR ............................................................................................................................21 ADDITIONAL INFORMATION ...............................................................................................................21 MISCELLANEOUS ....................................................................................................................................22 APPENDIX A:
APPENDIX B:
APPENDIX C:
APPENDIX D:
GENERAL INFORMATION RELATING TO THE SCHOOL DISTRICT
AND ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING
TO THE TOWNSHIP OF MANALAPAN AND THE BOROUGH
OF ENGLISHTOWN ................................................................................................. A-1
REPORT OF EXAMINATION OF FINANCIAL STATEMENTS .......................... B-1
FORM OF OPINION OF BOND COUNSEL ............................................................ C-1
FORM OF SECONDARY MARKET DISCLOSURE UNDERTAKING ................ D-1
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OFFICIAL STATEMENT
RELATING TO
THE BOARD OF EDUCATION OF THE REGIONAL SCHOOL DISTRICT INCLUDING THE
SCHOOL DISTRICTS OF MANALAPAN TOWNSHIP AND ENGLISHTOWN BOROUGH
MONMOUTH COUNTY, NEW JERSEY
$___________* REFUNDING SCHOOL BONDS, SERIES 2016
INTRODUCTION
This Official Statement (the “Official Statement”), which includes the cover page hereof and the
appendices hereto, has been prepared by The Board of Education of the Regional School District
including the School Districts of Manalapan Township and Englishtown Borough, a school district of the
State of New Jersey (the “Board” when referring to the governing body and the “School District” when
referring to the legal entity or the territorial boundaries governed by the Board) and provides certain
information regarding the financial and economic condition of the School District in connection with the
sale of the School District’s $___________* Refunding School Bonds, Series 2016 (the “Bonds”). This
Official Statement has been executed by and on behalf of the Board by the Business Administrator /
Board Secretary and its distribution and use in connection with the sale of the Bonds has been authorized
by the Board.
This Official Statement contains specific information relating to the Bonds including their general
description, certain legal matters, historical financial information and other information pertinent to this
issue. This Official Statement should be read in its entirety.
All financial and other information presented herein has been provided by the Board from its
records, except for information expressly attributed to other sources. The presentation of information is
intended to show recent historic information and, but only to the extent specifically provided herein,
certain projections into the immediate future and is not necessarily indicative of future or continuing
trends in the financial position of the Board.
THE SCHOOL DISTRICT AND THE BOARD
The School District is a Type II school district without a board of school estimate, coterminous
with the boundaries of the Township of Manalapan (the “Township”) and the Borough of Englishtown
(the “Borough”), both municipal corporations of the State of New Jersey (the “State”) located in the
County of Monmouth. The School District provides a full range of educational services appropriate to
students in grades Pre-K through 8.
The Board consists of 9 elected members. The Board appoints a Superintendent of Schools, who
is the Chief Administrative Officer of the School District and a Business Administrator / Board Secretary,
who oversees the business functions, and is the financial officer, of the Board.
General information concerning the School District and the Board, including statistical,
demographic and other relevant data, is set forth in Appendix A.
* Preliminary, subject to change.
Excerpts of the audited financial statement of the School District for the fiscal year ending
June 30, 2015, as prepared by Jump, Perry and Company L.L.C., Toms River, New Jersey (the
“Auditor”), are set forth in Appendix B.
DESCRIPTION OF THE BONDS
The following is a summary of certain provisions of the Bonds. Reference is made to the Bonds
themselves for the complete text thereof, and the discussion herein is qualified in its entirety by such
reference.
Terms and Interest Payment Dates
The Bonds will be dated the date of delivery thereof. The Bonds will mature on October 1 in
each year until maturity, and in the principal amounts as set forth on the cover page hereof. The Bonds
will bear interest at the interest rates per annum as set forth on the cover page hereof, payable on
October 1, 2016 and semiannually thereafter April 1 and October 1 in each year until maturity (each, an
“Interest Payment Date”).
Denominations and Place of Payment
The Bonds shall be issued in fully registered form to The Depository Trust Company, New York,
New York (“DTC”), and registered in the name of DTC’s nominee, Cede & Co. One bond certificate
shall be issued for each year of maturity of the Bonds, numbered RSB-1 to RSB-__ in order of maturity.
DTC will hold the Bonds and not physically distribute bond certificates to the DTC participants
or beneficial owners of the Bonds. Principal of and interest on the Bonds will be paid by the Board, or its
designee in its capacity as paying agent (the “Paying Agent”), to DTC as of each March 15 and
September 15 (whether or not a business day) immediately preceding the respective Interest Payment
Date (each, a “Record Date”). DTC will in turn remit the principal and interest payments received from
the Board to the DTC participants, which will remit such payments to the beneficial owners of the Bonds.
The Bonds may be purchased in increments of $5,000, plus integral multiples of $1,000 in excess
thereof. Purchasers of the Bonds will not receive bond certificates representing their beneficial ownership
interest in the amount of Bonds purchased.
So long as Cede & Co. is the registered owner of the Bonds, references herein (except under the
captions “Tax Matters” and “Secondary Market Disclosure”) to the registered owner(s) shall mean Cede
& Co. and shall not mean the beneficial owners of the Bonds. See “Book-Entry System” herein.
Redemption
The Bonds maturing on or after October 1, 2027 will be redeemable at the option of the Board in
whole or in part on any date on or after October 1, 2026 at a redemption price equal to the principal
amount thereof, plus accrued interest to the date fixed for redemption.
Notice of redemption shall be given by mailing by first class mail in a sealed envelope with
postage prepaid to the registered owners of the Bonds not less than 30 days, nor more than 60 days, prior
to the date fixed for redemption, at their respective addresses as they last appear on the registration books
kept for that purpose by the Board or a duly appointed Bond Registrar. If the Board determines to redeem
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a portion of the Bonds prior to maturity, such Bonds shall be selected by such method as the Board shall
determine.
If notice of redemption has been given as provided herein, the Bonds or the portion thereof
called for redemption shall be due and payable on the date fixed for redemption at the redemption price,
together with accrued interest to the date fixed for redemption. Interest shall cease to accrue on the Bonds
after the date fixed for redemption and no further interest shall accrue beyond the redemption date.
Book-Entry System
DTC will act as securities depository for the Bonds (the “Securities”). The Securities will be
issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or
such other name as may be requested by an authorized representative of DTC. One fully registered bond
certificate will be issued for each year of maturity of the Securities, in the aggregate principal amount of
each such maturity, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized
under the New York Banking Law, a “banking organization” within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of
the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money
market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with
DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other
securities transactions in deposited securities, through electronic computerized book-entry transfers and
pledges between Direct Participants’ accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company
for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard &
Poor’s rating of AA+. The DTC Rules applicable to its Direct Participants and Indirect Participants are
on file with the Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com.
Purchases of Securities under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual
purchaser of each Security (a “Beneficial Owner”) is in turn to be recorded on the Direct Participants’ 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 Participant or Indirect
Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books of Direct Participants and
Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Securities, except in the event that use of the
book-entry system for the Securities is discontinued.
3
To facilitate subsequent transfers, all Securities 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 Securities with DTC and their
registration in the name of Cede & Co., or such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records
reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which
may or may not be the Beneficial Owners. The Direct Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Securities within a maturity
are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct
Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Securities unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under
its usual procedures, DTC mails an omnibus proxy to the Board as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to
whose accounts the Securities are credited on the record date (identified in a listing attached to the
omnibus proxy).
Principal, redemption and interest payments on the Securities 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 the Board or the Paying Agent, on the payable date in accordance with their respective holdings
shown on DTC’s records. Payments by Direct Participants and Indirect 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 Direct Participant or Indirect Participant and not of DTC, the Paying Agent or the Board, subject to
any statutory or regulatory requirements as may be in effect from time to time. Payment of principal,
redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of the Board or the 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 Participants and Indirect
Participants.
DTC may discontinue providing its services as depository with respect to the Securities at any
time by giving reasonable notice to the Board or the Paying Agent. Under such circumstances, in the
event that a successor securities depository is not obtained, bond certificates are required to be printed and
delivered.
The Board may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, bond certificates will be printed and delivered to DTC.
4
The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources that the Board believes to be reliable, but the Board takes no responsibility for the accuracy
thereof.
Discontinuance of Book Entry System
In the event that DTC determines to discontinue providing its service with respect to the Bonds or
is removed by the Board, and if no successor Securities Depository is appointed, the Bonds which were
registered in the name of Cede & Co. shall be registered in the names of the beneficial owners to be
provided to the Board from the DTC participants. Upon such registration, the beneficial owners will
become the registered owners of the Bonds and the following provisions shall apply: (i) the Bonds shall
be exchanged for an equal aggregate principal amount of bonds (in any authorized denomination, and in
the same maturities of the Bonds) (the “Substitute Bonds”) upon surrender thereof at the office of the
Board or the Paying Agent, if any; (ii) the transfer of any Bonds shall be registered on the books
maintained by the Board or the Paying Agent, if any, for such purposes upon the surrender of the Bonds
to the Board or the Paying Agent, if any, together with duly executed assignments in a form satisfactory
to the Board or the Paying Agent, if any; and (iii) for every exchange or registration of transfer of the
Bonds, the Paying Agent, if any, shall be reimbursed by the Board for any charges required to be paid by
the Paying Agent, if any, with respect to any such Substitute Bonds.
Interest on the Bonds will be payable by check or draft, mailed on each Interest Payment Date to
the registered owners thereof as of the close of business on the Record Date next preceding an Interest
Payment Date. Principal on the Bonds and redemption price, if any, when due, shall be paid to the
registered owners of the Bonds upon surrender thereof to the Board or the Paying Agent, if any.
AUTHORIZATION AND PURPOSE
The Bonds are to be issued pursuant to the laws of the State, including the Education Law,
constituting Chapter 24 of Title 18A of the New Jersey Statutes, as amended (N.J.S.A. 18A:24-1, et seq.)
(the “Education Law”). The Bonds are authorized by a refunding bond ordinance of the Board finally
adopted on May 3, 2016 and entitled “REFUNDING BOND ORDINANCE PROVIDING FOR THE
REFUNDING OF OUTSTANDING REFUNDING SCHOOL BONDS BY THE REGIONAL BOARD
OF EDUCATION OF MANALAPAN-ENGLISHTOWN, APPROPRIATING $19,545,000 THEREFOR
AND AUTHORIZING THE ISSUANCE OF $19,545,000 REFUNDING BONDS OF THE SCHOOL
DISTRICT TO FINANCE THE COST THEREOF”; and a resolution of the Board adopted on
May 3, 2016, each in all respects duly approved and published as required by law.
The Bonds are being issued to provide funds which will be used to: (i) currently refund the
Board’s outstanding Refunding School Bonds dated November 7, 2006 and maturing on October 1, 2017
through October 1, 2028 in the aggregate principal amount of $9,475,000 (the “Series 2006 Bonds”) at a
redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the date
fixed for redemption (i.e., October 1, 2016 ); (ii) currently refund the Board’s outstanding Refunding
School Bonds dated January 5, 2007 and maturing on October 1, 2017 through October 1, 2028 in the
aggregate principal amount of $9,525,000 (the “Series 2007 Bonds”, and together with the 2006 Bonds,
the “Refunded Bonds”) at a redemption price equal to 100% of the principal amount thereof, plus accrued
interest thereon to the date fixed for redemption (i.e., October 1, 2016 ); and (iii) pay certain costs and
expenses incidental to the issuance and delivery of the Bonds.
Concurrently with the issuance and delivery of the Bonds, the Board and Manufacturers and
Traders Trust Company, New York, New York, as escrow agent (the “Escrow Agent”) will enter into an
5
escrow deposit agreement (the “Escrow Deposit Agreement”). Pursuant to the Escrow Deposit
Agreement, on the delivery date for the Bonds a portion of the proceeds of the Bonds together with other
available School District monies, if any, will be deposited with the Escrow Agent and invested in direct
obligations of the United States of America the principal of and interest on which, when due, together
with other monies on deposit in the escrow account, have been calculated to be sufficient to pay, when
due, the principal, interest and redemption price requirements of the Refunded Bonds.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Taxing Power
The Bonds are general obligations of the School District and the full faith, credit and taxing
power of the School District are irrevocably pledged for the payment of the principal of and interest on
the Bonds. The Bonds, unless paid from other sources, are payable from ad valorem taxes to be levied
upon all taxable property within the School District without limitation as to rate or amount, except to the
extent that enforcement of such payment may be limited by bankruptcy, insolvency or other similar laws
or equitable principles affecting the enforcement of creditors’ rights generally.
In accordance with Section 56 of the Education Law (N.J.S.A. 18A:24-56), the Bonds shall be
liens upon the real estate situated in the School District, the personal estates of the inhabitants of the
School District and the property of the School District, and such estates and property shall be liable for
the payment of the Bonds.
New Jersey School Bond Reserve Act
The Bonds will be secured under the provisions of the New Jersey School Bond Reserve Act of
1980, as amended (N.J.S.A. 18A:56-1, et seq.) (the “School Bond Reserve Act”). Pursuant to the School
Bond Reserve Act, there shall be a reserve comprised of two accounts, one in an amount equal to at least
1.5% of the aggregate issued and outstanding bonded indebtedness of counties, municipalities or school
districts for school purposes issued before July 1, 2003 (the “Old Reserve Account”) and another in an
amount equal to at least 1% of the aggregate issued and outstanding bonded indebtedness of counties,
municipalities or school districts for school purposes issued on or after July 1, 2003 (the “New Reserve
Account”, together with the Old Reserve Account, the “School Bond Reserve”). The amount to be held
within the State Fund (“Fund”) for the Support of Free Public Schools as the School Bond Reserve
pledged by law to secure payments of principal and interest due on such bonds in the event of the inability
of the issuer to make payment shall be determined on June 30 of each fiscal year by the State Treasurer
and shall be funded in the amount determined by the State Treasurer on September 15 of the ensuing
fiscal year. If the Old Reserve Account exceeds the amount determined to be required, the State
Treasurer may transfer the excess to the New Reserve Account. The School Bond Reserve is required to
be composed entirely of direct obligations of the United States Government or obligations guaranteed by
the full faith and credit of the United States Government. The amount of the School Bond Reserve may
not exceed the moneys available in the Fund. If a county, municipality or school district is unable to meet
payment of principal of or interest on any of its bonds issued for school purposes, it shall certify such
liability to the Commissioner of Education (the “Commissioner”) and the Director of the Division of
Local Government Services of the New Jersey Department of Community Affairs (the “Director”) at least
10 days prior to the date any such payment is due. If the Commissioner and Director approve the
certification, they shall certify the same to the trustees of the Fund. The trustees of the Fund will
purchase such bonds at par value or will pay to the Bondholders the interest due or to become due within
the limit of funds available in either account of the School Bond Reserve in accordance with the
provisions of the School Bond Reserve Act. Payment by the trustees of the Fund on behalf of any county,
6
municipality or school district shall be deducted from the appropriation or apportionment of State aid
which may otherwise be payable to the district, county or municipality, and shall not obligate the State or
entitle the school district, county or municipality to the payment of any additional appropriation or
apportionment. To date, there has been no occasion to call upon this Fund.
S&P Global Ratings currently rates the School Bond Reserve Act “A”, and views the outlook for
this rating as negative.
ESTIMATED SOURCES AND USES OF FUNDS
The following sets forth the estimated sources and uses of funds, exclusive of accrued interest, in
connection with the sale and issuance of the Bonds:
Sources of Funds:
Par Amount of Bonds
Plus Original Issue Premium
Debt Service Funds Available
$__________
$__________
$__________
Total Sources of Funds
$__________
Uses of Funds:
(1)
Escrow For Refunded Bonds
Costs of Issuance (1)
$__________
$__________
Total Uses of Funds
$__________
Includes credit rating, legal, printing, accounting, financial advisory and fiduciary expenses, and
underwriter’s discount incurred in connection with the sale and issuance of the Bonds.
GENERAL INFORMATION REGARDING NEW JERSEY SCHOOL DISTRICTS
State’s Role in Public Education
The Constitution of the State of New Jersey provides that the maintenance of and the support of a
thorough and efficient system of public schools for the instruction of all children between 5 and 18 years
of age is a legislative responsibility. Case law has expanded the responsibility to include children
between the ages of 3 and 21. Below is a summary of the role of the State.
The responsibilities of the State with respect to the general supervision and control of public
education have been delegated to the State Department of Education (the “Department”) which is a part of
the executive branch of the State government. The Department is governed by the State Board of
Education (the “State Board”). The State Board is responsible for the general supervision and control of
public education and is obligated to formulate plans and to make recommendations for the unified,
continuous and efficient development of public education of all people of all ages within the State. To
fulfill these responsibilities, the State Board has the power, inter alia, to adopt rules and regulations that
are binding upon school districts, to acquire land and other property and decide appeals from decisions of
the Commissioner on matters of school law or State Board regulations.
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The Commissioner is the chief executive and administrative officer of the Department. The
Commissioner is appointed by the Governor of the State, with the advice and consent of the State Senate,
for a 5 year, salaried term. The Commissioner is responsible for the supervision of all school districts in
the State and is obligated to enforce the rules and regulations of the State Board. The Commissioner’s
consent is required for authorization to sell school bonds that exceed the statutory debt limits, and the
Commissioner also may set the amount to be raised by taxation in a school district in a fiscal year, if a
school budget has not been approved by the voters of the school district or by a board of school estimate,
as the case may be, or by the governing body of the municipality.
An Executive County Superintendent of Schools (the “County Superintendent”) is appointed in
each county in the State by the Governor of the State, with the advice and consent of the State Senate.
The County Superintendent is the local representative of the Commissioner and is responsible for the
daily supervision of the school districts in the county, inter alia, as set forth in the Uniform Shared
Services and Consolidation Act (N.J.S.A. 40A:65-1, et seq.).
Structure of New Jersey School Districts
State school districts are generally coterminous with the boundaries of the municipalities they
serve. They are characterized by the manner in which the governing body takes office. Type I school
districts, most commonly found in cities, have a board of education appointed by the mayor or chief
executive officer of the municipality. In Type II districts, the board of education is elected by the voters
of the school district. Almost all regional and consolidated school districts operate as Type II school
districts. The Board is a Type II school district.
There is a procedure whereby a school district may change from one type to the other after an
approving public referendum. Such a public referendum must be held whenever directed by the
municipal governing body or board of education in a Type I school district, or the board of education in a
Type II school district, or when petitioned for by 15% of the voters of any school district.
STATE AID TO SCHOOL DISTRICTS
General
In 1973, the State Supreme Court (the “Supreme Court”) ruled that the existing method of
financing school costs primarily through property taxation was unconstitutional. Pursuant to the Supreme
Court’s ruling, the State Legislature enacted the Public School Education Act of 1975
(N.J.S.A. 18A:7A-1, et seq.) (the “Act”), which required funding of the State’s school aid through the
State Gross Income Tax Act (P.L. 1976, c. 47). The Act also intended to provide property tax relief. A
new formula (N.J.S.A. 18A:7A-1, et seq.), which took into account a local school district’s ability to pay
for its operating costs, was made available commencing July 1, 1976.
On June 5, 1990, the Supreme Court ruled in Abbott v. Burke, that the school aid formula
described above did not distribute funds fairly. The Supreme Court found that poorer urban districts were
significantly disadvantaged under the then funding formula because revenues were derived primarily from
property taxes. The Supreme Court found that wealthy districts were able to spend more, yet tax less for
educational purposes. In urban areas, on the other hand, the Supreme Court found the opposite to be true.
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Quality Education Act of 1990
The Legislative response to Abbott v. Burke was the passage of the Quality Education Act of
1990 (the “Quality Education Act”) (N.J.S.A. 18A:7D-1, et seq.), which was signed into law on
July 3, 1990. This law established a new formula for the distribution of state aid for public education
commencing with the 1991-92 fiscal year. The law provided a formula that took into account property
value and personal income to determine a district’s capacity to raise money for public education. A
budgetary limitation or “CAP” on expenditures was also provided in the law. The “CAP” was intended to
control the growth in local property taxes. The Quality Education Act was amended and revised by
Chapter 62 of the Pamphlet Laws of 1991 of the State, effective March 14, 1991, and further amended by
Chapter 7 of the Pamphlet Laws of 1993 effective January 14, 1993.
On July 12, 1994, the Supreme Court declared the school aid formula under the Quality of
Education Act of 1990, as amended, unconstitutional on several grounds as it is applied to the 30 special
needs districts designated by the State in ongoing litigation commonly known as Abbott v. Burke II. No
specific remediation was ordered, but the Supreme Court ultimately held that the Legislature and the
Governor were required to have a new funding formula in effect by December 31, 1996 so that the new
formula would be implemented in the 1997-98 fiscal year.
Comprehensive Educational Improvement and Financing Act of 1996
In keeping with the Supreme Court’s deadline, then Governor Christine Todd Whitman signed
into law on December 20, 1996, the Comprehensive Educational Improvement and Financing Act of 1996
(N.J.S.A. 18A:7F-1, et seq. ) (“CEIFA” or “Comprehensive Plan”). The Comprehensive Plan affects how
public schools are funded by the State, beginning in the 1997-98 fiscal year.
The Comprehensive Plan departs from other funding formulas adopted in the State in defining
what constitutes a “thorough and efficient” education, which is what the State Constitution requires every
public school student to receive. The Comprehensive Plan further establishes the costs to provide each
student with a “thorough and efficient” education.
In defining what constitutes a “thorough” education, the State Board adopted a set of Core
Curriculum Content Standards. The purpose of these standards is to provide all students with the
knowledge and skills that will enable them to be productive citizens when they graduate from any State
high school, regardless of the school’s location or socioeconomic condition. The Comprehensive Plan
provides state aid assistance in the form of Core Curriculum Standards Aid based on a school district’s
financial ability to raise sufficient tax revenue for its students to achieve the Core Curriculum Contents
Standards.
The definition of an “efficient” education under the Comprehensive Plan determines the cost to
provide each student with an education that fulfills the requirements for the Core Curriculum Content
Standards. The efficiency standard defines such things as optimal class size, administrator/teachers per
student, schools per district, and the types and amount of classroom supplies, services, and materials. The
Comprehensive Plan establishes an approximate amount per student to educate each student at various
grade levels in the Core Curriculum Content Standards. This amount will be adjusted biennially for
inflation by the consumer price index.
In determining how much Core Curriculum Standards Aid a school district will receive, the
Comprehensive Plan considers each school district’s financial ability to fund such a level of education.
This component of the Comprehensive Plan is referred to as the local share requirement, namely, the
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amount of taxes that a school district can raise relative to other school districts based on property wealth
and income levels. The purpose of the Core Curriculum Standards Aid is to provide school districts with
adequate State assistance that is proportionate to their ability to pay. The purpose of this type of aid is to
ensure that all school districts have the economic ability to provide their students with the ability to
achieve the Core Curriculum Content Standards. In addition to the Core Curriculum Standards Aid, the
Comprehensive Plan also provides per pupil assistance from the State for special education, early
childhood programs, demonstrably effective programs, instructional supplement, bilingual education,
county vocational schools and distance learning network.
Another form of aid that is provided by CEIFA is school facilities aid. During the 1997-98 fiscal
period, this type of aid was provided to those school districts that qualified for aid under the Quality
Education Act. The amount of school facilities aid that the State provided during the 1997- 98 fiscal year
was determined by the amount budgeted in the approved State budget.
Beginning in the 1998-99 fiscal year, State aid for school facilities consisted of a ratio that
divides (i) the amount of debt service or the amount of facilities rent for lease terms that exceed 5 years
required to be budgeted for a fiscal year period into (ii) the costs that are approved by the Department for
a proposed building or renovation project. The approved facility costs under the Comprehensive Plan
have not yet been determined. The Comprehensive Plan requires the Governor to submit to the
legislature criteria for determining approved facilities costs, State support levels and maintenance
incentives applicable to the fiscal year.
The Comprehensive Plan also limits the amount school districts can increase their annual current
expense and capital outlay budgets. Generally, these budgets can increase by either 2.5% or the consumer
price index, whichever is greater. Recent amendments to the Comprehensive Plan lowered the budget cap
to 2.5% from 3%. Budgets can also increase because of certain adjustments for enrollment increases,
certain capital outlay expenditures, pupil transportation costs, and special education costs that exceed
$40,000 per pupil. Waivers are available from the Commissioner based on increasing enrollments and
other fairly narrow grounds or by approval of the voters at the annual school election.
Under the Comprehensive Plan, rent payments made pursuant to a facilities lease purchase
agreement for a term that exceeds five years are treated as debt service for accounting purposes. These
rent payments will be eligible for aid in an amount determined in the State budget for the respective fiscal
year. Rent payments under a facilities lease with a term not exceeding 5 years and under equipment
leases are budgeted in the general fund and are subject to the school district’s spending growth limitations
under the Comprehensive Plan.
On May 14, 1997, the Supreme Court held that the Comprehensive Plan was unconstitutional as
applied to the 28 special needs districts (“Abbott Districts”) because: (i) its funding provisions fail to
assure that students in such districts will receive a thorough and efficient education; and (ii) supplemental
programs to increase student performance in such districts have neither been adequately identified nor
funded. They recognized the Core Curriculum Standards as a valid means of identifying what is a
“thorough and efficient” education under the State Constitution, but found that the State did not
adequately determine or provide the adequate funding level to allow those standards to be met in the
Abbott Districts. The Comprehensive Plan was not held unconstitutional as applied to the non-Abbott
Districts. The School District is not an Abbott District.
The Supreme Court ordered the State: (i) to increase State aid to the Abbott Districts for the
1997-98 school year to a level such that the per-pupil expenditure in such districts is equivalent to the
average per-pupil expenditure in wealthy suburban districts; (ii) through the Commissioner, to manage the
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additional spending to assure that it will be used to allow the students to meet the education content
standards; and (iii) under the supervision of the Superior Court, Chancery Division, to determine a plan to
provide supplemental educational and facilities programs in the Abbott Districts.
Provisions for the additional amounts of money were appropriated in the State budgets. The
Supreme Court then ruled that the Commissioner and the Department will be responsible for maintaining
the educational system in accordance with the orders of the Supreme Court. In response to the order, the
State enacted the Educational Facilities Construction and Financing Act discussed below.
Educational Facilities Construction and Financing Act
In response to the Supreme Court’s order under CEIFA, then Governor Whitman signed into law
on July 18, 2000, the Educational Facilities Construction and Financing Act (the “Facilities Act”). The
Facilities Act provides for full funding of the qualified costs of school facilities required in the Abbott
Districts and for the funding of the qualified costs of school facilities for all other school districts in an
amount equal to the ratio between their core curriculum facilities aid and their thorough and efficient
budget times 115% or 40% of the qualified costs, whichever is greater. In lieu of debt service aid, school
districts may elect to receive grants for the State’s share of the capital project and authorize bonds only
for the local share of the capital project. School districts may receive debt service aid under the same
formula for certain capital projects which were begun prior to the effective date of the Facilities Act.
A challenge was made to have the Facilities Act declared unconstitutional because it authorized
the issuance of debt paid out of the State’s General Fund without voter approval. On August 21, 2002,
the Supreme Court upheld the Facilities Act as constitutional advancing the guarantee of a “thorough and
efficient” education.
School Funding Reform Act of 2008
On January 7, 2008, the New Jersey Legislature adopted Senate Bill No. 4000 (companion
Assembly Bill No. 500) entitled the “School Funding Reform Act of 2008” (the “School Funding Reform
Act”), which establishes a new system for the funding of public school districts. The intent of the School
Funding Reform Act is to create a fair, equitable, and predictable funding formula based on student
characteristics, regardless of the community in which a student resides. The legislation was signed into
law by Governor Corzine on January 13, 2008.
The School Funding Reform Act maintains the requirements for the establishment and update by
the State Board of Education of the core curriculum content standards that define the substance of a
thorough education; however it repeals certain sections of the Comprehensive Educational Improvement
and Financing Act of 1996, P.L.1996, c.138, which established the State aid formulas that supported
school district programs to implement such standards. In addition, the School Funding Reform Act
establishes revised formulas for calculating such State aid.
In the 2009-2010 and 2010-2011 school years under the School Funding Reform Act, districts are
to receive adjustment aid in such amount as to ensure that the district receives the greater of the amount of
State aid calculated for the district in accordance with the School Funding Reform Act’s provisions or the
amount of State aid, other than educational adequacy aid, that the district received for the 2008-2009
school year.
The School Funding Reform Act also establishes 2 categorical State aid programs. The 1st
categorical aid program will support the cost of providing services to general special education students
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that is not supported through the adequacy budget. The 2d categorical aid program will support security
costs for school districts. The School Funding Reform Act also includes preschool education State aid,
which will fund a significant expansion of early childhood programs. The School Funding Reform Act
continues extraordinary special education aid, but with a number of revisions. In addition, the School
Funding Reform Act establishes the State aid category of educational adequacy aid for certain school
districts that received education opportunity aid in the 2007-2008 school year and are spending below
adequacy.
Moreover, the School Funding Reform Act provides a new formula for determining the amount
of state aid received by a school district or county vocational school district for transportation aid.
The School Funding Reform Act also addresses issues associated with the funding of charter
school students, as well as remaining choice students. The School Funding Reform Act also amends the
school construction law, the “Educational Facilities Construction and Financing Act,” to establish the
category of a “SDA” district, which is a district that received education opportunity aid or preschool
expansion aid in the 2007-2008 school year. For these “SDA” districts, the State share for their school
facilities projects will remain at 100% and they will be constructed by the New Jersey Schools
Development Authority. The School Funding reform Act also revises numerous sections of law that are
related to school funding and school budgeting procedures.
In the New Jersey Supreme Court’s most recent decision in Abbott v. Burke (decided on
May 28, 2009), it was determined that the School Funding Reform Act of 2008 is constitutional as
applied to the State’s 31 Abbott Districts. The Court ordered the State to provide school funding to all
districts during this and the next 2 years in accordance with the School Funding Reform Act’s funding
formula, subject further to mandated review after 3 years of implementation.
FEDERAL AID TO SCHOOL DISTRICTS
Federal funds are available for certain programs approved by the federal government with
allocation decided by the State, which assigns a proportion to each local school district. The Every
Student Succeeds Act of 2015 is a federal assistance program for which a school district qualifies to
receive aid. Such Federal aid is generally received in the form of block grants.
SUMMARY OF CERTAIN STATUTORY PROVISIONS RELATING
TO SCHOOL DISTRICTS AND SCHOOL DEBT
Set forth below is a summary of various statutory provisions and requirements relevant to the
School District’s debt and financial regulation and budget process. This summary does not purport to be
complete, and reference should be made to the statutes referred to for a complete statement of the
provisions thereof.
Levy and Collection of Taxes
School districts in the State do not levy or collect taxes to pay for those budgeted amounts that are
not provided by the State. The municipalities within which a school district is situated levy and collect the
required taxes and must remit them in full to the school district.
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School Budgets
In a Type II school district, the elected board of education develops the budget proposal and, after
a public hearing, submits it for voter approval. Debt service provisions are not subject to referendum. If
approved, the budget goes into effect. If defeated, the governing bodies of the constituent municipalities
served by the school district have until May 19 to fix the amount to be raised by taxation and to certify
that amount to the County Board of Taxation. The Board may then appeal the action of the governing
body to the Commissioner.
The Commissioner must also review every proposed local school district budget for the then
current school year. The Commissioner has the power to increase or decrease individual line items in a
budget. Any amendments in the school district’s budget must be approved by the board of the school
district.
The Budget Election Law (N.J.S.A. 19:60-1.1, et seq.) (the “Budget Election Law”) establishes
procedures that allow the date of the annual school election of a Type II school district, without a board of
school estimate, to be moved from April to the 1st Tuesday after the 1st Monday in November, to be held
simultaneously with the general election. Such change in the annual school election date must be
authorized by resolution of either the board of education or the governing bodies of the constituent
municipalities served by the school district, or by an affirmative vote of a majority of the voters whenever
a petition, signed by at least 15% of the legally qualified voters, is filed with the board of education.
Once the annual school election is moved to November, such election may not be changed back to an
April annual school election for 4 years.
The Board holds its election in November.
Limitation of increase in the Net Current Expense Budget
Annual increases in a school district budget are limited by law subject to certain limited
exceptions. Specifically, P.L. 2010, c. 44, which became effect on July 13, 2010, limits the school district
tax levy for the general fund budget to increases of 2% over the prior budget year with exceptions only
for enrollment increases, increases for certain normal and accrued liability for pension contributions in
excess of 2%, certain healthcare increases, and amounts approved by a simple majority of voters voting at
a special election. P.L. 2010, c. 44 eliminates the process for obtaining waivers from the Commissioner
for additional increases over the tax levy or spending limitations set forth in P.L. 2007, c. 62.
The restrictions are solely on the tax levy for the general fund and are not applicable to the debt
service fund. There are no restrictions on a local school district’s ability to raise funds for debt service,
and nothing would limit the obligation of a school district to levy ad valorem taxes upon all taxable real
property within the district to pay debt service on its bonds or notes.
Uniform System of Bookkeeping
Effective July 1, 1993, the State mandated that all school districts develop and implement
accounting practices consistent with generally accepted accounting principles (“GAAP”). In addition, the
districts are required to comply with the Uniform Minimum Chart of Accounts (Federal Handbook 2R2)
for their internal accounting reporting systems. The School District’s financial statements since the above
effective date have been prepared in accordance with the GAAP requirements.
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Annual Audits
The board of education of each school district annually shall have a licensed public school
accountant perform an audit of a school district’s accounts and financial transactions. Within 5 months
after the end of the school fiscal year, the Commissioner shall receive certified copies of each school
district’s audit. In addition, the audit must be summarized and discussed at a regular public meeting of the
local board of education within 30 days of its completion.
Bonds and Notes
School district bonds and temporary notes are required to be issued in conformity with the
Education Law, which establishes debt limits on the issuance of bonds or notes. The debt limits vary
depending on the type of school system.
The School District is a Type II school district. All authorizations of debt in a Type II school
district not having a board of school estimate require an approving referendum. The Local Finance Board,
in the Division of Local Government Services of the New Jersey Department of Community Affairs (the
“Local Finance Board”) and the Commissioner must approve any proposed authorization of debt that
exceeds the combined statutory debt limitations of a Type II district and the municipality or
municipalities coterminous therewith. When such obligations are issued, they are issued in the name of
the school district.
Prior to final approval, all authorizations of debt must be reported by a supplemental debt
statement filed with Division of Local Government Services of the New Jersey Department of
Community Affairs.
Temporary notes may be issued in anticipation of the issuance of permanent bonds for a capital
improvement or capital project. Such notes may not exceed in the aggregate the amount of bonds
authorized for such improvement or project. A school district’s notes may be issued for 1 year periods,
with the final maturity not exceeding 5 years from the date of original issuance; provided, however, that
no such notes shall be renewed beyond the 3d anniversary date of the original notes unless an amount of
such notes, at least equal to the 1st legally payable installment of the bonds in anticipation of which said
notes are issued, is paid and retired in each year subsequent to said 3d anniversary date.
Refunding Bonds
Notwithstanding the above provisions regarding issuance of debt, including debt limits and voter
referendums, school districts may authorize and issue refunding bonds for the purpose of paying any
refunded bonds, together with the costs of issuing the bonds. School Districts may issue refunding bonds
without the prior approval of the Local Finance Board if the proposed issuance meets certain conditions
set forth in N.J.A.C. 5:30-2.5.
Debt Limit
Except as provided below, no additional debt shall be authorized if the principal amount, when
added to the net debt previously authorized, exceeds a statutory percentage of the average equalized
valuation of taxable property in a school district. As a pre-K through eighth grade school district, the
School District can borrow up to 3.0% of the average equalized valuation of taxable property in the
School District. The School District has not exceeded its 3.0% debt limit. See Appendix A.
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Exceptions to Debt Limit
A Type II school district, (other than a regional district), may also utilize its constituent
municipality’s remaining statutory borrowing power (i.e. the excess of 3.5% of the average equalized
valuation of taxable property within the constituent municipality over the constituent municipality’s net
debt). The School District has not utilized the Constituent Municipalities’ borrowing margin. A school
district may also authorize debt in excess of this limit with the consent of the Commissioner and the Local
Finance Board.
Capital Lease Financing
School districts are permitted to enter into lease purchase agreements for the acquisition of
equipment (“Equipment Lease”) and for the construction of improvements or additions to school district
buildings (“Facility Leases”). Generally, the term of lease purchase agreements may not exceed 5 years in
duration, with the exception of certain energy-saving equipment, which may be leased for up to 15 years
if paid from energy savings received by the school district. In addition, all Facility Leases must be
approved by the Commissioner of the Department of Education. The payment of rent on all lease
purchase agreements is treated as a current expense and is contained within a school district’s budget
under the spending limitations imposed by applicable law.
Energy Savings Obligations
School districts are permitted to issue “energy savings obligations” without voter approval to
fund certain improvements that result in reduced energy use, facilities for production of renewable energy
or water conservation improvements provided that the amount of the savings will cover the cost of the
improvements pursuant to N.J.S.A. 18A:18A-4.6.
Related Constitutional and Statutory Provisions
In the general election of November 2, 1976, as amended by the general election of November 6,
1984, the following Article 8, Section 1, Paragraph 7, in respect of a state income tax, was added to the
State Constitution:
No tax shall be levied on personal incomes of individuals, estates and trusts of this State
unless the entire net receipts therefrom shall be received into the treasury, placed in a
perpetual fund and be annually appropriated, pursuant to formulas established from time
to time by the Legislature, to the several counties, municipalities and school districts of
this State exclusively for the purpose of reducing or offsetting property taxes. In no event,
however, shall a tax so levied on personal income be levied on payments received under
the federal Social Security Act, the federal Railroad Retirement Act, or any federal law
which substantially reenacts the provisions of either of those laws.
A progressive state income tax is currently in effect in the State. Interest payable on the Bonds is
exempt therefrom.
The State Constitution may only be amended after: (i) approval of a proposed amendment by 3/5
of all of the members of each house of the State Legislature and approval by a majority vote in a
statewide referendum; or (ii) approval in 2 successive legislative years by a majority of all of the
members of each house and approval by a majority vote in a statewide referendum. Amendments failing
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to receive voter approval may not be resubmitted for voter approval before the 3d succeeding general
election after such disaffirmance.
BANKRUPTCY
The undertakings of the School District should be considered with reference to Chapter IX of the
Bankruptcy Act (11 U.S.C. 401, et seq.), as amended by P.L. 94-260; the Bankruptcy Reform Act of 1978
(P.L. 95-598), as amended by P.L. 100-597; the Bankruptcy Reform Act of 1994 (P.L. 103-394); and
other bankruptcy laws affecting creditors’ rights and municipalities in general. The amendments of
P.L. 94-260 replace former Chapter IX and permit a state or any political subdivision, public agency or
instrumentality that is insolvent or unable to meet its debts to file a petition in a court of bankruptcy for
the purpose of effecting a plan to adjust its debts provided such entity is authorized by applicable state
law; directs such a petitioner to file with the court a list of a petitioner’s creditors; provides that a petition
filed under this chapter shall operate as a stay of the commencement or continuation of any judicial or
other proceeding against the petitioner; grants priority to debt owned for services or material actually
provided within 3 months of the filing of the petition; directs a petitioner to file a plan for the adjustment
of its debts; and provides that the plan must be accepted in writing by or on behalf of creditors holding at
least 2/3 in amount or more than 1/2 in number of the listed creditors. These amendments were
incorporated into the Bankruptcy Reform Act of 1978 with only minor changes.
Reference should also be made to N.J.S.A. 52:27-40, et seq., which provides that a municipality
or school district has the power to file a petition in bankruptcy provided the approval of the Municipal
Finance Commission of New Jersey has been obtained. The powers of the Municipal Finance
Commission of New Jersey have been vested in the Local Finance Board. The Bankruptcy Act
specifically provides that Chapter IX does not limit or impair the power of a state to control, by
legislation or otherwise, the procedures that a municipality or school district must follow in order to take
advantage of the provisions of the Bankruptcy Act.
The above references to the Bankruptcy Act are not to be construed as an indication that the
School District expects to resort to the provisions of the Bankruptcy Act or that, if it did, such action
would be approved by the Local Finance Board, or that any proposed plan would include a dilution of the
source of payment of and security for the Bonds.
NO DEFAULT
There is no record of default in the payment of principal of or interest on bonds or notes of
the Board.
ABSENCE OF MATERIAL LITIGATION
In the opinion of Cleary Giacobbe Alfieri Jacobs, LLC, Matawan, New Jersey (the “Board
Attorney”), no litigation of any nature is now pending or, to its knowledge, threatened restraining or
enjoining the issuance or delivery of the Bonds or the levy or collection of any taxes to pay the interest on
or principal of the Bonds, or in any manner questioning the authority or proceedings for the issuance of
the Bonds or for the levy or collection of said taxes, or relating to the Bonds or affecting the validity
thereof or the levy or collection of said taxes, and neither the corporate existence or boundaries of the
Board nor the title of any of the present officers thereof to their respective offices is being contested, and
no authority or proceedings for the issuance of the Bonds has or have been repealed, revoked or
rescinded. A signed statement to that effect will be supplied upon delivery of the Bonds. In the opinion
of the Board Attorney, there is no litigation pending or, to their knowledge, threatened against the Board
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which if adversely decided, would have a material adverse effect on the financial condition of the Board
or which is not otherwise adequately covered by insurance.
TAX MATTERS
Federal
The Board has covenanted to comply with any continuing requirements that may be necessary to
preserve the exclusion from gross income for purposes of federal income taxation of interest on the Bonds
under the Internal Revenue Code of 1986, as amended (the “Code”). Failure to comply with certain
requirements of the Code could cause interest on the Bonds to be includable in gross income for federal
income tax purposes retroactive to the date of issuance of the Bonds. In the opinion of
Waters, McPherson, McNeill, P.C. (“Bond Counsel”) to be delivered at the time of original issuance of
the Bonds, assuming continuing compliance by the Board with certain covenants described herein, under
current law, interest on the Bonds is not included in gross income for federal income tax purposes and is
not an item of tax preference under Section 57 of the Code when calculating the federal alternative
minimum tax on individuals. However, interest on the Bonds is included in the relevant income
computation for purposes of calculating the federal alternative minimum tax on corporations as a result of
the inclusion of interest on the Bonds in “adjusted current earnings” (see discussion below). No
opinion is expressed regarding other federal tax consequences or other federal taxes arising with respect
to the Bonds.
The Code imposes certain significant ongoing requirements that must be met after the issuance
and delivery of the Bonds in order to assure that the interest on the Bonds will be and remain excludable
from gross income for federal income tax purposes. These requirements include, but are not limited to,
requirements relating to use and expenditure of proceeds, yield and other restrictions on investments of
gross proceeds, and the arbitrage rebate requirement that certain excess earnings on investments of gross
proceeds of the Bonds be rebated to the federal government. Noncompliance with such requirements may
cause interest on the Bonds to become subject to federal income taxation retroactive to their date of
issuance, regardless of the date on which such noncompliance occurs or is discovered. The Board has
covenanted that it shall do and perform all acts permitted by law that are necessary or desirable to assure
that interest on the Bonds will be and will remain excluded from gross income for federal income tax
purposes. The Board will deliver its Arbitrage and Tax Certificate concurrently with the issuance of the
Bonds, which will contain provisions relating to compliance with the requirements of the Code, including
certain covenants in that regard by the Board. In rendering its opinion, Bond Counsel has relied on
certain representations, certifications of fact, and statements of reasonable expectations made by the
Board in connection with the Bonds, and Bond Counsel has assumed compliance by the Board with
certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of
interest on the Bonds from gross income under Section 103 of the Code. The Bonds are not “private
activity bonds” as defined in the Code.
Alternative Minimum Tax. Section 55 of the Code provides that an alternative minimum tax is
imposed on corporations at a rate of 20%. For purposes of the corporate alternative minimum tax, the
Code includes an increase adjustment for computation of the alternative minimum tax consisting
generally of 75% of the amount by which “adjusted current earnings” exceeds alternative minimum
taxable income (computed without regard to this adjustment and the alternative tax net operating loss
deduction). Thus, to the extent that interest on the Bonds is a component of a corporate holder’s
“adjusted current earnings”, a portion of that interest may be subject to an alternative minimum tax.
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Bank Qualification. The Code denies the interest deduction for indebtedness incurred by banks,
thrift institutions and other financial institutions to purchase or to carry tax exempt obligations. The
denial to such institutions of 100% of the deduction for interest paid on funds allocable to tax exempt
obligations applies to those tax exempt obligations acquired by such institutions after August 7, 1986.
For certain issues, which must be so designated by the issuer as qualified under Section 265 of the Code,
80% of such interest may be deducted as a business expense by such institutions.
The Bonds will not be designated as qualified under Section 265 of the Code by the Board for an
exemption from the denial of deduction for interest paid by financial institutions to purchase or to carry
tax exempt obligations.
Branch Profits Tax. Section 884 of the Code imposes on foreign corporations a branch profits tax
equal to 30% of the “dividend equivalent amount” for the taxable year, unless modified, reduced or
eliminated by income tax treaty in certain instances. Interest on the Bonds received or accrued by a
foreign corporation subject to the branch profits tax may be included in computing the “dividend
equivalent amount” of such corporation for purposes of the branch profits tax.
S Corporation Tax. Section 1375 of the Code imposes a tax on the “excess net passive income”
of certain S corporations with passive investment income in excess of 25% of gross receipts for a taxable
year. The United States Department of Treasury has issued regulations indicating that interest on tax
exempt bonds, such as the Bonds, held by an S corporation would be included in the calculation of excess
net passive income.
Other Federal Tax Consequences. Owners of the Bonds should consult their own tax advisors as
to the applicability and the effect on their federal income taxes of the alternative minimum tax, the branch
profits tax and the tax on S corporations, as well as the applicability and the effect of any other federal
income tax consequences.
Possible Government Action. Legislation affecting municipal bonds is regularly under
consideration by the United States Congress. In addition, the Internal Revenue Service (“IRS”) has
established an expanded audit program for tax exempt obligations. There can be no assurance that
legislation enacted or proposed or an audit initiated or concluded by the IRS after the issue date of the
Bonds involving either the Bonds or other tax exempt obligations will not have an adverse effect on the
tax exempt status or market price of the Bonds.
State
In the opinion of Bond Counsel, under current law interest on the Bonds, and any gain on the sale
thereof, is not includable as gross income under the New Jersey Gross Income Tax Act.
ALL POTENTIAL PURCHASERS OF THE OBLIGATIONS SHOULD CONSULT WITH
THEIR TAX ADVISORS IN ORDER TO UNDERSTAND THE IMPLICATIONS OF THE CODE.
SECONDARY MARKET DISCLOSURE
The Board has entered into a written Secondary Market Disclosure Undertaking in order to
comply with the secondary market disclosure requirements contemplated by Rule 15c2-12 adopted by the
United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. A
copy of the Secondary Market Disclosure Undertaking is set forth in Appendix D hereto. Annual
18
Financial Information, Operating Data and notices of Material Events shall be filed with
www.emma.msrb.org (“EMMA”).
The Board previously failed to timely file the following in the past 5 years pursuant to prior
undertakings executed in connection with bonds issued by the Board: (i) operating data for the fiscal years
ending June 30, 2011, 2012 and 2013; (ii) certain “Material Event Notices”, consisting of certain ratings
changes on outstanding obligations of the Board; and (iii) certain “Late Filing Notices” related to the
aforementioned.
Please note that the undertakings executed in connection with the Refunded Bonds required the
Board to file its annual financial information and operating data within 120 days after the close of its
fiscal year (except that audited financial statements are to be filed within 60 days after the Board’s receipt
of same). This short filing deadline is eliminated following the defeasance of the Refunded Bonds and
the Board’s last payment of principal and interest to accrue on the Refunded Bonds on October 1, 2016.
Thereafter, the shortest filing deadline within which the Board will have to file its annual financial
information and operating data pursuant to its prior undertakings is within 180 days after the close of the
its fiscal year (except that audited financial statements are to be filed within 60 days after the Board’s
receipt of same).
As of the date hereof, the Board has taken all necessary steps to ensure future compliance with
the Rule, including the appointment of Phoenix Advisors, LLC, Bordentown, New Jersey as continuing
disclosure agent.
CREDIT RATING
Standard & Poor’s Financial Services LLC (“S&P Global Ratings”) has assigned a rating of
“AA” to the Bonds, and views the outlook for this rating as stable. This rating, which does not include
the outlook as related to Rule 15c2-12, reflects only the view of S&P Global Ratings and an explanation
thereof may be obtained only from S&P Global Ratings. Certain information and materials, including
information and materials not included in this Official Statement, were furnished by the Board to S&P
Global Ratings. Generally, S&P Global Ratings bases its ratings on the information and materials so
furnished and on its investigations, studies and assumptions.
S&P Global Ratings currently rates the School Bond Reserve Act “A”, and views the outlook for
this rating as negative.
There is no assurance any such rating will remain in effect for any given period of time or that
any such rating will not be revised downward, suspended or withdrawn entirely by a rating agency if, in
the judgment of such rating agency, circumstances so warrant. Any such downward revision, suspension
or withdrawal of a rating may have an adverse effect on the market price or the marketability of the
Bonds. The Board has not undertaken any responsibility to oppose any such downward revision,
suspension or withdrawal of a rating.
UNDERWRITING
RBC Capital Markets, LLC (the “Underwriter”) has agreed to purchase the Bonds from the
Board, subject to the terms of a purchase contract between the Board and the Underwriter, at a purchase
price of $___________. The purchase price reflects an Underwriter’s discount of $______ and an
original issue premium of $___________. The Purchase Contract provides that the Underwriter will
19
purchase all the Bonds, if any are purchased, and that the obligation to make such purchase is subject to
certain terms and conditions set forth therein.
The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth
on the cover page of this Official Statement, which may subsequently change without any requirement of
prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the
Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers
depositing Bonds into investment trusts) at prices lower than the public offering prices set forth on the
cover page, and such public offering prices may be changed, from time to time, by the Underwriter
without prior notice. The Underwriter may also receive a fee for conducting a competitive bidding
process regarding the investment of certain proceeds of the Bonds.
The Underwriter and its respective affiliates are full-service financial institutions engaged in
various activities, that may include securities trading, commercial and investment banking, municipal
advisory, brokerage, and asset management. In the ordinary course of business, the Underwriter and its
respective affiliates may actively trade debt and, if applicable, equity securities (or related derivative
securities) and provide financial instruments (which may include bank loans, credit support or interest
rate swaps). The Underwriter and its respective affiliates may engage in transactions for their own
accounts involving the securities and instruments made the subject of this securities offering or other
offering of the School District. The Underwriter and its respective affiliates may also communicate
independent investment recommendations, market color or trading ideas and publish independent research
views in respect of this securities offering or other offerings of the School District. The Underwriter and
its respective affiliates may make a market in credit default swaps with respect to municipal securities in
the future.
VERIFICATION OF MATHEMATICAL ACCURACY
The accuracy of (i) the arithmetic computations supporting the conclusion that the principal
amounts of, and interest earned on, the government obligations to be acquired with a portion of the
proceeds of the Bonds, are sufficient to pay the redemption price of and interest on the Refunded Bonds
due through and including their redemption date and (ii) the mathematical computations supporting the
conclusion that the Bonds will not be “arbitrage bonds” under the Code, will be independently verified by
Jump, Perry and Company, L.L.P., Toms River, New Jersey.
LEGALITY
All legal matters relating to the authorization, the issuance, the sale and the delivery of the Bonds
are subject to the approval of Waters, McPherson, McNeill, P.C. (“Bond Counsel”), whose approving
opinion will be delivered with the Bonds substantially in the form set forth in Appendix C hereto. Except
to the extent necessary to issue its approving opinion as to the validity of the Bonds and the exemption of
the interest earned on the Bonds from taxation, Bond Counsel has made no inquiry of any Borough
officials or other persons as to any financial information, documents, statements or materials, and has not
independently verified any such financial information, documents, statements or materials that have been
or may be furnished in connection with the authorization, issuance or marketing of the Bonds.
Accordingly, Bond Counsel will not express any opinion with respect to the accuracy or completeness of
any such financial information, documents, statements or materials.
Bond Counsel has reviewed the statements made in the Official Statement under the captions
entitled “Description of the Bonds” (other than the information pertaining to DTC and Book-Entry
System), “Authorization and Purpose of the Bonds”, “Municipal Bankruptcy”, “Tax Matters”,
20
“Secondary Market Disclosure” (first paragraph only) and “Legality”. Bond Counsel has neither
reviewed nor made any independent verification of the accuracy or completeness of any other portions of
the Official Statement, and will not express any opinion with respect to such portions.
Certain legal matters will be passed upon for the Board by the Board Attorney. The Board
Attorney has reviewed the statements made in the Official Statement under the caption entitled “Absence
of Material Litigation”. The Board Attorney has neither reviewed nor made any independent verification
of the accuracy or completeness of any other portions of the Official Statement, and will not express any
opinion with respect to such portions.
FINANCIAL STATEMENTS
The financial statements of the Board as of June 30, 2015 have been audited by Jump, Perry and
Company, L.L.P., Toms River, New Jersey (the “Auditor”). Accordingly, the Auditor takes responsibility
for their Independent Auditors’ Report, and the audited financial information specified therein, set forth in
Appendix B hereto.
The Auditor has reviewed the statements made in the Official Statement under the caption
entitled “Appendix B”. The Auditor has neither reviewed nor made any independent verification of the
accuracy or completeness of any other portions of the Official Statement, and will not express any
opinion with respect to such portions.
MUNICIPAL ADVISOR
Phoenix Advisors, LLC, Bordentown, New Jersey (the “Municipal Advisor”) served as municipal
advisor to the Board with respect to the issuance of the Bonds and assisted in matters relating to the
planning, structuring and issuance of the Bonds. The Municipal Advisor has made no inquiry of any
Borough officials or other persons as to any financial information, documents, statements or materials,
and has not independently verified any such financial information, documents, statements or materials
that have been or may be furnished in connection with the authorization, issuance or marketing of the
Bonds. Accordingly, the Municipal Advisor will not express any opinion with respect to the accuracy or
completeness of any such financial information, documents, statements or materials.
The Municipal Advisor has reviewed the statements made in the Official Statement under the
captions entitled “Secondary Market Disclosure”. The Municipal Advisor has neither reviewed nor made
any independent verification of the accuracy or completeness of any other portions of the Official
Statement, and will not express any opinion with respect to such portions.
The Municipal Advisor is an Independent Registered Municipal Advisor pursuant to the DoddFrank Act and is in compliance with all applicable rules and regulations.
ADDITIONAL INFORMATION
Inquiries regarding this Official Statement, including information additional to that contained
herein, may be directed to Veronica Wolf, Business Administrator / Board Secretary, 54 Main Street,
Englishtown, New Jersey 07726, Telephone No. (732) 786-2514.
21
MISCELLANEOUS
All information used in the preparation of this Official Statement and the Appendices hereto has
been obtained from sources which the Board considers to be reliable. However, the Board makes no
warranty, guaranty or other representation with respect to the accuracy and completeness of any such
information.
Upon request, the Business Administrator / Board Secretary of the Board will confirm to the
purchasers of the Bonds, by certificate signed by the Business Administrator / Board Secretary, that to the
knowledge of the Business Administrator / Board Secretary the descriptions and statements relating to the
Board herein, as of the date of this Official Statement, are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state a material fact necessary to make such
descriptions and statements, in light of the circumstances under which they were made, not misleading.
All quotations from and summaries and explanations of provisions of laws of the State herein do
not purport to be complete and are qualified in their entirety by reference to the official compilation
thereof.
So far as any statements made in this Official Statement involve matters of opinion or estimates,
whether or not expressly stated, they are set forth as such and not as representations of fact, and no
representation is made that any such statements will be realized. Neither this Official Statement nor any
statement which may have been made verbally or in writing is to be construed as part of any contract with
the holders of the Bonds.
This Official Statement has been duly executed on behalf of the Board by its Business
Administrator / Board Secretary.
THE BOARD OF EDUCATION OF THE
REGIONAL SCHOOL DISTRICT INCLUDING
THE SCHOOL DISTRICTS OF MANALAPAN
TOWNSHIP AND ENGLISHTOWN BOROUGH
By: _____________________________________
Veronica Wolf
Business Administrator / Board Secretary
Dated: June __, 2016
22
APPENDIX A
GENERAL INFORMATION RELATING TO THE SCHOOL DISTRICT AND ECONOMIC
AND DEMOGRAPHIC INFORMATION RELATING TO THE TOWNSHIP OF MANALAPAN
AND THE BOROUGH OF ENGLISHTOWN
[ THIS PAGE INTENTIONALLY LEFT BLANK ]
INFORMATION REGARDING THE SCHOOL DISTRICT1
Type
The Board of Education of the Regional School District including the School Districts of
Manalapan Township and Englishtown Borough (“School District”) is comprised of one (1)
middle school, one (1) sixth grade school, five (5) elementary schools and one (1) early learning
center all providing a full-range of educational services appropriate to grade levels Pre-K
through eight (8).
The School District, serving the Township of Manalapan and the Borough of
Englishtown (the “Constituent Municipalities”) was formed as a regional elementary district in
1963. The School District is geographically coterminous with the Constituent Municipalities,
which are located in Monmouth County (“County”), in the central part of the State of New
Jersey (“State”).
The Board of Education (the “Board”) is the policy making body of the School District
and has the general responsibility for providing an education program, the power to establish
policies and supervise the public schools in the School District, the responsibility to develop the
annual School District budget and present it to the legally registered voters in the School District.
The Board's fiscal year ends each June 30.
The Board appoints a Superintendent and Board Secretary/Business Administrator who
are responsible for budgeting, planning and the operational functions of the School District. The
administrative structure of the Board gives final responsibility for both the educational process
and the business operation to the Superintendent.
Description of Facilities
The Board presently operates the following school facilities:
Facility
John I. Dawes Early Learning Center
Clark Mills Elementary
Taylor Mills Elementary
Pine Brook Elementary
Lafayette Mills Elementary
Milford Brook Elementary
Wemrock Brook Elementary
Manalapan Englishtown Middle
Construction
Date
2008
1957
1965
1966
1968
1971
2002
1992
Source: Comprehensive Annual Financial Report of the School District
1
Source: The Board, unless otherwise indicated.
A-1
Grade
Level
Pre K - K
1-5
1-5
6
1-5
1-5
1-5
7-8
Student
Enrollment
(As of 6/30/15)
530
605
519
778
508
604
631
1,346
Staff
The Superintendent is the chief executive officer of the Board and is in charge of carrying
out Board policies. The Board Secretary/Business Administrator is the chief financial officer of
the Board and must submit monthly financial reports to the Board and annual reports to the New
Jersey Department of Education.
The following table presents the number of full and part-time teaching professionals and
support staff of the School District as of June 30, 2015, for each of the past five (5) years.
Teaching Professionals
Support Staff
Total Full & Part Time Employees
2015
461
365
2014
476
327
2013
439
373
2012
427
342
2011
430
335
826
803
812
769
765
Source: Comprehensive Annual Financial Report of the School District
Pupil Enrollments
The following table presents the historical average daily pupil enrollments for the past
five (5) school years and projections of pupil enrollment.
Pupil Enrollments
School Year
Enrollment
2015-2016
4,999
2014-2015
5,116
2013-2014
5,090
2012-2013
5,136
2011-2012
5,161
Projected
Future Enrollments
Enrollment
School Year
2017-2018
5,002
2016-2017
5,008
Source: School District and Comprehensive Annual Financial Report of the School District
A-2
Labor Relations
Labor Contract Representing
Transport Workers Union of America Local 225 Branch 4 AFL-CIO
Manalapan-Englishtown Education Association
Manalapan-Englishtown Education Association – Support Staff Unit
Manalapan-Englishtown Federation of Non-Instructional Personnel, Local 2198, AFT/AFL-CIO
Manalapan-Englishtown Association of School Administrators
Manalapan- Englishtown Non-Certified Administrators and Supervisors Association
Date of Contract
Expiration
6/30/2016
6/30/2017
6/30/2018
6/30/2018
6/30/2018
6/30/2019
Source: School District
Pensions
Those employees of the School District who are eligible for pension coverage are
enrolled in one of the two State-administered multi-employer pension systems (the “Pension
System”). The Pension System was established by an act of the State Legislature. The Board of
Trustees for the Pension System is responsible for the organization and administration of the
Pension System. The two State-administered pension funds are: (1) the Teacher’s Pension and
Annuity Fund (“TPAF”) and (2) the Public Employee’s Retirement System (“PERS”). The
Division of Pensions and Benefits, within the State of New Jersey Department of the Treasury
(the “Division”), charges the participating school districts annually for their respective
contributions. The School District raises its contributions through taxation and the State
contributes the employer's share of the annual Social Security and Pension contribution for
employees enrolled in the TPAF. The Pension System is a cost sharing multiple employer
contributory defined benefit plan. The Pension System's designated purpose is to provide
retirement and medical benefits for qualified retirees and other benefits to its members.
Membership in the Pension System is mandatory for substantially all full-time employees of the
State or any county, municipality, school district or public agency provided the employee is not
required to be a member of another State administered retirement system or other state or local
jurisdiction.
Fiscal 2016-17 Budget
The General Fund budget is the sum of all state aid (exclusive of pension aid and social
security aid) and the local tax levy (exclusive of debt service). The Board’s General Fund Budget
for the 2016-2017 fiscal year is $83,280,665. The major sources of revenue are $58,286,034
from the local tax levy and $20,112,100 from state aid.
Source: Annual User-Friendly Budget of the School District
A-3
Budget History
As noted, prior to the Board’s budget for its 2012-2013 fiscal year, the Board was
required to submit its budget for voter approval. A summary of the last five (5) budget years of
the Board is presented below:
Budget
Year
2016-2017
2015-2016
2014-2015
2013-2014
2012-2013
Amount Raised
in Taxes
$58,286,034
56,603,915
54,942,358
52,583,623
51,552,572
Budget
Amount
$83,280,665
82,212,327
79,493,134
77,564,312
75,838,322
Election
Result
N/A
N/A
N/A
N/A
N/A
Source: Annual User-Friendly Budget of the School District and NJ State Department of Education Website – School Election Results
[Remainder of Page Intentionally Left Blank]
A-4
Financial Operations
The following table summarizes information on the changes in general fund revenues and
expenditures for the school years ending June 30, 2011 through June 30, 2015 for the general
fund. This summary should be used in conjunction with the tables in the sourced documents from
which it is derived (see Appendix B). Beginning with the 1993-94 fiscal year, school districts in
the State of New Jersey have begun to prepare their financial statements in accordance with
Generally Accepted Accounting Principles in the United States.
GENERAL FUND REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES FOR THE YEARS ENDED JUNE 30:
2015
REVENUES
Local Sources:
Local Tax Levy
Other Local Revenue
Total revenues-local sources
State Sources
Federal Sources
Total Revenues
EXPENDITURES
General Fund:
Instruction
Undistributed Expenditures
Capital Outlay
Total Expenditures
Excess (Deficiency) of Revenues
Over/(Under) Expenditures
Other Financing Sources (Uses):
Proceeds of Capital Lease
FEMA Aid
Transfers in
Transfers out
Total other financing sources (uses)
Net Change in Fund Balance
Fund Balance, July 1
Fund Balance, June 30
2014
2013
2012
2011
$54,942,228
323,502
55,265,730
25,667,218
0
$80,932,948
$52,583,623
605,202
53,188,825
25,754,200
21,813
$78,964,838
$51,552,572
614,872
52,167,444
26,655,004
1,829
$78,824,277
$50,541,738
341,129
50,882,867
24,967,770
732,580
$76,583,217
$49,550,724
280,648
49,831,372
23,126,015
0
$72,957,387
$37,122,190
41,885,462
2,607,956
$81,615,608
$36,277,860
41,258,976
1,502,885
$79,039,721
$36,311,051
39,352,376
1,580,491
$77,243,918
$33,977,892
37,786,991
1,093,908
$72,858,791
$32,804,951
37,169,850
1,457,468
$71,432,269
(682,660)
(74,883)
1,580,359
3,724,426
1,525,118
478,384
0
0
0
478,384
(204,276)
10,064,443
$9,860,167
98,320
0
0
0
98,320
23,437
10,041,006
$10,064,443
571,815
56,489
0
(2,046,000)
(1,417,696)
162,663
9,878,343
$10,041,006
0
0
0
0
0
3,724,426
6,153,909
$9,878,335
117,599
0
0
0
117,599
1,642,717
4,511,192
$6,153,909
Source: Comprehensive Annual Financial Report of the School District. Statement of Revenues, Expenditures Governmental Funds and Changes
In Fund Balances on a GAAP basis
A-5
Capital Leases
As of June 30, 2015, the Board has capital lease(s) outstanding with payments due
through year ending June 30, 2023, totaling $1,166,874.
Source: Comprehensive Annual Financial Report of the School District
Operating Leases
As of June 30, 2015, the Board has no operating leases outstanding.
Source: Comprehensive Annual Financial Report of the School District
Short Term Debt
As of June 30, 2015, the Board has no short term debt outstanding.
Source: Comprehensive Annual Financial Report of the School District
Long Term Debt
The following table outlines the outstanding long term debt of the Board as of June 30,
2015.
Fiscal Year Ending
Principal
2016
$2,125,000
2017
2,220,000
2018
2,330,000
2019
2,450,000
2020
2,560,000
2021
2,685,000
2022
2,825,000
2023
2,970,000
2024
3,165,000
2025
3,415,000
2026
3,555,000
2027
3,705,000
2028
3,850,000
2029
4,000,000
$41,855,000
TOTALS
Interest
$1,801,631
1,706,894
1,600,403
1,485,006
1,363,319
1,235,238
1,098,175
955,278
820,809
688,122
546,547
399,081
244,419
82,506
$14,027,428
Source: Comprehensive Annual Financial Report of the School District
A-6
Total
$3,926,631
3,926,894
3,930,403
3,935,006
3,923,319
3,920,238
3,923,175
3,925,278
3,985,809
4,103,122
4,101,547
4,104,081
4,094,419
4,082,506
$55,882,428
Debt Limit of the Board
The debt limitation of the Board is established by statute (N.J.S.A. 18A:24-19). The
Board is permitted to incur debt up to 3% of the average equalized valuation for the past three
years (See “SUMMARY OF CERTAIN STATUTORY PROVISIONS RELATING TO
SCHOOL DISTRICTS AND SCHOOL DEBT- Exceptions to Debt Limit” herein). The
following is a summation of the Board’s debt limitation as of June 30, 2015:
Average Equalized Real Property Valuation
(2013, 2014, and 2015)
School District Debt Analysis
Permitted Debt Limitation (3% of AEVP)
Less: Bonds and Notes Authorized and Outstanding
Remaining Limitation of Indebtedness
Percentage of Net School Debt to Average Equalized Valuation
Source: Comprehensive Annual Financial Report of the School District
[Remainder of Page Intentionally Left Blank]
A-7
$6,469,250,485
$194,077,515
41,855,000
$152,222,515
0.65%
INFORMATION REGARDING THE TOWNSHIP1
The following material presents certain economic and demographic information of the
Township of Manalapan (the “Township”), a municipal corporation of the State of New Jersey
(the “State”), in the County of Monmouth (the “County”).
General Information
The Township is located in the central eastern portion of the State and is south of the
New York-northern New Jersey metropolitan area. The Township comprises approximately
30.85 square miles southwest of New York City. The Township is one of the border
municipalities of the County, adjoining the County of Middlesex, which forms it entire
northwestern boundary. On the northeast it is bounded by the Township of Marlboro, on the
East and Southeast by the Townships of Marlboro and Freehold and on the Southwest by the
Township of Millstone. The Manalapan and Matchaponix Creeks, Wemrock Brook and several
other small tributaries flow northwestwardly through the Township into the County of
Middlesex, where they mingle their waters with those of South River and the Southern Branch of
the Raritan River.
Government
The Township operates under the Township form of government as provided by N.J.S.A.
40A-63-1 et seq., as amended and supplemented. The Township is governed by a five (5)
member Township Committee, whose members are elected at large for 3-year terms by the
legally registered voters in the Township. The Township Committee comprises the legislative
body which formulates policy, appropriates funds and adopts ordinances and resolutions for the
conduct of Township business. The Mayor is the Chairman of the Township Committee and
head of the municipal government.
Retirement Systems
All full-time permanent or qualified Township employees who began employment after
1944 must enroll in one of two retirement systems depending upon their employment status.
These systems were established by acts of the State Legislature. Benefits, contributions, means
of funding and the manner of administration are set by State law. The Division of Pensions,
within the New Jersey Department of Treasury (the “Division”), is the administrator of the funds
with the benefit and contribution levels set by the State. The Township is enrolled in the Public
Employees' Retirement System (“PERS”) and the Police and Firemen’s Retirement System
(“PFRS”).
1
Source: The Township, unless otherwise indicated.
A-8
Employment and Unemployment Comparisons
For the following years, the New Jersey Department of Labor reported the following
annual average employment information for the Township, the County, and the State:
Total Labor
Force
Employed
Labor Force
Township
2015
2014
2013
2012
2011
20,996
20,775
20,598
20,659
20,365
20,072
19,611
19,213
19,080
18,827
924
1,164
1,385
1,579
1,538
4.4%
5.6%
6.7%
7.6%
7.6%
County
2015
2014
2013
2012
2011
331,623
327,666
327,301
331,262
330,006
315,165
307,924
302,882
302,437
301,735
16,458
19,742
24,419
28,825
28,271
5.0%
6.0%
7.5%
8.7%
8.6%
4,545,083
4,518,715
4,537,800
4,595,500
4,556,200
4,291,650
4,218,423
4,166,000
4,159,300
4,131,800
253,417
300,277
371,800
436,200
424,400
5.6%
6.6%
8.2%
9.5%
9.3%
State
2015
2014
2013
2012
2011
Total
Unemployed
Unemployment
Rate
Source: New Jersey Department of Labor, Office of Research and Planning, Division of Labor Market and Demographic Research, Bureau of
Labor Force Statistics, Local Area Unemployment Statistics
Income (as of 2010)
Median Household Income
Median Family Income
Per Capita Income
Township
$108,349
122,009
44,989
Source: US Bureau of the Census 2010
A-9
County
$84,526
105,971
42,749
State
$71,180
86,779
35,768
Population
The following tables summarize population increases and the decreases for the Township,
the County, and the State.
Year
2010
2000
1990
1980
1970
Township
Population % Change
38,872
16.30%
33,423
25.10
26,716
41.25
18,914
34.63
14,049
252.11
County
Population % Change
630,380
2.45%
615,301
11.24
553,124
9.93
503,173
8.95
461,849
38.11
State
Population % Change
8,791,894
4.49%
8,414,350
8.85
7,730,188
4.96
7,365,001
2.75
7,168,164
18.15
Source: United States Department of Commerce, Bureau of the Census
Largest Taxpayers
The ten largest taxpayers in the Township and their assessed valuations are listed below:
2015
% of Total
Assessed Valuation Assessed Valuation
Taxpayers
Manalapan Realty
$42,593,600
0.69%
Manalapan VF
29,989,700
0.49%
Towne Pointe Associates
13,573,200
0.22%
Trans Equity Realty, LLC
9,694,600
0.16%
Taylor 9 South Associates LLC
7,593,400
0.12%
Monmouth Investors LLC
7,500,000
0.12%
Lenine, LLC
7,356,000
0.12%
Pension Road Realty Associates
6,400,000
0.10%
Englishtown Auction Sales. Inc
6,245,200
0.10%
Bleach Associates
6,218,700
0.10%
Total
$137,164,400
Source: Comprehensive Annual Financial Report of the School District and Municipal Tax Assessor
A-10
2.23%
Comparison of Tax Levies and Collections
Year
2014
2013
2012
2011
2010
Current Year
Collection
$123,464,749
119,794,727
117,168,641
115,253,579
113,910,009
Tax Levy
$124,737,609
121,065,191
118,422,656
116,566,423
115,530,685
Current Year
% of Collection
98.98%
98.95%
98.94%
98.87%
98.60%
Source: Annual Audit Reports of the Township
Delinquent Taxes and Tax Title Liens
Year
2014
2013
2012
2011
2010
Amount of Tax
Amount of
Title Liens
Delinquent Tax
$123,127
$1,214,665
111,673
1,133,338
100,405
1,074,035
89,595
1,239,632
102,744
1,668,958
Total
Delinquent
$1,337,792
1,245,011
1,174,441
1,329,227
1,771,702
Source: Annual Audit Reports of the Township
Property Acquired by Tax Lien Liquidation
Year
2014
2013
2012
2011
2010
Amount
$264,800
264,800
264,800
264,800
264,800
Source: Annual Audit Reports of the Township
A-11
% of
Tax Levy
1.07%
1.03%
0.99%
1.14%
1.53%
Tax Rates per $100 of Net Valuations Taxable and Allocations
The table below lists the tax rates for Township residents for the past five (5) years.
Year
2015
2014
2013
2012
2011R
Municipal
$0.361
0.372
0.365
0.359
0.352
Local
School
$0.932
0.945
0.925
0.912
0.902
Regional
School
$0.420
0.436
0.425
0.420
0.421
County
$0.312
0.327
0.316
0.315
0.312
Total
Taxes
$2.025
2.080
2.031
2.006
1.987
R: Revaluation
Source: Abstract of Ratables and State of New Jersey – Property Taxes
Valuation of Property
Year
2015
2014
2013
2012
2011R
Aggregate Assessed
Valuation of
Real Property
$6,161,426,100
5,842,218,476
5,791,041,500
5,746,321,400
5,697,047,400
Aggregate True
Value of
Real Property
$6,385,559,229
6,234,359,701
6,109,982,591
5,978,278,610
6,162,301,136
Ratio of
Assessed to
True Value
96.49%
93.71
94.78
96.12
92.45
Assessed
Value of
Equalized
Personal Property
Valuation
$0
$6,385,559,229
0
6,234,359,701
0
6,109,982,591
0
5,978,278,610
6,951,526
6,169,252,662
R: Revaluation
Source: Abstract of Ratables and State of New Jersey – Table of Equalized Valuations
Classification of Ratables
Year Vacant Land Residential
2015
$38,765,800 $5,657,693,750
2014
47,846,600
5,359,086,600
2013
58,673,900
5,299,331,500
2012
70,482,900
5,241,149,800
2011R
84,044,500
5,183,906,700
Farm
$36,517,600
34,399,600
33,855,300
34,620,100
35,135,300
Commercial
$387,171,100
380,616,076
378,911,200
377,401,400
371,293,700
R: Revaluation
Source: Abstract of Ratables and State of New Jersey – Property Value Classification
A-12
Industrial
Apartments
$20,451,600
$0
20,269,600
0
20,269,600
0
22,667,200
0
22,667,200
0
Total
$6,140,599,850
5,842,218,476
5,791,041,500
5,746,321,400
5,697,047,400
Financial Operations
The following table summarizes the Township’s Current Fund budget for the past five (5)
fiscal years ending December 31. The following summary should be used in conjunction with
the tables in the sourced documents from which it is derived.
Summary of Current Fund Budget
Anticipated Revenues
2012
2013
2014
2015
2016*
Fund Balance
$3,500,000 $3,500,000 $3,500,000 $3,650,000 $3,825,000
Miscellaneous Revenues
6,714,645
6,719,301
7,241,353
6,934,291
6,987,758
Receipts from Delinquent Taxes
1,000,000
750,000
750,000
750,000
675,000
Amount to be Raised by Taxes for
Support of Municipal Budget
19,463,480 19,945,043 20,526,836 20,909,145 21,294,002
Total Revenue:
$30,678,125 $30,914,344 $32,018,189 $32,243,437 $32,781,760
Appropriations
General Appropriations
Operations
Deferred Charges and Statutory
Expenditures
Judgments
Capital Improvement Fund
Municipal Debt Service
Reserve for Uncollected Taxes
Total Appropriations:
$25,298,439 $25,199,466 $25,782,813 $26,311,393 $26,781,900
699,317
953,510
1,217,268
958,686
884,956
0
0
0
0
0
0
0
0
0
7,000
85,000
140,000
320,000
145,000
175,000
2,203,954
2,163,020
2,295,859
2,330,134
2,557,824
2,391,415
2,458,348
2,402,250
2,498,225
2,375,080
$30,678,125 $30,914,344 $32,018,189 $32,243,437 $32,781,760
*: Introduced
Source: Annual Adopted Budgets of the Township
A-13
Fund Balance
Current Fund
The following table lists the Township’s fund balance and the amount utilized in the
succeeding year’s budget for the Current Fund for the past five (5) fiscal years ending December
31.
Fund Balance - Current Fund
Balance
Utilized in Budget
12/31
of Succeeding Year
Year
2014
$6,297,911
$3,650,000
2013
6,629,134
3,500,000
2012
4,943,067
3,500,000
2011
4,629,962
3,500,000
2010
5,071,201
4,300,000
Source: Annual Audit Reports of the Township
Water Utility Operating Fund
The following table lists the Township’s fund balance and the amount utilized in the
succeeding year’s budget for the Water Utility Operating Fund for the past five (5) fiscal years
ending December 31.
Fund Balance - Water Utility Operating Fund
Balance
Utilized in Budget
Year
12/31
of Succeeding Year
2014
$119,433
$69,192
2013
82,492
30,791
2012
84,559
30,788
2011
105,164
30,694
2010
117,872
42,998
Source: Annual Audit Reports of the Township
A-14
Township Indebtedness as of December 31, 2015
General Purpose Debt
Serial Bonds
Bond Anticipation Notes
Bonds and Notes Authorized but Not Issued
Other Bonds, Notes and Loans
Total:
$19,516,142
4,551,620
0
0
$24,067,762
Regional School District I Debt
Serial Bonds
Temporary Notes Issued
Bonds and Notes Authorized but Not Issued
Total:
$1,387,640
0
0
$1,387,640
Regional School District II Debt
Serial Bonds
Temporary Notes Issued
Bonds and Notes Authorized but Not Issued
Total:
$38,342,360
0
0
$38,342,360
Self-Liquidating Debt
Serial Bonds
Bond Anticipation Notes
Bonds and Notes Authorized but Not Issued
Other Bonds, Notes and Loans
Total:
$35,859
0
0
0
$35,859
TOTAL GROSS DEBT
$63,833,621
Less: Statutory Deductions
General Purpose Debt
Regional School District I Debt
Regional School District II Debt
Self-Liquidating Debt
Total:
$7,161,620
1,387,640
38,342,360
35,859
$46,927,479
TOTAL NET DEBT
$16,906,142
A-15
Overlapping Debt (As of December 31, 2015)2
Name of Related Entity
Regional School District I
Regional School District II
County
Related Entity
Debt Outstanding
$39,730,000
23,540,000
437,190,697
Township
Percentage
97.00%
21.00%
5.56%
Net Indirect Debt
Net Direct Debt
Total Net Direct and Indirect Debt
Township
Share
$38,342,360
4,846,265
24,289,215
$67,477,839
16,906,142
$84,383,981
Debt Limit
Average Equalized Valuation Basis (2013, 2014, 2015)
Permitted Debt Limitation (3.5%)
Less: Net Debt
Remaining Borrowing Power
Percentage of Net Debt to Average Equalized Valuation
Gross Debt Per Capita based on 2010 population of 38,872
Net Debt Per Capita based on 2010 population of 38,872
Source: Annual Debt Statement of the Township
2
Township percentage of County debt is based on the Township’s share of total equalized valuation in the County.
A-16
$6,243,300,507
218,515,518
16,906,142
$201,609,376
0.27%
$1,642
$435
INFORMATION REGARDING THE BOROUGH1
The following material presents certain economic and demographic information of the
Borough of Englishtown (the “Borough”), a municipal corporation of the State of New Jersey
(the “State”), in the County of Monmouth (the “County”).
Employment and Unemployment Comparisons
For the following years, the New Jersey Department of Labor reported the following
annual average employment information for the Borough, the County, and the State:
Total Labor
Force
Borough
2015
2014
2013
2012
2011
Total
Unemployed
Unemployment
Rate
1,086
1,076
1,073
1,049
927
1,027
1,003
980
972
859
59
73
93
77
67
5.4%
6.8%
8.7%
7.3%
7.3%
331,623
327,666
327,301
331,262
330,006
315,165
307,924
302,882
302,437
301,735
16,458
19,742
24,419
28,825
28,271
5.0%
6.0%
7.5%
8.7%
8.6%
4,545,083
4,518,715
4,537,800
4,595,500
4,556,200
4,291,650
4,218,423
4,166,000
4,159,300
4,131,800
253,417
300,277
371,800
436,200
424,400
5.6%
6.6%
8.2%
9.5%
9.3%
County
2015
2014
2013
2012
2011
State
2015
2014
2013
2012
2011
Employed
Labor Force
Source: New Jersey Department of Labor, Office of Research and Planning, Division of Labor Market and Demographic Research, Bureau of
Labor Force Statistics, Local Area Unemployment Statistics
Income (as of 2010)
Median Household Income
Median Family Income
Per Capita Income
Borough
$85,556
98,036
35,422
Source: US Bureau of the Census 2010
1
Source: The Borough, unless otherwise indicated.
A-17
County
$84,526
105,971
42,749
State
$71,180
86,779
35,768
Population
The following tables summarize population increases and the decreases for the Borough,
the County, and the State.
Year
2010
2000
1990
1980
1970
Borough
Population % Change
1,847
4.71%
1,764
39.12
1,268
29.92
976
-6.87
1,048
-8.31
County
Population % Change
630,380
2.45%
615,301
11.24
553,124
9.93
503,173
8.95
461,849
38.11
State
Population % Change
8,791,894
4.49%
8,414,350
8.85
7,730,188
4.96
7,365,001
2.75
7,168,164
18.15
Source: United States Department of Commerce, Bureau of the Census
Largest Taxpayers
The ten largest taxpayers in the Borough and their assessed valuations are listed below:
Taxpayers
Stamford Square LLC
Three Corners Ventures LLC
BAL Governor's Crossing LLC
BTR Englishtown LLC
Village Center Associates, LLC
Wemacs LLC
DCD LLC
Brooklawn Gardens Inc
Five South Main Street LLC
Sovereign Bank
2015
% of Total
Assessed Valuation Assessed Valuation
$12,271,500
5.12%
4,762,200
1.99%
4,210,000
1.76%
3,100,000
1.29%
2,965,700
1.24%
2,387,000
1.00%
1,987,000
0.83%
1,925,100
0.80%
1,850,000
0.77%
0.50%
1,208,100
$36,666,600
Total
15.29%
Source: Comprehensive Annual Financial Report of the School District and Municipal Tax Assessor
Comparison of Tax Levies and Collections
Year
2014
2013
2012
2011
2010
Tax Levy
$5,510,865
5,604,783
5,303,072
5,061,614
5,010,827
Current Year
Collection
$5,507,076
5,501,290
5,243,471
5,026,280
4,959,862
Source: Annual Audit Reports of the Borough
A-18
Current Year
% of Collection
99.93%
98.15%
98.88%
99.30%
98.98%
Delinquent Taxes and Tax Title Liens
Year
2014
2013
2012
2011
2010
Amount of Tax
Title Liens
$158
158
12,328
24,865
7,535
Amount of
Delinquent Tax
$0
0
0
0
0
Total
Delinquent
$158
158
12,328
24,865
7,535
% of
Tax Levy
0.00%
0.00%
0.23%
0.49%
0.15%
Source: Annual Audit Reports of the Borough
Property Acquired by Tax Lien Liquidation
Year
2014
2013
2012
2011
2010
Amount
$100
100
100
100
100
Source: Annual Audit Reports of the Borough
Tax Rates per $100 of Net Valuations Taxable and Allocations
The table below lists the tax rates for Borough residents for the past five (5) years.
Year
2015
2014
2013
2012
2011
Municipal
$0.591
0.558
0.498
0.462
0.405
Local
School
$0.873
0.812
0.786
0.778
0.860
Regional
School
$0.373
0.372
0.404
0.393
0.299
Source: Abstract of Ratables and State of New Jersey – Property Taxes
A-19
County
$0.294
0.268
0.281
0.276
0.264
Total
Taxes
$2.131
2.010
1.969
1.909
1.828
Valuation of Property
Year
2015
2014
2013
2012
2011
Aggregate Assessed
Valuation of
Real Property
$239,850,700
249,645,900
254,020,900
249,869,200
252,343,900
Aggregate True
Value of
Real Property
$232,973,581
223,236,967
221,639,386
231,103,589
235,241,820
Ratio of
Assessed to
True Value
104.89%
111.83
114.61
108.12
107.27
Assessed
Value of
Personal Property
$0
0
0
0
0
Equalized
Valuation
$232,973,581
223,236,967
221,639,386
231,103,589
235,241,820
Source: Abstract of Ratables and State of New Jersey – Table of Equalized Valuations
Classification of Ratables
The table below lists the comparative assessed valuation for each classification of real
property within the Borough for the past five (5) years.
Year
2015
2014
2013
2012
2011
Vacant Land
$1,654,800
1,867,700
3,274,100
2,384,300
3,788,700
Re side ntial
$183,619,000
200,060,300
206,535,000
201,896,900
198,279,700
Farm
$0
0
0
0
0
Commercial
$34,989,900
39,188,600
35,332,500
35,742,000
39,134,100
Industrial
$6,358,900
7,267,200
7,617,200
8,583,900
9,879,300
Source: Abstract of Ratables and State of New Jersey – Property Value Classification
[Remainder of Page Intentionally Left Blank]
A-20
Apartments
$13,228,100
1,262,100
1,262,100
1,262,100
1,262,100
Total
$239,850,700
249,645,900
254,020,900
249,869,200
252,343,900
Financial Operations
The following table summarizes the Borough’s Current Fund budget for the past five (5)
fiscal years ending December 31. The following summary should be used in conjunction with
the tables in the sourced documents from which it is derived.
Summary of Current Fund Budget
Anticipated Revenues
2012
2013
2014
2015
Fund Balance
$265,000
$295,000
$285,000
$325,000
Miscellaneous Revenues
535,026
494,375
722,728
645,558
Receipts from Delinquent Taxes
0
0
0
0
Amount to be Raised by Taxes for
Support of Municipal Budget
1,153,802 1,266,404 1,391,916 1,415,680
Total Revenue:
$1,953,828 $2,055,778 $2,399,644 $2,386,238
1,493,126
$2,357,034
Appropriations
General Appropriations
Operations
$1,588,748 $1,649,222 $1,693,683 $1,798,635
132,924
145,170
148,107
243,300
$1,870,980
137,670
38,144
15,000
0
6,900
0
0
0
0
36,100
60,000
30,000
46,600
60,200
89,300
418,700
189,400
97,712
97,087
109,154
101,403
$1,953,828 $2,055,778 $2,399,644 $2,386,238
5,000
0
25,000
212,550
105,834
$2,357,034
Deferred Charges and Statutory
Expenditures
Judgments
Capital Improvement Fund
Municipal Debt Service
Reserve for Uncollected Taxes
Total Appropriations:
2016*
$258,000
605,908
0
*: Introduced
Source: Annual Adopted Budgets of the Borough
Fund Balance
Current Fund
The following table lists the Borough’s fund balance and the amount utilized in the
succeeding year’s budget for the Current Fund for the past five (5) fiscal years ending December
31.
Fund Balance - Current Fund
Balance
Utilized in Budget
12/31
of Succeeding Year
Year
2014
$372,067
$325,000
2013
326,284
285,000
2012
339,097
295,000
2011
305,872
265,000
2010
343,644
303,000
Source: Annual Audit Reports of the Borough
A-21
Sewer Utility Operating Fund
The following table lists the Borough’s fund balance and the amount utilized in the
succeeding year’s budget for the Sewer Utility Operating Fund for the past five (5) fiscal years
ending December 31.
Fund Balance - Sewer Utility Operating Fund
Balance
Utilized in Budget
Year
12/31
of Succeeding Year
2014
$416,963
$175,300
2013
386,952
180,500
2012
371,073
164,500
2011
316,039
137,000
2010
401,786
218,000
Source: Annual Audit Reports of the Borough
Water Utility Operating Fund
The following table lists the Borough’s fund balance and the amount utilized in the
succeeding year’s budget for the Water Utility Operating Fund for the past five (5) fiscal years
ending December 31.
Fund Balance - Water Utility Operating Fund
Utilized in Budget
Balance
Year
12/31
of Succeeding Year
2014
$333,307
$207,000
2013
344,110
223,000
2012
441,058
235,000
2011
534,344
317,200
2010
599,730
264,900
Source: Annual Audit Reports of the Borough
A-22
Borough Indebtedness as of December 31, 2015
General Purpose Debt
Serial Bonds
Bond Anticipation Notes
Bonds and Notes Authorized but Not Issued
Other Bonds, Notes and Loans
Total:
$1,852,000
0
238,000
0
$2,090,000
Regional School District I Debt
Serial Bonds
Temporary Notes Issued
Bonds and Notes Authorized but Not Issued
Total:
$1,387,640
0
0
$1,387,640
Regional School District II Debt
Serial Bonds
Temporary Notes Issued
Bonds and Notes Authorized but Not Issued
Total:
$175,390
0
0
$175,390
Self-Liquidating Debt
Serial Bonds
Bond Anticipation Notes
Bonds and Notes Authorized but Not Issued
Other Bonds, Notes and Loans
Total:
$520,000
0
0
0
$520,000
TOTAL GROSS DEBT
$4,173,030
Less: Statutory Deductions
Source: Annual Debt Statement of the Borough
[Remainder of Page Intentionally Left Blank]
A-23
Overlapping Debt (as of December 31, 2015)2
Name of Related Entity
Regional School District I
Related Entity
Debt Outstanding
$39,730,000
Borough
Percentage
3.00%
Borough
Share
$1,387,640
Regional School District II
County
23,540,000
437,190,697
1.00%
0.20%
175,390
886,179
Net Indirect Debt
Net Direct Debt
Debt Limit
$2,449,209
2,090,000
Average Equalized Valuation Basis (2013, 2014, 2015)
Permitted Debt Limitation (3.5%)
Less: Net Debt
Remaining Borrowing Power
Percentage of Net Debt to Average Equalized Valuation
Gross Debt Per Capita based on 2010 population of 1,847
Net Debt Per Capita based on 2010 population of 1,847
Source: Annual Debt Statement of the Borough
2
Borough percentage of County debt is based on the Borough’s share of total equalized valuation in the County.
A-24
$225,949,978
7,908,249
2,090,000
$5,818,249
0.92%
$2,259
$1,132
APPENDIX B
REPORT OF EXAMINATION OF FINANCIAL STATEMENTS
[ THIS PAGE INTENTIONALLY LEFT BLANK ]
INDEPENDENT AUDITORS’ REPORT
The Honorable President and
Members of the Board of Education
Manalapan-Englishtown Regional School District
County of Monmouth
Freehold, New Jersey
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of Board of Education
of the Manalapan-Englishtown Regional School District in the County of Monmouth, State of New
Jersey, as of and for the year ended June 30, 2015, and the related notes to the financial statements,
which collectively comprise the School’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
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; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and in compliance with the audit
requirements as prescribed by the Office of School Finance, Department of Education State of New
Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
1
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the Board of Education of the ManalapanEnglishtown Regional School District in the County of Monmouth, State of New Jersey, as of June 30,
2015, and the respective changes in financial position and, where applicable, cash flows thereof for
the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and budgetary comparison information on pages 13 and 55
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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Manalapan-Englishtown Regional School District’s basic financial
statements. The introductory section, combining fund financial statements and schedules and
statistical section, are presented for purposes of additional analysis and are not a required part of the
basic financial statements. The schedule of expenditures of federal and state awards is presented for
purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations and New Jersey OMB’s Circular
04-04 and/or 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid,
and is presented for purposes of additional analysis and are also not a required part of the basic
financial statements.
The combining fund financial statements and schedules and the schedule of expenditures of federal
and state awards are the responsibility of management and were derived from and relate directly to
the underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements
or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the combining
fund financial statements and schedules and the schedule of expenditures of federal and state
awards are fairly stated, in all material respects in relation to the basic financial statements as a
whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied
in the audit of the basic financial statements and, accordingly, we do not express an opinion or
provide any assurance on them.
2
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November
20, 2015 on our consideration of the Board of Education of the Manalapan-Englishtown Regional
School District in the County of Monmouth, State of New Jersey’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 internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering Board of Education of the Manalapan-Englishtown Regional School District in the County
of Monmouth, State of New Jersey’s internal control over financial reporting and compliance.
Respectfully submitted,
Jump, Perry and Company, L.L.P.
JUMP, PERRY AND COMPANY, L.L.P.
Toms River, New Jersey
Kathryn Perry, CPA
Kathryn Perry, Partner
Licensed Public School Accountant
No. CS 20CS00226400
Toms River, New Jersey
November 20, 2015
3
K-1
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
Honorable President and Members
of the Board of Education
Manalapan-Englishtown Regional School District
County of Monmouth, New Jersey
We have audited, in accordance with the 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, and audit requirements as
prescribed by the Office of School Finance, Department of Education, State of New Jersey, the
financial statements of the governmental activities, the business-type activities, each major fund, and
the aggregate remaining fund information of the Board of Education of the Manalapan-Englishtown
Regional School District in the County of Monmouth, State of New Jersey, as of and for the year
ended June 30, 2015, and the related notes to the financial statements, which collectively comprise
the District’s basic financial statements, and have issued our report thereon dated November 20,
2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Board of
Education of the Manalapan-Englishtown Regional School District in the County of Monmouth, State
of New Jersey’s internal control over financial reporting (internal control) to determine the audit
procedures that are appropriate in the circumstances for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
Board of Education of the Manalapan-Englishtown Regional School District in the County of
Monmouth, State of New Jersey’s internal control. Accordingly, we do not express an opinion on the
effectiveness of the Board of Education of the Manalapan-Englishtown Regional School District’s
internal control.
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 a
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. A significant deficiency is a deficiency, or a combination of deficiencies,
in internal control that is less severe than a material weakness, yet important enough to merit
attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
4
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Board of Education of the ManalapanEnglishtown Regional School District’s financial statements are free from 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 and audit requirements as prescribed by the Division of
Finance, Department of Education, State of New Jersey.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Jump, Perry and Company, L.L.P.
JUMP, PERRY and COMPANY, L.L.P.
Toms River, New Jersey
Kathryn Perry, CPA
Kathryn Perry, Partner
Licensed Public School Accountant
No. CS 20CS00226400
November 20, 2015
5
K-2
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
AND NEW JERSEY OMB CIRCULAR LETTER 04-04 AND/OR 15-08
Honorable President and Members
of the Board of Education
Manalapan-Englishtown Regional School District
County of Monmouth, New Jersey
Report on Compliance for Each Major Federal and State Program
We have audited the Board of Education of the Manalapan-Englishtown Regional School
District’s compliance with the types of compliance requirements described in the OMB Circular A133 Compliance Supplement and the New Jersey State OMB Circular 04-04 and/or 15-08 that
could have a direct and material effect on each of the Manalapan-Englishtown Regional School
District’s major federal and state programs for the year ended June 30, 2015. The Board of
Education of the Manalapan-Englishtown Regional School District’s major federal and state
programs are identified in the summary of auditor’s results section of the accompanying schedule
of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts,
and grants applicable to its federal and state programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the Board of Education of
the Manalapan-Englishtown Regional School District’s major federal and state programs based
on our audit of the types of compliance requirements referred to above. 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 OMB Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB
Circular A-133 and the New Jersey State OMB Circular 04-04 and/or 15-08 require that we plan
and perform the audit to obtain reasonable assurance about whether noncompliance with the
types of compliance requirements referred to above that could have a direct and material effect
on a major federal and state program occurred. An audit includes examining, on a test basis,
evidence about the Board of Education of the Manalapan-Englishtown Regional 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 on compliance for each
major federal and state program. However, our audit does not provide a legal determination of the
Board of Education of the Manalapan-Englishtown Regional School District’s compliance.
6
Opinion on Each Major Federal and State Program
In our opinion, the Board of Education of the Manalapan-Englishtown Regional School District
complied, in all material respects, with the types of compliance requirements referred to above
that could have a direct and material effect on each of its major federal and state programs for the
year ended June 30, 2015.
Report on Internal Control Over Compliance
Management of Manalapan-Englishtown Regional School District is responsible for establishing
and maintaining effective internal control over compliance with the types of compliance
requirements referred to above. In planning and performing our audit of compliance, we
considered the Board of Education of the Manalapan-Englishtown Regional School District’s
internal control over compliance with the types of requirements that could have a direct and
material effect on each major federal and state program to determine the auditing procedures that
are appropriate in the circumstances for the purpose of expressing an opinion on compliance for
each major federal and state program and to test and report on internal control over compliance
in accordance with OMB Circular A-133 and New Jersey OMB 04-04 and/or 15-08, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the Board of Education of the
Manalapan-Englishtown Regional School District’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal and state program on a timely basis. A material weakness in
internal control over compliance is a deficiency, or combination of deficiencies, in internal control
over compliance, such that there is a reasonable possibility that material noncompliance with a
type of compliance requirement of a federal and state program will not be prevented, or detected
and corrected, on a timely basis. A significant deficiency in internal control over compliance is a
deficiency, or a combination of deficiencies, in internal control over compliance with a type of
compliance requirement of a federal and state program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those
charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control
over compliance that might be material weaknesses or significant deficiencies. We did not identify
any deficiencies in internal control over compliance that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of OMB Circular A-133 and the New Jersey State OMB Circular 04-04 and/or 1508. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
Jump, Perry and Company, L.L.P.
JUMP, PERRY and COMPANY, L.L.P.
Toms River, NJ
Kathryn Perry, CPA
Kathryn Perry, Partner
Licensed Public School Accountant
No. CS 20CS00226400
November 20, 2015
7
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED
The Discussion and Analysis (MD&A) of Manalapan-Englishtown Regional School District’s (the
District) financial performance provides an overall review of the District’s financial activities for the
fiscal year ended June 30, 2015. The intent of this discussion and analysis is to look at the District’s
financial performance as a whole; readers should also review the basic financial statements and
notes to enhance their understanding of the District’s financial performance. Certain comparative
information between the current year (2014-2015) and the prior year (2013-2014) is required to be
presented in the MD&A.
Financial Highlights
Key financial highlights for 2015 are as follows:
 In total, Net Position of governmental activities increased $511,331, which represents a
1.75% increase from 2014. Net Position of business-type activities increased $70,328, which
represents a .12% increase from 2014.
 General revenues accounted for $78,649,239 in revenue or 91.06% of all revenues. Program
specific revenues in the form of charges for services, operating grants and contributions, and
capital grants and contributions accounted for $7,724,628 or 9.89% of total revenues of
$86,373,867.
 Total assets of governmental activities decreased by $2,335,814 as cash and cash
equivalents decreased by $1,197,655, receivables decreased by $306,337, net capital assets
decreased by $831,822, and other assets increased by $911,450.
 The District had $85,862,536 in governmental activity expenses; only $7,724,628 of these
expenses was offset by program specific charges for services, grants or contributions.
General revenues (primarily property taxes) of $78,649,239 were adequate to provide for
these programs.
 In the governmental funds, the general fund had $82,242,343 in revenues and $82,439,258
in expenditures. The general fund’s fund balance decreased $196,915 over 2014.
Using this Comprehensive Annual Financial Report (CAFR)
This annual report consists of a series of financial statements and notes to those statements. These
statements are organized so the reader can understand the Manalapan-Englishtown Regional School
District as a financial whole, an entire operating entity. The statements then proceed to provide an
increasingly detailed look at specific financial activities.
The focus of governmental accounting differs from that of business enterprises. In government, the
financial statement user is concerned with determining accountability for funds, evaluating operating
results, and assessing services that can be provided by the government along with its ability to meet
obligations as they become due. In comparison, the primary emphasis in the private sector from both
an operational and reporting perspective is on the maximization of profits.
The Statement of Net Position and Statement of Activities provide information about the activities of
the whole District, presenting both an aggregate view of the District’s finances and a longer-term view
of those finances. Fund financial statements provide the next level of detail. For governmental funds,
these statements tell how services were financed in the short-term as well as what remains for future
spending. In the case of Manalapan-Englishtown Regional School District, the general fund is by far
the most significant fund.
8
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
Reporting the School District as a Whole
Statement of Net Position and the Statement of Activities
This document contains the large number of funds used by the District to provide programs and
activities. The view of the District as a whole looks at all financial transactions and asks the question,
“How did we do financially during 2015?” The statement of net position and the statement of activities
help answer this question. These statements include all assets and liabilities using the accrual basis
of accounting similar to the accounting used by most private-sector companies. This basis of
accounting takes into account all of the current year’s revenues and expenses, regardless of when
cash is received or paid.
These two statements report the school district’s Net Position and changes in those assets. This
change in Net Position is important because it tells the reader that, for the District as a whole, the
financial position of the District has improved or diminished. The causes of this change may be the
result of many factors, some financial, and some not. Non-financial factors include the District’s
property tax base, current laws in New Jersey restricting revenue growth, facility condition, required
educational programs and others.
In the statement of net position and the statement of activities, the school district is divided into two
distinct kinds of activities:
♦
Governmental Activities – All of the District’s programs and services are reported here
including, but not limited to, instruction, support services, operation and maintenance of
plant facilities, pupil transportation, and extracurricular activities.
♦
Business-Type Activities – This service is provided on a charge for goods or services
basis in order to recover all the expenses of the goods or services provided. The Food
Service enterprise fund is reported as a business activity.
Reporting the School District’s Most Significant Funds
Fund Financial Statements
Fund financial reports provide detailed information about the District’s major funds. The District uses
many funds to account for a multitude of financial transactions. The District’s major governmental
funds are the General Fund, Special Revenue Fund, Capital Projects Fund, and Debt Service Fund.
Governmental Funds
The District’s activities are reported in governmental funds, which focus on how money flows into and
out of those funds and the balances left at year-end available for spending in future years. These
funds are reported using an accounting method called modified accrual accounting, which 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 general government operations and the
basic services it provides. Governmental funds information help the reader determine whether there
are more or fewer financial resources that can be spent in the near future to finance educational
programs. The relationship (or differences) between governmental activities (reported in the
statement of net position and the statement of activities) and governmental funds is reconciled in the
financial statements.
9
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
Proprietary Fund
The enterprise fund uses the same basis of accounting as business-type activities; therefore, these
statements are essentially the same.
Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided
in the district-wide and fund financial statements. The notes to the basic financial statements can be
found on pages 36 to 60 of this report.
The School District as a Whole
Recall that the statement of net position provides the perspective of the school district as a whole. Net
Position may serve over time as a useful indicator of a government’s financial position.
The district’s financial position is the product of several financial transactions including the net results
of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and
the depreciation of capital assets.
Table 1 provides a summary of the school district’s Net Position for 2015 and 2014.
Table 1
Net Position
Governmental Activities
Assets
Current and Other Assets
Capital Assets, Net
Total Assets
Deferred Outflows
Deferred outflows - PERS
Bond Issuance Costs, net
Total Deferred Outflows
Liabilities
Long-term Liabilities
Other Liabilities
Total Liabilities
Deferred Inflows
Deferred inflows - PERS
Total Deferred Outflows
Net Position
Net Investment in Capital
Assets
Restricted
Unrestricted
Total Net Position
$
$
$
$
$
2015
11,347,228
97,913,334
109,260,562
2014
12,851,220
98,745,156
$ 111,596,376
$
934,653
220,358
1,155,011
$
$
$
$
72,534,559
5,725,710
78,260,269
$
$
2,492,354
2,492,354
$
$
$
54,812,614
10,132,234
(35,281,898)
29,662,950
$
$
Business-type Activities
$
$
10
243,561
243,561
44,615,144
5,483,639
50,098,783
-
53,679,682
10,386,596
(2,325,124)
61,741,154
$
$
$
$
$
$
$
$
$
$
2015
593,646
224,458
818,104
-
164,264
164,264
-
224,458
429,382
653,840
$
$
$
$
$
$
$
$
$
$
2014
507,305
254,423
761,728
-
178,216
178,216
-
254,423
329,089
583,512
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
The district’s combined Net Position was $30,316,790 on June 30, 2015. This was an increase of
$581,659, 1.96% from the prior year after the prior period adjustment was recorded. See Note 22 for
more details.
Table 2 shows the changes in Net Position from fiscal year 2015 and fiscal year 2014.
Table 2
Changes in Net Position
Governmental Activities
2015
$
$
Business-type Activities
2015
2014
384,137
7,511,687
$ 1,576,958
438,677
$ 1,624,960
447,813
58,393,874
19,876,153
379,212
86,373,867
56,038,070
20,511,322
270,299
84,715,515
42
2,015,677
2,072,773
54,064,437
51,130,539
8,556,080
1,130,398
4,742,655
8,662,640
7,207,730
1,498,596
85,862,536
8,208,796
1,059,447
4,646,535
9,433,435
7,133,698
1,907,067
83,519,517
25,194
7,699,434
511,331
2014
$
$
-
-
1,945,349
1,945,349
1,195,998
$
70,328
1,994,809
1,994,809
$
77,964
Governmental Activities
In the past, there was a unique nature to property taxes in New Jersey which created the legal
requirement to annually seek voter approval for the District operations. On Tuesday, January 17,
2012, Governor Christie signed into law A-4394/S-3148 (P.L. 2011, chapter 202), which established
procedures for moving the date of a school district’s annual school election from April to the General
Election in November. Districts that choose to elect their school board members in November no
longer have to submit their budgets for voter approval as long as it does not exceed the levy
cap. Budgets that are in excess of the cap would still require voter approval. Once a school election
is moved to November, no action can be taken (either by petition or resolution) to move the election
back to April for four (4) years. Special Elections are still permitted in January, March, September
and December should the need arise.
On Tuesday, January 17, 2012, the Manalapan-Englishtown Regional Board of Education passed a
resolution moving the annual school board election to the General Election in November and
effectively eliminated the requirement for voter approval of the district school budget as long as it
does not exceed the levy cap. This election shall remain in effect for a minimum of four (4) years.
11
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
Property taxes made up 67.6% of revenues for governmental activities for the ManalapanEnglishtown Regional School District for fiscal year 2015 and 66.1% of revenues for fiscal year 2014.
Property tax revenues increased by $2,355,804, which is a 4.2% increase from the prior year. The
District’s total revenues for governmental activities were $86,373,867 for the year ended June 30,
2015. Federal, state and local grants accounted for another 22.2% of revenue.
Sources of Revenues for Fiscal Year 2015
Operating
Grants
9.9%
Other
0.4%
State &
Federal Aid
22.2%
Property
Taxes
67.6%
Expenses for Fiscal Year 2015
Transportation
Maintenance &
8.5%
Operations
10.2%
Other
1.8%
Administration
6.9%
Student Support
Services
10.1%
Instruction
62.4%
The total cost of all programs and services was $85,862,536. Instruction comprised 62.4% of district
expenses.
12
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
Business-Type Activities
Revenues for the District’s business-type activities (food service program) were comprised of charges
for services and federal and state reimbursements.

Food service income exceeded expenses by $70,328.

Charges for services, which are the amounts paid by patrons for daily food services,
represent $1,576,958 of total revenue.

Federal and state reimbursements for meals, including payments for free and reduced
lunches and donated commodities, were $438,677.
Governmental Activities
The Statement of activities shows the cost of program services and the charges for services and
grants offsetting those services. Table 3 shows the total cost of services and the net cost of services.
The net cost shows the financial burden that was placed on the District’s taxpayers by each of these
functions.
Table 3
Cost of Services
Net Cost of
Total Cost of
Services 2015
Services 2014
Total Cost of
Services 2015
Instruction
Support Services:
Pupils and Instructional Staff
General Administration, School
Administration, and Central Srvcs
Operations and Maint. Of Facilities
Pupil Transportation
Interest on debt
Total Expenses
$
$
54,064,437
$
48,917,529
$
51,130,539
Net Cost of
Services 2014
$
45,761,475
8,556,080
8,049,950
8,208,796
7,695,066
5,873,053
8,662,640
7,207,730
1,498,596
85,862,536
5,391,353
7,952,140
6,451,250
1,375,686
78,137,908
5,705,982
9,433,435
7,133,698
1,907,067
83,519,517
4,982,842
8,774,775
6,635,618
1,773,917
75,623,693
$
$
$
 Instruction expenses include activities directly dealing with the teaching of pupils and the
interaction between teacher and student, including extracurricular activities.
 Pupils and instructional staff include the activities involved with assisting staff with the content
and process of teaching to students, including curriculum and staff development.
 General administration, school administration and business include expenses associated with
administrative and financial supervision of the District.
 Operation and maintenance of facilities activities involve keeping the school grounds,
buildings, and equipment in effective working condition.
 Pupil transportation includes activities involved with the conveyance of students to and from
school, as well as to and from school activities, as provided by state law.
 Interest and fiscal charges involve the transactions associated with the payment of interest
and other related charges to District debt.
13
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
The School District’s Funds
All governmental funds (i.e., general fund, special revenue fund, capital projects fund and debt
service fund presented in the fund-based statements) are accounted for using the modified accrual
basis of accounting. Total revenues amounted to $85,129,088 and expenditures were $87,113,826.
The net negative changes in fund balances for the year were in the general fund, which showed a
decrease of $204,276, the capital projects fund, which showed a decrease of $120,193 and the debt
service fund, which showed an increase of $52,994. The most significant change was in the general
fund, which is due to the increased costs of salaries and benefits as well as an increase in
transportation costs. As demonstrated by the various statements and schedules included in the
financial section of this report, the District continues to meet its responsibility for sound financial
management.
Table 4
Revenues for the Fiscal Year Ended June 30,
2015
Amount
Property taxes
Tuition
Interest earnings
Miscellaneous
State sources
Federal sources
Total
2014
Amount
Percent
Change
$
58,393,874
25,194
1,931
367,381
24,868,074
1,472,634
$
56,038,070
384,137
2,277
372,775
26,283,087
1,585,962
4.20%
-93.44%
-15.20%
-1.45%
-5.38%
-7.15%
$
85,129,088
$
84,666,308
0.55%
Revenues were up $462,780 or .55% over the prior year. Although tuition revenue decreased
significantly, property taxes increased. Interest earnings continue to decrease due to lowered interest
rates because of current economic conditions.
Table 5
Expenditures for the Fiscal Year Ended June 30,
2015
Amount
Salaries and wages
Benefits
Purchased services
Supplies and other
Capital outlay
Debt service
Total
2014
Amount
Percent
Change
$
47,260,581
20,381,967
7,172,530
4,447,024
2,607,956
3,941,734
$
46,313,475
20,164,275
7,665,191
5,126,738
1,509,705
3,962,072
2.04%
1.08%
-6.43%
-13.26%
72.75%
-0.51%
$
85,811,792
$
84,741,456
1.26%
Expenditures increased by $1,070,336 or 1.26% more than the prior year. The overall increase is due
to major projects being completed in the 2014-2015 school year.
14
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
Fund balance is an integral part of the district financial position. The unreserved and undesignated fund
balances in the general fund for the past seven years are as follows:
Table 6
Fund Balance
School Year
07-08
08-09
09-10
10-11
11-12
12-13
13-14
14-15
GAAP
511,166
(424,907)
(563,211)
(91,073)
(35,804)
(260,329)
(201,884)
(240,069)
Budgetary Basis
1,420,992
372,805
1,571,181
1,672,188
1,881,637
1,690,110
1,745,198
1,714,374
In 2003, P.L. 2003, c.97 provided that in the event a state school aid payment is not made until the
following school budget year, districts must record the last state aid payment as revenue, for budget
purposes only, in the current school budget year. The bill provides the legal authority for school districts
to recognize this revenue in the current budget year. For intergovernmental transactions, Governmental
Accounting Standards requires that recognition (revenue, expenditure, asset, liability) should be in
symmetry, i.e., if one government recognizes an asset, the other government recognizes the liability.
Since the state is recording the last state aid payment in the subsequent fiscal year, the District cannot
recognize the last state aid payment on the GAAP financial statements until the year the state records
the payable.
General Fund Budgeting Highlights
The District’s budget is prepared according to New Jersey law, and is based on accounting for certain
transactions on a basis of modified accrual and encumbrance accounting. The most significant
budgeted fund is the general fund.
During the course of the fiscal year 2015, the District revised the annual operating budget several
times. Revisions in the budget were made to recognize revenues that were not anticipated and to
prevent over-expenditures in specific line item accounts. The following explains the reasons for
significant budget transfers:






The district received $204,851 in extraordinary aid for special education costs that were
not budgeted. The district is eligible to receive additional funding for each special
education student whose program costs exceed $40,000. However, the state does not
have adequate funding for these students and prorates the amount given to districts
based on the applications received for this aid and the total amount allocated.
TPAF, which is the state’s contribution to the pension fund, is an “on-behalf” revenue and
expenditure item to the District and is required to be reflected in the financial statements.
Legal services for employee litigation and special education cases.
Changes in Charter School enrollment. The District pays the Charter Schools for
students who reside in our district but are enrolled in their schools.
Increases in transportation contracted repair services.
Additional students sent out of district.
15
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)
Capital Assets
At the end of the fiscal year 2015, the school district had $97,913,334 invested in land, buildings and
improvements and machinery and equipment. Table 7 shows fiscal 2015 balances compared to
2014.
Table 7
Capital Assets (Net of Depreciation) at June 30,
School Year
2015
Land
Construction in progress
Building and improvements
Machinery and equipment
Totals
2014
$
9,747,190
1,483,348
84,070,145
2,612,651
$
9,747,190
601,290
85,728,014
2,668,662
$
97,913,334
$
98,745,156
Overall, the capital assets decreased $831,822 from fiscal year 2014 to fiscal year 2015. This
decrease in Net Position is due to the depreciation on the completed construction projects. For more
detailed information, please refer to Note 6 in the Notes to the Basic Financial Statements.
Debt Administration
As of June 30, 2015 the District had $75,097,165 of outstanding debt. Of this amount, $2,407,820 is
for compensated absences, $1,111,256 for bus and equipment leases, $41,855,000 for bonds for
school construction, and the balance of $29,723,089 is for PERS pension liability.
At June 30, 2011, the District’s overall legal debt limit was $200,452,819 and the unvoted debt margin
was $150,147,818. For more detailed information, please refer to Note 7 in the Notes to the Basic
Financial Statements. Following is a listing of all bond issues for which the District is currently paying
debt service.
Date of Issue
General Obligation Bonds - 2004
General Obligation Bonds - 2006
General Obligation Bonds - 2007
General Obligation Bonds - 2012
10/15/04
10/01/06
01/05/07
01/31/12
Amount of Issue
Remaining
18,995,000
9,695,000
9,795,000
12,840,000
$
10,580,000
9,525,000
9,585,000
12,165,000
41,855,000
For the Future

It is the opinion of the Superintendent and Business Administrator that while the ManalapanEnglishtown Regional School District has historically maintained a strong financial position
we will be facing a more difficult financial situation due to the state’s inability to fund the
current school funding formula. The District is proud of the community’s support of its public
schools.
16
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
ENGLISHTOWN, NJ
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
UNAUDITED (CONTINUED)

Key areas of concern are the decreased state funding, the new funding formula for schools
that was enacted in January 2008 and the continued necessary increased reliance on local
property taxes. Manalapan-Englishtown Regional is primarily a residential community with
very few commercial ratables; thus the burden is focused on homeowners to bear the tax
burden.

With the continued concern over property taxes it is important to highlight the areas of either
shared services or buying cooperatives in an effort to reduce expenses. These areas include
utilizing Educational Data Services, Middlesex Regional Educational Services Commission,
Monmouth Ocean Educational Services Commission, and many other Co-Op’s for the
purchase of classroom supplies, art supplies, maintenance supplies, copy paper, and other
services. The District is exploring opportunities for future purchases jointly with other districts
within the Freehold Regional area.

In conclusion, the Manalapan-Englishtown Regional School District has committed itself to
financial excellence for many years. In addition, the District’s system for financial planning,
budgeting and internal financial controls are well regarded. The District plans to continue its
sound fiscal management practices to meet the challenges of the future.
Contacting the School District’s Financial Management
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a
general overview of the school district’s finances and to show the school district’s accountability for
the money it receives. If you have questions about this report or need additional information, contact
Veronica Wolf, School Business Administrator/Board Secretary, Manalapan-Englishtown Regional
Board of Education, 54 Main Street, Englishtown, NJ 07746 or e-mail [email protected].
17
BASIC FINANCIAL STATEMENTS
18
Exhibit A-1
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Net Position
June 30, 2015
Governmental
Activities
ASSETS
Cash and cash equivalents
Receivables, net
Receivables - state
Receivables - other governments
Interfund receivable
Inventory
Capital assets, non-depreciable
Capital assets, depreciable, net
Total assets
$
10,720,181
22,486
408,112
196,417
32
11,230,538
86,682,796
109,260,562
DEFERRED OUTFLOWS
Deferred outflows - PERS
Deferred bond issuance costs, net
Total deferred outflows
$
934,653
220,358
1,155,011
LIABILITIES
Accounts payable
Accrued bond interest
Other current liabilities
Unearned revenue
Noncurrent liabilities:
Due within one year
Due beyond one year
Total liabilities
$
-
11,246,624
24,675
410,397
224,472
12,666
22,040
11,230,538
86,907,254
110,078,666
934,653
220,358
1,155,011
133,121
31,143
1,163,991
354,822
272,932
161,332
3,936,897
72,534,559
78,260,269
164,264
3,936,897
72,534,559
78,424,533
2,492,354
2,492,354
$
526,443
2,189
2,285
28,055
12,634
22,040
224,458
818,104
Total
1,030,870
354,822
272,932
130,189
DEFERRED INFLOWS
Deferred inflows - PERS
Total deferred inflows
NET POSITION
Net investment in capital assets
Restricted for:
Debt service
Capital projects
Other purposes
Unrestricted
Total net position
Business-type
Activities
-
2,492,354
2,492,354
54,812,614
224,458
55,037,072
53,070
10,079,164
(35,281,898)
29,662,950
429,382
653,840
53,070
10,079,164
(34,852,516)
30,316,790
See accompanying notes to financial statements.
19
$
$
Exhibit A-2
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Activities
For the Fiscal Year Ended June 30, 2015
Functions/Programs
Governmental activities:
Current:
Regular instruction
Special schools instruction
Other special instruction
Nonpublic school programs
Support services and undistributed costs:
Tuition
Student & instruction related services
General administration
School administrative services
Central services
Administrative information technology
Plant operations & maintenance
Pupil transportation
Interest on long-term debt
Total governmental activities
$
Business-type activities:
Food service
Total business-type activities
Total primary government
Charges for
Services
Expenses
$
38,746,639
12,047,689
3,263,657
6,452
$
25,194
-
Net (Expense) Revenue and
Changes in Net Assets
Program Revenues
Operating
Grants and
Contributions
$
3,858,924
988,130
267,680
6,980
Capital
Grants and
Contributions
$
-
965,931
7,590,149
1,130,398
3,169,779
1,183,092
389,784
8,662,640
7,207,730
1,498,596
85,862,536
25,194
506,130
92,710
259,980
97,040
31,970
710,500
756,480
122,910
7,699,434
-
1,945,349
1,945,349
1,576,958
1,576,958
438,677
438,677
-
87,807,885
General revenues:
$
1,602,152
$
8,138,111
$
-
Governmental
Activities
$
$
(78,137,908)
Net position—beginning
$
-
Total
$
70,286
70,286
$
70,286
70,286
70,286
$
(78,067,622)
42
54,942,228
3,451,646
19,453,268
422,885
377,281
1,973
78,649,239
42
78,649,281
511,331
70,328
581,659
29,151,619
583,512
29,735,131
29,662,950
-
(34,862,521)
(11,059,559)
(2,995,977)
528
(965,931)
(7,084,019)
(1,037,688)
(2,909,799)
(1,086,052)
(357,814)
(7,952,140)
(6,451,250)
(1,375,686)
(78,137,908)
-
54,942,228
3,451,646
19,453,268
422,885
377,281
1,931
Change in net position
20
$
-
Total general revenues, special items,
extraordinary items and transfers
See accompanying notes to financial statements.
(34,862,521)
(11,059,559)
(2,995,977)
528
(965,931)
(7,084,019)
(1,037,688)
(2,909,799)
(1,086,052)
(357,814)
(7,952,140)
(6,451,250)
(1,375,686)
(78,137,908)
Taxes:
Property
Property taxes
taxes,levied
leviedfor
forgeneral
generalpurpose
purposes, net
Taxes levied for debt service
Federal and state aid - not restricted
Federal and State aid - restricted
Miscellaneous income
Investment earnings
Net position—ending
Business-type
Activities
$
653,840
$
30,316,790
Exhibit B-1
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Balance Sheet
Governmental Funds
June 30, 2015
Major Funds
Special
Revenue
Fund
General
Fund
ASSETS
Cash and cash equivalents
Receivables, net
Due from other funds
Receivables from other governments
Restricted cash and cash equivalents
Total assets
$
$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Interfund payable
Payable to state government
Deferred revenue
Other current liabilities
Total liabilities
Fund Balances:
Restricted for:
Excess surplus
Excess surplus -- designated for
Subsequent year's expenditures
Maintenance reserve account
Capital reserve account
Debt service fund
Capital Projects
Committed to:
Other purposes
Assigned to:
Designated by the BOE for
subsequent year's expenditures
Unassigned, reported in:
General fund
Total Fund balances
Total liabilities and fund balances
6,248,840
6,116
7,832
408,112
4,404,697
11,075,597
$
$
969,638
40,644
205,148
1,215,430
$
Capital
Projects
Fund
13,574
16,370
196,417
226,361
$
$
61,232
7,800
59,711
89,545
8,073
226,361
Debt
Service
Fund
-
$
$
Total
Governmental
Funds
53,070
53,070
$
$
6,315,484
22,486
7,832
604,529
4,404,697
11,355,028
-
-
1,030,870
7,800
59,711
130,189
213,221
1,441,791
2,000,000
-
-
-
2,000,000
1,972,162
2,850,000
1,554,697
-
-
-
53,070
-
1,972,162
2,850,000
1,554,697
53,070
-
852,305
-
-
-
852,305
850,000
-
-
-
850,000
-
53,070
53,070
(218,997)
9,913,237
(218,997)
9,860,167
11,075,597
$
226,361
$
$
Amounts reported for governmental activities in the statement of
net assets (A-1) are different because:
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds. The cost
of the assets are 144,202,605 and the accumulated depreciation
is $46,289,271.
97,913,334
Deferred outflows related to the PERS pension plan
934,653
Deferred inflows related to the PERS pension plan
(2,492,354)
The costs associated with the issues of the various bonds are
expensed in the governmental funds in the year the bonds are
issued, but are capitalized in the Statement of Net Assets.
The bond issuance costs are $363,325 and the accumulated
amortization is $142,967.
220,358
Accrued bond interest
(354,822)
Long-term liabilities, including bonds payable, are not due and
payable in the current period and therefore are not reported as
liabilities in the funds.
Net position of governmental activities
See accompanying notes to financial statements.
21
(76,471,456)
$
29,662,950
Exhibit B-2
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Revenues, Expenditures, And Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2015
Special
Revenue
Fund
General
Fund
REVENUES
Local sources:
Local tax levy
Tuition charges
Interest on investments
Interest earned on capital reserve funds
Miscellaneous
Total - Local Sources
State sources
Federal sources
Total revenues
$
EXPENDITURES
Current:
Regular instruction
Special education instruction
Other special instruction
Nonpublic school programs
Support services and undistributed costs:
Tuition
Student & instruction related services
General administration
School administrative services
Central services
Administrative information technology
Plant operations & maintenance
Pupil transportation
Employee benefits
Debt service:
Principal
Interest and other charges
Capital outlay
$
OTHER FINANCING SOURCES (USES)
Capital leases
Transfer in
Transfers out
Total other financing sources and uses
$
$
-
$
4
4
(67,155)
(67,151)
Total
Governmental
Funds
3,451,646
3,451,646
490,040
3,941,686
$
58,393,874
25,194
1,379
552
367,381
58,788,380
26,102,953
1,472,634
86,363,967
1,275,218
6,452
-
-
26,906,059
9,014,473
2,476,876
6,452
965,931
7,383,307
854,084
3,150,236
1,183,092
389,784
7,916,526
6,995,038
13,047,464
274,814
-
-
-
965,931
7,383,307
1,128,898
3,150,236
1,183,092
389,784
7,916,526
6,995,038
13,047,464
-
81,615,608
Excess (Deficiency) of revenues
over expenditures
71,000
71,000
12,850
1,472,634
1,556,484
Debt
Service
Fund
25,630,841
9,014,473
2,476,876
-
2,607,956
Total expenditures
Net change in fund balances
Fund balance—July 1
Fund balance—June 30
54,942,228
25,194
1,375
552
296,381
55,265,730
25,667,218
80,932,948
Capital
Projects
Fund
1,556,484
-
2,065,000
1,876,734
-
2,065,000
1,876,734
2,607,956
-
3,941,734
87,113,826
(682,660)
-
(67,151)
478,384
478,384
-
(53,042)
(53,042)
53,042
53,042
478,384
53,042
(53,042)
478,384
-
(120,193)
120,193
-
52,994
76
53,070
(271,475)
10,184,712
9,913,237
(204,276)
10,064,443
9,860,167
$
See accompanying notes to financial statements.
22
$
(48)
$
(749,859)
$
Exhibit B-3
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended June 30, 2015
Total net change in fund balances - governmental funds (from B-2)
$
(271,475)
Amounts reported for governmental activities in the statement
of activities (A-2) are different because:
Capital outlays are reported in governmental funds as expenditures. However, in the statement of
activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.
This is the amount by which capital outlays exceeded depreciation in the period.
Depreciation expense
Capital outlays
In the statement of activities, only the gain on the disposal of capital assets is reported, whereas
in the governmental funds, the proceeds from a sale increase financial resources. Thus, the change in
net assets will differ from the change in fund balance by the cost of the asset removed.
Accumulated depreciation on capital assets sold or
retired during the fiscal year ended June 30, 2015
Cost basis of capital assets sold or
retired during the fiscal year ended June 30, 2015
2,854,487
(2,026,340)
(828,147)
(449,088)
.
462,663
(13,575)
In the Statement of Activities, the PERS pension expense is the amount paid plus net change in the Deferred Outflows,
Deferred Inflows and pension liability as reported by the State of New Jersey.
(65,546)
Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces
long-term liabilities in the statement of net assets and is not reported in the statement of activities.
2,065,000
In the Statement of Activities, interest on long-term debt is accrued, regardless of when due. In the governmental funds, interest
is reported when due. The change in accrued interest is an addition to the reconciliation.
7,431
In the Statement of Activities, the amortization of bond issuance costs is recorded as interest expense.
In the governmental funds, the amortization is not recorded.
(23,203)
In the Statement of Activities, the principal payments on capital leases are recorded as a reduction
in the long-term liability. In the governmental funds, the payments is an expenditure.
(Amount is net of payments included in capital outlay)
(84,474)
In the Statement of Activities, the fair market value of donated capital assets should be recognized
as revenue in the period when all eligibility requirements are met (typically in the period when
ownership is transferred). In the Governmental Funds, however, the fair market value of these
donated assets are not reported as an increase in financial resources.
9,900
In the Statement of Activities, certain operating expenses, e.g., compensated absences (sick leave) and
special termination benefits (early retirement incentive) are measured by the amounts earned during
the year. In the governmental funds, however, expenditures for these items are reported in the
amount of financial resources used, essentially, the amounts actually paid. When the earned amount
exceeds the paid amount, the difference is a reduction in the reconciliation; when the paid amount exceeds
the earned amount, the difference is an addition to the reconciliation.
Change in net position of governmental activities
(284,580)
$
See accompanying notes to financial statements.
23
511,331
Exhibit B-4
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Net Position
Proprietary Funds
June 30, 2015
Business-type-activitiesEnterprise Funds
Food
Service
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Other receivables
Prepaid expense
Inventories
Total current assets
$
Noncurrent assets:
Building improvements
526,443
30,340
2,189
12,634
22,040
593,646
192,533
Furniture, machinery & equipment
1,344,287
Less accumulated depreciation
Total noncurrent assets
Total assets
$
(1,312,362)
224,458
818,104
LIABILITIES
Current liabilities:
Accounts payable
Unearned revenue
Total current liabilities
$
133,121
31,143
164,264
NET POSITION
Invested in capital assets net of
related debt
Unrestricted
Total net position
Total liabilities and net position
$
24
224,458
429,382
653,840
818,104
Exhibit B-5
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Revenues, Expenses, and Changes in Fund Net Position
Proprietary Funds
For the Year Ended June 30, 2015
Business-type Activities Enterprise Fund
Food
Service
Operating revenues:
Charges for services:
Daily sales - reimbursable programs
Daily sales - non-reimbursable programs
Special functions
Total operating revenues
$
Operating expenses:
Cost of sales
Salaries
Employee benefits
Other purchased professional services
Cleaning, repair and maintenance services
General supplies
Depreciation
Total Operating Expenses
Operating income (loss)
934,690
633,318
8,950
1,576,958
908,356
566,053
209,190
126,707
50,332
44,127
40,584
1,945,349
(368,391)
Nonoperating revenues (expenses):
State sources:
State school lunch program
Federal sources:
National school lunch program
Special milk program
Food distribution program
Interest and investment revenue
Total nonoperating revenues (expenses)
Change in net position
20,304
331,539
357
86,477
42
438,719
70,328
Total net position—beginning
Total net position—ending
$
25
583,512
653,840
Exhibit B-6
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Food Services Enterprise Fund
Statement of Cash Flows
for the Fiscal Year ended June 30, 2015
Food
Service
Cash Flows from Operating Activities:
Receipts from customers and other funds
Payments to employees
Payments for employee benefits
Payments to suppliers
Net cash used for operating activities
$
1,629,920
(566,053)
(209,190)
(1,066,148)
(211,471)
Cash Flows from Noncapital Financing Activities
State sources
Federal sources
Net cash provided by noncapital financing activities
20,304
331,896
352,200
Cash Flows from Capital and Related Financing Activities
Purchases of fixed assets
Net cash used for capital and related financing activities
(10,619)
(10,619)
Cash Flows from Investing Activities
Interest on investments
Net cash provided by investing activities
42
42
Net increase in cash and cash equivalents
Balances-beginning of the year
Balances-end of the year
$
130,152
396,291
526,443
$
(368,391)
Reconciliation of operating income (loss) to net cash provided
by (used for) operating activities:
Operating loss
Adjustments to reconcile operating loss
to cash used by operating activities:
Depreciation
Federal commodities
Change in assets and liabilities:
Decrease (increase) in interfund receivable
Increase in prepaid expense
Decrease (increase) in accounts receivable
Decrease (increase) in inventory
Increase (decrease) in accounts payable
Total adjustments
Net cash used by operating activities
40,584
86,477
$
26
6,058
(4,872)
46,904
1,779
(20,010)
156,920
(211,471)
Exhibit B-7
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Fiduciary Net Position
June 30, 2015
Trust
Private Purpose
Scholarship Fund
Unemployment
Compensation Trust
ASSETS
Cash and cash equivalents
Other accounts receivable
Interfund receivable
Total assets
LIABILITIES
Accounts payable
Payroll deductions and withholdings
Payable to student groups
Intrafund payable
Other current liabilities
Total liabilities
$
$
11,240
11,240
$
709,722
709,722
720,962
NET POSITION
Held in trust for unemployment
claims and other purposes
Reserved for scholarships
Total net position
Total liabilities and net position
641,312
79,650
720,962
$
5,459
5,459
Agency
Maintenance
Contracts Trust
$
40,009
40,009
$
1,576
1,576
-
40,009
40,009
$
3,883
3,883
5,459
$
27
40,009
Total
Trust Fund
$
686,780
79,650
766,430
$
12,816
12,816
$
749,731
3,883
753,614
766,430
Student
Activity
$
$
57,465
57,465
$
3,808
53,657
57,465
Flex
Spending
Payroll
$
$
531,598
531,598
$
426,902
25,016
79,650
30
531,598
$
$
71,589
71,589
$
71,587
2
71,589
Total
Agency
$
$
660,652
660,652
$
430,710
96,603
53,657
79,650
32
660,652
Exhibit B-8
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Fiscal Year Ended June 30, 2015
Unemployment
Compensation Trust
ADDITIONS
Contributions:
Plan member
Other
Total Contributions
Investment earnings:
Net increase (decrease) in
fair value of investments
Interest
Dividends
Less investment expense
Net investment earnings
Total additions
$
DEDUCTIONS
Quarterly contribution reports
Unemployment claims
Scholarships awarded
Refunds of contributions
Administrative expenses
Total deductions
Change in net position
$
$
-
Total
Trusts
$
79,650
1,500
81,150
1,500
-
6
6
75
75
81,225
107,781
1,491
109,272
1,600
1,600
20,004
20,004
107,781
1,600
20,004
1,491
130,876
(19,998)
(49,651)
60,007
803,265
40,009
753,614
709,722
28
-
(100)
739,275
$
1,500
1,500
Maintenance
Contracts Trust
69
69
79,719
(29,553)
Net position—beginning of the year
Net position—end of the year
79,650
79,650
Private Purpose
Scholarship Fund
3,983
$
3,883
$
6
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
June 30, 2015
1.
DESCRIPTION OF THE SCHOOL DISTRICT AND REPORTING ENTITY
Manalapan-Englishtown Regional School District (District) is organized under the Constitution of
the State of New Jersey. The District operates under a locally elected Board form of government
consisting of nine members elected to three-year terms, which are staggered. The District
provides educational services as authorized by state and federal guidelines.
The District serves an area of 32 square miles. It is located in Monmouth County and provides
education for all of Manalapan-Englishtown Regional’s students in grades K through 8. The
District currently operates eight instructional buildings, a transportation depot, buildings and
grounds office, and an administrative building. The District services approximately 5,100 students
and is one of the largest K through 8 Districts in Monmouth County.
A. Reporting Entity
The Board of Education (Board) is an instrumentality of the State of New Jersey, established to
function as an educational institution. The Board consists of elected officials and is responsible
for the fiscal control of the District. A superintendent is appointed by the Board and is
responsible for the administrative control of the District. The operations of the District include an
early learning center, five elementary schools and two middle schools located in Manalapan and
Englishtown, New Jersey.
In evaluating how to define the governmental reporting entity, the District follows the
Governmental Accounting Standards, under which the financial statements include all the
organizations, activities, functions and component units for which the District is financially
accountable. Financial accountability is defined as the appointment of a voting majority of the
component unit’s Board and either (1) the District’s ability to impose its will over the component
unit, or (2) the possibility that the component unit will provide a financial benefit to or impose a
financial burden on the District. On this basis, the District’s financial reporting entity has no
component units.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the District have been prepared in conformity with generally
accepted accounting principles (GAAP) as applied to governmental units. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles. The more significant of the Board's
accounting policies are described below.
A. Basis of Presentation
The School District’s basic financial statements consist of District-wide statements, including a
statement of net position and a statement of activities, and fund financial statements which
provide a more detailed level of financial information.
District-wide Statements: The district-wide financial statements (A-1 and A-2) include the
statement of net position and the statement of activities. These statements report financial
information of the District as a whole excluding the fiduciary activities. All interfund activity,
excluding the fiduciary funds, has been eliminated in the statement of activities. Individual
funds are not displayed but the statements distinguish governmental activities, generally
supported through taxes and user fees, from business-type activities, generally financed in
whole or in part with fees charged to external customers.
29
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Basis of Presentation (continued)
The School District adopted the newly implemented Governmental Accounting Standard
requiring the reporting of deferred outflows, deferred inflows, and net position. The term Net
Assets will no longer be used and will be replaced with Net Position. The Statement of Net
Position includes the reporting of assets, deferred outflows, liabilities and deferred inflows. The
deferred outflows are reported under assets and deferred inflows are reported under liabilities
on the Statement of Net Position. Items previously classified as assets and liabilities but not
meeting that definition have then been reviewed for categorization as deferred outflows or
deferred inflows. Items not classified as an asset, deferred outflows, liability or deferred inflows
have been charged to the Statement of Activities in the current year.
The School District did have items that needed to be reviewed for proper classification on the
Statement of Net Position. The District has Bond Costs which were being amortized. Following
these new guidelines the Bond Costs have been classified as a Deferred Outflow.
GASB Implemented in the current Fiscal Year: In June, 2012, GASB issued Statement No. 68,
Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No.
27(GASB No. 68). The primary objective of this Statement is to improve accounting and
financial reporting by state and local governments for pensions. It also improves information
provided by state and local governmental employers about financial support for pensions that is
provided by other entities. This Statement results from a comprehensive review of the
effectiveness of existing standards of accounting and financial reporting for pensions with
regard to providing decision-useful information, supporting assessments of accountability and
interperiod equity, and creating additional transparency. The requirements of this Statement
will improve the decision-usefulness of information in employer and governmental nonemployer
contributing entity financial reports and will enhance its value for assessing accountability and
interperiod equity by requiring recognition of the entire net pension liability and a more
comprehensive measure of pension expense. The requirements of this Statement are effective
for financial statements for periods ending on or after June 30, 2015.
The statement of net position presents the financial condition of the governmental and
business-type activity of the School District at fiscal year–end. The statement of activities
presents a comparison between direct expenses and program revenues for the business-type
activity of the District and for each function of the District’s governmental activities. Direct
expenses are those that are specifically associated with a program or function and, therefore,
are clearly identifiable to a particular function. Program revenues include (a) fees and charges
paid by the recipients of goods or services offered by the programs and (b) grants and
contributions that are restricted to meeting the operational or capital requirements of a particular
program. Revenues that are not classified as program revenues, including all taxes, are
presented as general revenues. The comparison of direct expenses with program revenues
identifies the extent to which each governmental function or business segment is self-financing
or draws from the general revenues of the School District.
30
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Basis of Presentation (continued)
Fund Financial Statements: During the fiscal year, the School District segregates transactions
related to certain School District functions or activities in separate funds in order to aid financial
management and to demonstrate legal compliance. The fund financial statements provide
detail of the governmental, proprietary and fiduciary funds. Separate statements for each fund
category – governmental, proprietary, and fiduciary – are presented. The New Jersey
Department of Education (NJDOE) has elected to require New Jersey districts to treat each
governmental fund as a major fund in accordance with Governmental Accounting Standards.
The NJDOE believes that the presentation of all funds as major is important for public interest
and to promote consistency among district financial reporting models.
The District reports the following governmental funds:
General Fund: The general fund is the general operating fund of the District. It is used to
account for all financial resources except those required to be accounted for in another
fund. Included are certain expenditures for vehicles and movable instructional or noninstructional equipment which are classified in the Capital Outlay sub-fund.
As required by the New Jersey State Department of Education, the District includes in this
fund budgeted Capital Outlay. Generally accepted accounting principles as they pertain to
governmental entities state that General Fund resources may be used to directly finance
capital outlays for long-lived improvements as long as the resources in such cases are
derived exclusively from unrestricted revenues.
Resources for budgeted capital outlay purposes are normally derived from State of New
Jersey Aid, district taxes and appropriated fund balance. Expenditures are those that result
in the acquisition of or additions to capital assets for land, existing buildings, improvements
of grounds, construction of buildings, additions to or remodeling of buildings and the
purchase of built-in equipment. These resources can be transferred from and to Current
Expense by Board resolution.
Special Revenue Fund: The special revenue fund is used to account for the proceeds of
specific revenue from state and federal Government, (other than major capital projects,
debt service or the enterprise funds) and local appropriations that are legally restricted to
expenditures for specified purposes.
Capital Projects Fund: The capital projects fund is used to account for all financial
resources to be used for the acquisition or construction of major capital facilities (other than
those financed by proprietary funds). The financial resources are derived from temporary
notes or serial bonds that are specifically authorized by the voters as a separate question
on the ballot either during the annual election or at a special election.
Debt Service Fund: The debt service fund is used to account for the accumulation of
resources for, and the payment of principal and interest on bonds issued to finance major
property acquisition, construction and improvement programs.
31
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Basis of Presentation (continued)
The District reports the following proprietary fund:
Enterprise Fund: The Enterprise Fund is utilized to account for operations that are
financed and operated in a manner similar to private business enterprises where the
intent of the District is that the costs (i.e. expenses including depreciation and indirect
costs) of providing goods or services to the students on a continuing basis be financed or
recovered primarily through user charges; or, where the District has decided that periodic
determination of revenues earned, expenses incurred, and/or net income is appropriate
for capital maintenance, public policy, management control, accountability or other
purposes.
The District's Enterprise Fund is comprised of the Food Service Fund.
Depreciation of all capital assets used by proprietary funds is charged as an expense
against their operations. Accumulated depreciation is reported on proprietary fund
balance sheets. Depreciation has been provided over the estimated useful lives using the
straight-line method. The estimated useful lives are as follows:
Equipment
5-20 Years
Additionally, the District reports the following fund type:
Fiduciary Funds: The Fiduciary Funds are used to account for assets held by the District
on behalf of others and includes the Student Activities Fund, Payroll Agency Fund,
Unemployment Compensation Insurance Trust Fund and Private Purpose Trust Funds.
B. Basis of Accounting
Basis of accounting determines when transactions are recorded in the financial records and
reported on the financial statements.
District-wide, proprietary, and fiduciary fund financial statements: The district-wide financial
statements are prepared using the accrual basis of accounting. Governmental funds use the
modified accrual basis of accounting; the enterprise fund and fiduciary funds use the accrual
basis of accounting. Differences in the accrual and modified accrual basis of accounting arise
in the recognition of revenue, the recording of deferred revenue, and in the presentation of
expenses versus expenditures. The tax revenues are recognized in the year for which they are
levied (see Note 2.c.). Revenue from grants, entitlements, and donations is recognized in the
fiscal year in which all requirements have been satisfied.
Governmental fund financial statements: Governmental funds are reported using the current
financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized when they are both measurable and available. Available means
collectible within the current period or soon thereafter to pay current liabilities. The District
considers revenues to be available if they are collected within 60 days of the end of the fiscal
year. Expenditures are recorded when the related fund liability is incurred, except for principal
and interest on general long-term debt, claims and judgments, and compensated absences,
which are recognized as expenditures to the extent they have matured. General capital asset
acquisitions are reported as expenditures in governmental funds. Proceeds of general longterm debt and acquisitions under capital leases are reported as other financing sources.
32
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Property Taxes
Ad Valorem (Property) Taxes are susceptible to accrual as per New Jersey State Statute
whereby a municipality is required to remit to its school district the entire balance of taxes in the
amount voted upon or certified, prior to the end of the school year. The District records the
entire approved tax levy as revenue (accrued) at the start of the fiscal year, since the revenue is
both measurable and available. The District is entitled to receive moneys under the established
payment schedule and the unpaid amount is considered to be an "accounts receivable".
D. Budgets/Budgetary Control
Annual appropriated budgets are prepared in the spring of each year for the general, special
revenue and debt service funds. On Tuesday, January 17, 2012, Governor Christie signed
into law A-4394/S-3148 (P.L. 2011, chapter 202), which established procedures for moving
the date of a school district’s annual school election from April to the General Election in
November. Districts that choose to elect their school board members in November no longer
have to submit their budgets for voter approval as long as it does not exceed the levy
cap. Budgets that are in excess of the cap would still require voter approval. Once a school
election is moved to November, no action can be taken (either by petition or resolution) to
move the election back to April for four (4) years. Special Elections are still permitted in
January, March, September and December should the need arise.
On Tuesday, January 17, 2012, the Manalapan-Englishtown Regional Board of Education
passed a resolution moving the annual school board election to the General Election in
November and effectively eliminated the requirement for voter approval of the district school
budget as long as it does not exceed the levy cap. This election shall remain in effect for a
minimum of four (4) years.
The 2015-16 budget was approved by the county on May 28, 2015. Budgets are prepared
using the modified accrual basis of accounting. The legal level of budgetary control is
established at line item accounts within each fund. Line item accounts are defined as the
lowest (most specific) level of detail as established pursuant to the minimum chart of accounts
referenced in N.J.A.C. 6a:23-1.2.
All budget amendments must be approved by School Board resolution. Budget amendments
were made during the year ended June 30, 2015.
Formal budgetary integration into the accounting system is employed as a management control
device during the year. For governmental funds there are no substantial differences between
the budgetary basis of accounting and generally accepted accounting principles with the
exception of the legally mandated revenue recognition of the last state aid payment for
budgetary purposes only and the special revenue fund as noted below. Encumbrance
accounting is also employed as an extension of formal budgetary integration in the
governmental fund types. Unencumbered appropriations lapse at fiscal year end.
The accounting records of the special revenue fund are maintained on the grant accounting
budgetary basis. The grant accounting budgetary basis differs from GAAP in that the grant
accounting budgetary basis recognizes encumbrances as expenditures and also recognizes
the related revenues, whereas the GAAP basis does not. Sufficient supplemental records are
maintained to allow for the presentation of GAAP basis financial reports.
33
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. Encumbrances
Under encumbrance accounting purchase orders, contracts and other commitments for the
expenditure of resources are recorded to reserve a portion of the applicable appropriation.
Open encumbrances in governmental funds other than the special revenue fund are reported
as reservations of fund balances at fiscal year-end as they do not constitute expenditures or
liabilities but rather commitments related to unperformed contracts for goods and services.
Open encumbrances in the special revenue fund, for which the District has received advances,
are reflected in the balance sheet as deferred revenues at fiscal year-end.
The encumbered appropriation authority carries over into the next fiscal year. An entry will be
made at the beginning of the next fiscal year to increase the appropriation reflected in the
certified budget by the outstanding encumbrance amount as of the current fiscal year end.
F. Cash, Cash Equivalents and Investments
Cash and cash equivalents include petty cash, change funds, cash in banks and all highly
liquid investments with a maturity of three months or less at the time of purchase and are
stated at cost plus accrued interest. U.S. Treasury and agency obligations and certificates of
deposit with maturities of one year or less when purchased are stated at cost. All other
investments are stated at fair value.
G. Interfund Activity
Transfers between governmental and business-type activities on the district-wide statements
are reported in the same manner as general revenues. Flows of cash or goods from one
fund to another without a requirement for repayment are reported as interfund transfers.
Interfund transfers are reported as other financing sources/uses in governmental funds and
after non-operating revenues/expenses in the enterprise fund. Repayments from funds
responsible for particular expenditures/expenses to the funds that initially paid for them are
not presented on the financial statements.
On fund financial statements, short-term interfund loans are classified as interfund
receivables/payables. These amounts are eliminated in the statement of net position, except for
amounts between governmental and business-type activities or governmental and agency funds,
which are presented as internal balances.
H. Allowances for Uncollectible Accounts
No allowance for uncollectible accounts has been recorded as all amounts are considered
collectible.
I.
Inventories and Prepaid Expenses
Inventories and prepaid expenses, which benefit future periods, are recorded as an expenditure
during the year of purchase.
Inventories in the enterprise funds are valued at cost, which approximates market, using the
first-in-first-out (FIFO) method. Prepaid expenses in the enterprise fund represent payments
made to vendors for services that will benefit periods beyond June 30, 2015.
34
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J. Capital Assets
The District has established a formal system of accounting for its capital assets. Purchased
or constructed capital assets are reported at cost. Donated capital assets are valued at their
estimated fair market value on the date received. The cost of normal maintenance and
repairs is not capitalized. The School District does not possess any infrastructure. The
capitalization threshold used by school districts in the State of New Jersey is $2,000.
All reported capital assets except for land and construction in progress are depreciated.
Depreciation is computed using the straight-line method under the half-year convention over
the following estimated useful lives:
Estimated
Asset Class
Useful Lives
School Building
50
Building Improvements
20
Electrical/Plumbing
30
Vehicles
8
Office & computer equipment
5-10
Instructional equipment
10
Grounds equipment
15
In the fund financial statements, capital assets used in governmental fund operations are
accounted for as capital outlay expenditures of the governmental fund upon acquisition.
Capital assets are not capitalized and related depreciation is not reported in the fund financial
statements.
K. Compensated Absences
Compensated absences are those absences for which employees will be paid, such as
vacation, sick leave, and sabbatical leave. A liability for compensated absences that are
attributable to services already rendered, and that are not contingent on a specific event that
is outside the control of the District and its employees, is accrued as the employees earn the
rights to the benefits. Compensated absences that relate to future services, or that are
contingent on a specific event that is outside the control of the District and its employees, are
accounted for in the period in which such services are rendered or in which such events take
place.
In governmental and similar trust funds, compensated absences that are expected to be
liquidated with expendable available financial resources are reported as an expenditure and
fund liability in the fund that will pay for the compensated absences.
In proprietary and similar trust funds, compensated absences are recorded as an expense
and liability of the fund that will pay for them.
L. Unearned/Deferred Revenue
Unearned/Deferred revenue in the general and special revenue funds represent cash which
has been received but not yet earned.
35
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
M. Accrued Liabilities and Long-Term Obligations
All payables, accrued liabilities, and long-term obligations are reported on the District-wide
financial statements. In general, governmental fund payables and accrued liabilities that, once
incurred, are paid in a timely manner and in full from current financial resources are reported as
obligations of the funds.
However, contractually required pension contributions and
compensated absences that are paid from governmental funds are reported as liabilities on the
fund financial statements only to the extent that they are due for payment during the current
year. Bonds are recognized as a liability on the fund financial statements when due. The
general fund is utilized to liquidate all long-term liabilities other than debt via annual budget
appropriation.
N. Net Position
Net position represents the difference between assets, deferred outflows, liabilities and
deferred inflows. Net position invested in capital assets, net of related debt consists of capital
assets, net of accumulated depreciation, reduced by the outstanding balance of any
borrowing used for the acquisition, construction, or improvement of those assets. Net
position is reported as restricted in the District-wide financial when there are limitations
imposed on their use either through the enabling legislation adopted by the School District or
through external restrictions imposed by creditors, grantors, or laws or regulations of other
governments. The School District’s policy is to first apply restricted resources when an
expense is incurred for purposes for which both restricted and unrestricted net position is
available.
O. Fund Balance Reserves
The Governmental Accounting Standards established fund balance classifications that
comprise a hierarchy based primarily on the extent to which a government is bound to
observe constraints imposed upon the use of the resources reported in governmental
funds. The fund balances in the governmental funds financial statements are reported under
the modified accrual basis of accounting and classified into the following five categories, as
defined below:
1)
2)
3)
4)
5)
Nonspendable – includes amounts that cannot be spent because they are either
(a) not in spendable form or (b) legally or contractually required to be maintained
intact. Assets included in this fund balance category include prepaid assets,
inventories, long-term receivables, and corpus of any permanent funds.
Restricted – includes amounts that can be spent only for the specific purposes
stipulated by constitution, external resource providers, or through enabling
legislation.
Committed – includes amounts that can be spent only for the specific purposes
determined by a formal action of the government’s highest level of decision-making
authority.
Assigned – amounts intended to be used by the government for specific purposes
but do not meet the criteria to be classified as restricted or committed.
Unassigned – includes all spendable amounts not contained in the other
classifications.
36
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
P. Revenues – Exchange and Non-exchange Transactions
Revenue resulting from exchange transactions, in which each party gives and receives
essentially equal value, is recorded on the accrual basis when the exchange takes place. On
the modified accrual basis, revenue is recorded 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 within sixty days of
the fiscal year-end.
Non-exchange transactions, in which the School District receives value without directly giving
equal value in return, include property taxes, grants, entitlements, and donations. On the
accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes
are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year
in which all eligibility requirements have been satisfied. Eligibility requirements include timing
requirements, which specify the year when the resources are required to be used or the fiscal
year when use is first permitted; matching requirements, in which the School District must
provide local resources to be used for a specified purpose; and expenditure requirements, in
which the resources are provided to the School District on a reimbursement basis. On the
modified accrual basis, revenue from non-exchange transactions must also be available
before it can be recognized. Under the modified accrual basis, the following revenue sources
are considered to be both measurable and available at fiscal year-end: property taxes
available as an advance, interest, and tuition.
Q. Operating Revenues and Expenses
Operating revenues are those revenues that are generated directly from the primary activity
of the enterprise fund. For the School District, these revenues are sales for food service.
Operating expenses are necessary costs incurred to provide the service that is the primary
activity of the enterprise fund.
R. Management Estimates
The preparation of financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those
estimates.
S. Allocation of Indirect Expense
The District reports all direct expense by function in the statement of activities. Direct
expenses are those that are clearly identifiable with a function. Indirect expenses are
allocated to functions but are reported separately in the statement of activities. Employee
benefits, including the employer’s share of social security, workers’ compensation, and
medical, dental and prescription benefits, were allocated based on salaries of that program.
Depreciation expense, where practicable, is specifically identified by function and is included
in the indirect expense column of the statement of activities. Depreciation expense that could
not be attributed to a specific function is considered an indirect expense and is reported
separately on the statement of activities. Interest on long-term debt is considered an indirect
expense and is reported separately on the statement of activities.
37
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
T. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section
for deferred outflows of resources. This separate financial statement element, deferred
outflows of resources, represent a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources (expense/expenditure)
until then.
In addition to liabilities, the statement of net position will sometimes report a separate section
for deferred inflows of resources. This separate financial statement element, deferred inflows
of resources, represents an acquisition of net position that applies to future periods and so
will not be recognized as an inflow of resources (revenue) until that time.
3.
CASH AND CASH EQUIVALENTS AND INVESTMENTS
New Jersey school districts are limited as to the types of investments and types of financial
institutions they may invest in. New Jersey statute 18A:20-37 provides a list of permissible
investments that may be purchased by New Jersey school districts.
Additionally, the District has adopted a cash management plan that requires it to deposit
public funds in public depositories protected from loss under the provisions of the
Governmental Unit Deposit Protection Act ("GUDPA"). GUDPA was enacted in 1970 to
protect governmental units from a loss of funds on deposit with a failed banking institution in
New Jersey.
N.J.S.A. 17:9-41 et. seq. establishes the requirements for the security of deposits of
governmental units. The statute requires that no governmental unit shall deposit public funds
in a public depository unless such funds are secured in accordance with GUDPA. Public
depositories include savings and loan institutions, banks (both state and national banks) and
savings banks, the deposits of which are federally insured. All public depositories must
pledge collateral, having a market value at least equal to five percent of the average daily
balance of collected public funds, to secure the deposits of governmental units. If a public
depository fails, the collateral it has pledged, plus the collateral of all other public
depositories, is available to pay the full amount of their deposits to the governmental units.
Deposits:
New Jersey statutes require that school districts deposit public funds in public depositories
located in New Jersey that are insured by the Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation, or by any other agency of the United States
that insures deposits made in public depositories. School districts are also permitted to deposit
public funds in the State of New Jersey Cash Management Fund.
New Jersey statutes require public depositories to maintain collateral for deposits of public
funds that exceed depository insurance limits as follows:
The market value of the collateral must equal at least 5% of the average daily balance of
collected public funds on deposit.
In addition to the above collateral requirement, if the public funds deposited exceed 75% of the
capital funds of the depository, the depository must provide collateral having a market value at
least equal to 100% of the amount exceeding 75%.
38
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
3.
CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED)
All collateral must be deposited with the Federal Reserve Bank of New York, the Federal
Reserve Bank of Philadelphia, the Federal Home Loan Bank of New York, or a banking
institution that is a member of the Federal Reserve System and has capital funds of not less
than $25,000,000. The District’s cash and cash equivalents are classified below to inform
financial statement users about the extent to which a government’s deposits and investments
are exposed to custodial credit risk. Pursuant to Governmental Accounting Standards, the
District’s operating cash accounts are profiled in order to determine exposure, if any, to
Custodial Credit Risk (risk that in the event of failure of the counterparty the District would not
be able to recover the value of its deposits and investments). Deposits are considered to be
exposed to Custodial Credit Risk if they are: uncollateralized (securities not pledged to the
depositor), collateralized with securities held by the pledging financial institution, or
collateralized with securities held by the financial institution’s trust department or agent but
not in the government’s name. As of June 30, 2015, all of the District’s deposits, except as
noted below, were collateralized by securities held in its name and, accordingly, not exposed
to custodial credit risk.
New Jersey statutes require that school districts deposit public funds in public depositories
located in New Jersey that are insured by the Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation, or by any other agency of the United States
that insures deposits made in public depositories. School districts are also permitted to deposit
public funds in the State of New Jersey Cash Management Fund.
As of June 30, 2015, the carrying amount of the District’s deposits for all funds was $12,594,056
and the bank balance was $13,312,270. All bank deposits, as of the balance sheet date are
entirely insured or collateralized by a collateral pool maintained by public depositories as required
by GUDPA.
Investments:
New Jersey statutes permit the Board to purchase the following types of securities:
a. Bonds or other obligations of the United States or obligations guaranteed by the United
States.
b. Bonds of any Federal Intermediate Credit Bank, Federal Home Loan Bank, Federal
National Mortgage Agency or of any United States Bank for Cooperatives that have a
maturity date not greater than twelve months from the date of purchase.
c. Bonds or other obligations of the school district.
b. Bonds of any Federal Intermediate Credit Bank, Federal Home Loan Bank, Federal
National Mortgage Agency or of any United States Bank for Cooperatives that have a
maturity date not greater than twelve months from the date of purchase.
c. Bonds or other obligations of the school district.
As of June 30, 2015, the District’s Cash and Cash Equivalents consisted of the following:
Cash and Cash
Equivalents
Checking Accounts
Capital Reserve
Change Funds
11,953,531
640,325
200
Totals
12,594,056
39
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
3.
CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED)
The fiduciary funds had a balance of $1,347,432 at June 30, 2015.
Custodial Credit Risk: Pursuant to Governmental Accounting Standards, the NJCMF, which
is a pooled investment, is exempt from custodial credit risk disclosure. The District does not
have a policy for custodial credit risk other than depositing all of its funds in banks covered by
GUDPA.
Credit Risk: The District does not have an investment policy regarding the management of
credit risk. Governmental Accounting Standards require that disclosure be made as to the
credit rating of all debt security investments except for obligations of U.S. government or
investments guaranteed by the U.S. government. The NJCMF is not rated by a rating
agency.
Interest Rate Risk: The District does not have a policy to limit interest rate risk. The average
maturity of the District’s sole investment, the NJCMF, is less than one year.
4.
RESTRICTED CASH RESERVES
A. Capital Reserve Account
A capital reserve account was established by the District during fiscal year 2001-2002 in which
it deposited $100,000 for the accumulation of funds for use as capital outlay expenditures in
subsequent fiscal years. The capital reserve account is maintained in the general fund and its
activity is included in the general fund annual budget. Funds placed in the capital reserve
account are restricted to capital projects in the District’s Long Range Facilities Plan, (“LRFP”).
Upon submission of the LRFP to the department, a district may deposit funds by appropriating
funds in the annual general fund budget certified for taxes or by transfer by board resolution at
year end of any unanticipated revenue or unexpended line-item appropriation amounts, or both.
A district may also appropriate amounts when the express approval of the voters has been
obtained either by a separate proposal at budget time or by a special question at one of the four
special elections authorized pursuant to N.J.S.A. 19:60-2. Pursuant to N.J.A.C. 6A:23-2.12(g),
the balance in the account cannot at any time exceed the local support costs of uncompleted
capital projects in its approved LRFP.
The activity of the capital reserve for the July 1, 2014 to June 30, 2015 fiscal year is as
follows:
Beginning balance, July 1, 2014
Interest earnings
FY 2014-2015 Budgeted withdrawal
Funds unused at June 30, 2015
Deposit - June 30, 2015
Ending balance, June 30, 2015
$2,094,363
552
(1,454,363)
845,518
68,627
$1,554,697
The June 30, 2009 LRFP balance of local support costs of uncompleted capital projects is
$3,978,750. There were no withdrawals from the capital reserve for DOE approved facilities
projects.
40
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
4.
RESTRICTED CASH RESERVES (CONTINUED)
B. Maintenance Reserve
A maintenance reserve account was established by the District during fiscal year 20072008 in which it deposited $484,791 for the accumulation of funds for use as
maintenance expenditures in subsequent fiscal years. The District approved a transfer in
June 2009 to the maintenance reserve in the amount of $600,000. The District withdrew
$484,791 during the 2009-2010 school year for required maintenance projects. The
District approved a transfer in June 2010 to the maintenance reserve in the amount of
$500,000. The District withdrew $600,000 during the 2010-2011 school year for required
maintenance projects. The District approved a transfer in June 2011 to the maintenance
reserve in the amount of $1,100,000. The District withdrew $500,000 during the 20112012 school year for required maintenance projects. The District approved a transfer in
June 2012 to the maintenance reserve in the amount of $1,400,000. The District
withdrew $500,000 during the 2012-2013 school year for required maintenance projects.
The District approved a transfer in June 2013 to the maintenance reserve in the amount
of $800,000. The District withdrew $935,000 during the 2013-2014 school year for
required maintenance projects. The District approved a transfer in June 2014 to the
maintenance reserve in the amount of $1,003,000. The District withdrew $968,000
during the 2014-2015 school year for required maintenance projects.
Funds placed in the Maintenance Reserve Account are restricted to maintenance
projects in the District's approved Comprehensive Maintenance Plan (CMP). Upon
submission of the CMP to the New Jersey Department of Education, the District may
increase the balance in the maintenance reserve by appropriating funds in the annual
general fund budget certified for taxes or by transfer by board resolution at year end
(June 1 to June 30) of any unanticipated revenue or unexpended line-item appropriation
amounts, or both. The District may also appropriate additional amounts when the
express approval of the voters has been obtained either by a separate proposal at budget
time or by a special question at one of the four special elections authorized pursuant to
N.J.S.A. 19:60-2. Pursuant to N.J.A.C. 6A:23A-14.2(g), the balance in the account
cannot at any time exceed four percent of the replacement cost of the school district's
school facilities for the current year.
The balance in the maintenance reserve does not exceed four percent of the
replacement cost of the school district's school facilities for the current year at June 30,
2015.
The District approved a transfer in June 2015 to the maintenance reserve in the amount of
$950,000. The balance in the maintenance reserve at June 30, 2015 is $2,850,000.
The activity of the maintenance reserve for the July 1, 2014 to June 30, 2015 fiscal year is
as follows:
Beginning balance, July 1, 2014
Deposits
Withdrawals
Ending balance, June 30, 2015
$ 2,868,000
950,000
(968,000)
$ 2,850,000
41
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
5.
RECEIVABLES
Receivables at June 30, 2015, consisted of accounts (rent and tuition), accrued interest,
interfund, intergovernmental, and property taxes. All receivables are considered collectible in
full. A summary of the principal items of governmental receivables follows:
Governmental
Fund Financial
Statements
$
408,112
196,417
7,832
22,486
634,847
634,847
State Aid
Federal Aid
Interfunds
Other
Gross Receivables
Less: Allowance for Uncollectibles
Total Receivables, Net
6.
District-Wide
Financial
Statements
$
409,815
224,472
12,666
22,486
669,439
669,439
CAPITAL ASSETS
Capital assets consisted of the following at June 30, 2015:
Balance
6/30/2014
Governmental Activities:
Capital assets not being depreciated
Land and land improvements
Construction in progress
Total capital assets not being
depreciated
Capital assets being depreciated
Building and building imprvmts
Machinery & equipment
Totals at historical cost
Less accumulated depreciation for:
Building and bldg & land imprvmts
Machinery & equipment
Total accumulated depreciation
Total capital assets being
depreciated, net of accumulated
depreciation
Governmental activity capital
assets, net
Business-type Activities:
Capital assets being depreciated
Building improvements
Machinery & equipment
Totals at historical cost
Less accumulated depreciation for:
Building improvements
Machinery & equipment
Total accumulated depreciation
Enterprise fund capital assets, net
$
9,747,190
601,290
Transfers/
Additions
$
882,058
Transfers/
Retirements
$
-
$
-
9,747,190
1,483,348
10,348,480
882,058
118,872,953
13,407,595
132,280,548
339,545
814,638
1,154,183
(462,664)
(462,664)
119,212,498
13,759,569
132,972,067
(33,144,939)
(10,738,933)
(43,883,872)
(1,997,414)
(857,073)
(2,854,487)
449,088
449,088
(35,142,353)
(11,146,918)
(46,289,271)
88,396,676
(1,700,304)
(13,576)
86,682,796
$ 97,913,334
$ 98,745,156
$
(818,246)
$
(13,576)
$
$
10,619
10,619
$
-
192,533
1,333,668
1,526,201
(122,088)
(1,149,690)
(1,271,778)
$
Balance
6/30/2015
254,423
42
(9,627)
(30,957)
(40,584)
$
(29,965)
11,230,538
$
$
-
192,533
1,344,287
1,536,820
(131,715)
(1,180,647)
(1,312,362)
$
224,458
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
6.
CAPITAL ASSETS (continued)
Depreciation expense was charged to governmental functions as follows:
Regular instruction
Special instruction
Student & instruction services
General administration
School administration
Plant operations & maintenance
Student transportation
Total depreciation expense
7.
$
$
2,114,633
148,354
206,842
1,500
19,543
150,923
212,692
2,854,487
LONG-TERM LIABILITIES
During the fiscal year ended June 30, 2015 the following changes occurred in the non-current
liabilities:
Bonds Payable
Obligations under
capital leases
Pension liability - PERS
Compensated absences
payable
Balance
6/30/2014
$ 43,920,000
Increase
$
-
Decrease
$ 2,065,000
Balance
6/30/2015
$ 41,855,000
Due Within
One Year
$ 2,125,000
1,026,782
-
478,384
31,097,380
393,910
-
1,111,256
31,097,380
383,802
1,374,291
2,123,240
$ 47,070,022
325,477
$ 31,901,241
40,897
$ 2,499,807
2,407,820
$ 76,471,456
53,804
$ 3,936,897
A. Bonds Payable
Bonds are authorized in accordance with State law by the voters of the District through
referendums. All bonds are retired in serial installments within the statutory period of
usefulness. Bonds issued by the District are general obligation bonds.
Principal and interest due on serial bonds outstanding is as follows:
Year ending
June 30,
2016
2017
2018
2019
2020-2024
2025-2029
Principal
2,125,000
2,220,000
2,330,000
2,450,000
14,205,000
18,525,000
$ 41,855,000
Interest
1,801,631
1,706,894
1,600,403
1,485,006
5,472,819
1,960,675
$ 14,027,428
Total
3,926,631
3,926,894
3,930,403
3,935,006
19,677,819
20,485,675
$ 55,882,428
B. Bonds Authorized But Not Issued
As of June 30, 2015 the District had no authorized nor issued bonds.
43
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
7.
LONG-TERM LIABILITIES (continued)
C. Capital Leases
The District is leasing buses, equipment and a roof lease/purchase totaling $1,166,874, with
a net book value of $1,111,256 under capital leases. All capital leases are for terms of two to
five years. The following is a schedule of the future minimum leases payments under capital
leases and the present value of the net minimum leases payments as of June 30, 2015:
Fiscal Year
Ended Jund 30,
2016
2017
2018
2019
2020-2023
Total of Minimum Lease Payments
Amount of
Lease
402,484
400,604
77,806
57,196
228,784
$
1,166,874
Less: amount representing interest
55,618
Present value of net minimum lease pmts
8.
$
1,111,256
PENSION PLANS
Description of Plans
All required employees of the District are covered by either the Public Employees' Retirement
System ("PERS"), the Teachers' Pension and Annuity Fund ("TPAF") or the Defined
Contribution Retirement Program (DCRP) which have been established by State statute and
are administered by the New Jersey Division of Pension and Benefits ("Division"). Each plan
has a Board of Trustees that is primarily responsible for its administration. The Division
issues a publicly available financial report that includes the financial statements and required
supplementary information. These reports may be obtained by writing to the Division of
Pensions and Benefits, P.O. Box 295, Trenton, New Jersey, 08625.
Teachers' Pension and Annuity Fund (TPAF)
The Teachers' Pension and Annuity Fund was established as of January 1, 1955, under the
provisions of N.J.S.A. 18A:66 to provide retirement benefits, death, disability and medical
benefits to certain qualified members. The Teachers' Pension and Annuity Fund is
considered a cost-sharing multiple-employer plan with a special funding situation, as under
current statute, all employer contributions are made by the State of New Jersey on behalf of
the District and the system's other related non-contributing employers. Membership is
mandatory for substantially all teachers or members of the professional staff certified by the
State Board of Examiners, and employees of the Department of Education who have titles
that are unclassified, professional and certified.
For the year ended June 30, 2015, the District recognized pension expense of $1,302,034
and revenue of $1,302,034 for support provided by the State on the fund financials. These
amounts are not included in the district-wide financials as required by GASB 68.
44
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
8.
PENSION PLANS (CONTINUED)
Teachers' Pension and Annuity Fund (TPAF) (Contined)
At June 30, 2015, the District has no deferred outflow, deferred inflows or pension liability for
the TPAF plan as all future costs are to be incurred by the State of New Jersey. As detailed
in GASB 68 the District's proportionate share of the deferred outflows of resources and
deferred inflows of resources and pension liability is required to be disclosed. These items
are not included on the district-wide financials. The District's proportionate share is
0.3077796387% of the total plan. The information below was provided from the State of New
Jersey June 30, 2014 audit of the TPAF fund and has been adjusted to the District's
proportionate share:
Differences between
expected and actual
experience
Deferred Outflows of
Resources
-
Deferred Inflows of
Resources
67,156
Changes of assumptions
7,050,991
Net difference between
projected and actual
earnings on pension plan
investments
-
5,322,690
Changes in proportion
and differences between
District contributions and
proportionate share of
contributions
-
256,489
District contributions
subsequent to the
measurement date
-
-
7,050,991
5,646,335
Total
The District's proportionate share of the pension liability at June 30, 2014 as it relates to the
District is $164,498,200.
The District's proportionate share of other amounts reported as deferred outflows of
resources and deferred inflows of resources related to pensions will be recognized in pension
expense by the State of New Jersey as follows:
Year ended June 30:
2015
2016
2017
2018
2019
Thereafter
Total
45
(402,233)
(402,233)
(402,233)
(402,233)
937,560
2,343,901
1,672,529
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
8. PENSION PLANS (CONTINUED)
Public Employees' Retirement System (PERS)
The Public Employees' Retirement System was established as of January 1, 1955 under the
provisions of N.J.S.A. 43:15A to provide retirement, death, disability and medical benefits to
certain qualified members. The PERS is a cost-sharing multiple-employer plan. Membership
is mandatory for substantially all full-time employees of the State of New Jersey or any
county, municipality, school district, or public agency, provided the employee is not required
to be a member of another State-administered retirement system or other state or local
jurisdiction.
For the year ended June 30, 2015, the District recognized pension expense of $86,189. As
detailed in GASB 68 the District's proportionate share of the deferred outflows of resources and
deferred inflows of resources and pension liability is required to be disclosed and recorded.
These items are included on the district-wide financials. The District's proportionate share is
0.1587539904% of the total plan. The information below was provided from the State of New
Jersey June 30, 2014 audit of the PERS fund and has been adjusted to the District's
proportionate share. At June 30, 2015, the District reported deferred outflows of resources and
deferred inflows of resources related to PERS from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
-
-
934,653
-
Differences between expected
and actual experience
Changes of assumptions
Net difference between projected
and actual earnings on pension
plan investments
1,771,335
Changes in proportion and
differences between District
contributions and proportionate
share of contributions
-
721,019
District contributions subsequent
to the measurement date
-
-
934,653
2,492,354
Total
The District's proportionate share of the pension liability at June 30, 2014 as it relates to the District is
$29,723,089 and has been recorded on the district-wide financials. The current portion due in April
2016 for the June 30, 2015 liability is $1,374,291 and has been included on the district-wide financials.
The total PERS pension liability at June 30, 2015 is $31,097,380.
46
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
8.
PENSION PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Year ended June 30:
2015
2016
2017
2018
2019
Thereafter
Total
(271,022)
(271,022)
(271,022)
(271,022)
171,811
75,597
(836,680)
Long-Term Expected Rate of Return
In accordance with State statute, the long-term expected rate of return on plan investments is
determined by the State Treasurer, after consultation with the Directors of the Division of
Investments and Division of Pensions and Benefits, the board of trustees and the actuaries.
Best estimates of arithmetic real rates of return for each major asset class included in PERS's
target asset allocation as of June 30, 2014 are summarized in the following table:
Target
Allocation
6.00%
1.00%
11.20%
2.50%
5.50%
2.50%
25.90%
12.70%
6.50%
8.25%
12.25%
3.20%
2.50%
Asset Class
Cash
Core Bands
Intermediate-Term Bonds
Mortgages
High Yield Bonds
Inflation-Indexed Bonds
Broad US Equities
Developed Foreign Equities
Emerging Market Equities
Private Equity
Hedge Funds/Absolute Return
Real Estate (Property)
Commodities
47
Long-term Expected Real
Rate of Return
0.80%
2.49%
2.26%
2.17%
4.82%
3.51%
8.22%
8.12%
9.91%
13.02%
4.92%
5.80%
5.35%
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
8.
PENSION PLANS (CONTINUED)
Discount Rate
The discount rate used to measure the total pension liability was 5.39% and 5.55% as of
June 30, 2014 and 2013, respectively. This single blended discount rate was based on the
long-term expected rate of return on pension plan investments of 7.9%, and a municipal bond
rate of 4.29% and 4.63% as of June 30, 2014 and 2013, respectively, based on Bond Buyer
Go 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal
bonds with an average rating of AA/Aa or higher. The projection of cash flows used to
determine the discount rate assumed that contributions from plan members will be made at
the current member contribution rates and that contributions from employers will be made
based on the average of the last five years of contributions made in relation to the last five
years of recommended contributions. Based on those assumptions, the plan's fiduciary net
position was projected to be available to make projected future benefit payments of current
plan members through 2033. Therefore, the long-term expected rate of return on plan
investments was applied to projected benefit payments through 2033, and the municipal bond
rate was applied to projected benefit payments after that date in determining the total pension
liability.
Sensitivity of the Collective Net Pension Liability to Changes in the Discount Rate
The following presents the collective net pension liability of the participating employers as of
June 30, 2014 and 2013 respectively, calculated using the discount rate as disclosed above
as well as what the collective net pension liability would be if it was calculated using a
discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current
rate:
1% Decrease
Current Discount
(4.39%)
Rate (5.39%)
1% Increase (6.39%)
District’s
proportionate share of
37,392,658
29,723,089
23,282,603
the net pension
liability
Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary
net position is available in the separately issued PERS financial report.
Vesting and Benefit Provisions
The vesting and benefit provisions for PERS are set by N.J.S.A. 43:15A and 43.3B, and
N.J.S.A. 18A:6C for TPAF. All benefits vest after eight to ten years of service, except for
medical benefits that vest after 25 years of service. Retirement benefits for age and service
are available at age 60 and are generally determined to be 1/60 of the final average salary for
each year of service credit, as defined. Final average salary equals the average salary for
the final three years of service prior to retirement (or highest three years' compensation if
other than the final three years). Members may seek early retirement after achieving 25
years of service credit or they may elect deferred retirement after achieving eight to ten years
of service in which case benefits would begin the first day of the month after the member
attains normal retirement age. The TPAF and PERS provides for specified medical benefits
for members who retire after achieving 25 years of qualified service, as defined, or under the
disability provisions of the System.
Members are always fully vested for their own contributions and, after three years of service
credit, become vested for 2% of related interest earned on the contributions. In the case of
death before retirement, members' beneficiaries are entitled to full interest credited to the
members' accounts.
48
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
8.
PENSION PLANS (CONTINUED)
Contribution Requirements
The contribution policy is set by N.J.S.A. 43:15A, Chapter 62, P.L. of 1994, Chapter 115, P.L.
of 1997 and N.J.S.A. 18:66, and requires contributions by active members and contributing
employers. Plan member and employer contributions may be amended by State of New
Jersey legislation. TPAF and PERS provide for employee contributions of 6.78% of
employees’ annual compensation, as defined. Employers are required to contribute at an
actuarially determined rate in both TPAF and PERS. The actuarially determined contribution
includes funding for both cost-of-living adjustments, noncontributory death benefits, and postretirement medical premiums. Under current statute the District is a non-contributing
employer of the TPAF.
During the fiscal year ended June 30, 2014, the State of New Jersey contributed $3,436,879
to the TPAF for post-retirement medical benefits on behalf of the District. Also, in accordance
with N.J.S.A. 18A:66-66 the State of New Jersey reimbursed the District $2,335,145 during
the year ended June 30, 2014 for the employer's share of social security contributions for
TPAF members, as calculated on their base salaries. This amount has been included in the
basic financial statements as a revenue and expenditure in accordance with Governmental
Accounting Standards.
9.
DEFINED CONTRIBUTION RETIREMENT PLAN (DCRP)
The Defined Contribution Retirement Plan is a cost-sharing multiple-employer defined
contribution pension plan which was established on July 1, 2007, under the provisions of
Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007 (N.J.S.A.43:15C-1 et. seq), and expanded
under the provisions of Chapter 89, P.L. 2008 and Chapter 1, P.L. 2010. The Defined
Contribution Retirement Program Board oversees the DCRP, which is administered for the
Divisions of Pensions and Benefits by Prudential Financial. The DCRP provides eligible
members, and their beneficiaries, with tax-sheltered, defined contribution retirement benefit,
along with life insurance and disability coverage. Vesting and benefit provisions are
established by N.J.S.A.43:15C-1 et. seq.
The contribution requirements of plan members are determined by State statute. In
accordance with Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007, plan members are
required to contribute 5.5% of their annual covered salary. In addition to the employee
contributions, the School District’s contribution amounts for each pay period are transmitted
to Prudential Financial not later than the fifth business day after the date on which the
employee is paid for that pay period.
The District’s contributions to the DCRP for June 30, 2015 were $30,265. There was no
liability for unpaid contributions at June 30, 2015.
49
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
10.
POST-RETIREMENT BENEFITS
Chapter 384 of Public Laws 1987 and Chapter 6 of Public Laws 1990 required TPAF and
PERS, respectively, to fund post-retirement medical benefits of those State employees who
retire after reaching age 60 and accumulating 25 years of credited service. P.L. 2007, c.103
amended the law to eliminate the funding of post-retirement medical benefits thru TPAF and
PERS. It created separate funds outside of the pension plans for the funding and payment of
post-retirement medical benefits for retired State employees and retired educational
employees. As of June 30, 2014, there were 103,432 retirees receiving post-retirement medical
benefits, and the State contributed $1.04 billion on their behalf. The cost of these benefits is
funded through contributions by the State in accordance with Chapter 62, P.L. 1994. Funding
of post-retirement medical benefits changed from a pre-funding basis to a pay-as-you-go basis
beginning in Fiscal Year 1994.
The State is also responsible for the cost attributable to Chapter 126, P.L. 1992 c.126, which
provides employer paid health benefits to members of PERS and the Alternate Benefit
Program who retired from a board of education or county college with 25 years of service.
The State paid $165.8 million toward Chapter 126 benefits for 18,122 eligible retired
members in Fiscal Year 2014.
11.
COMPENSATED ABSENCES
The District accounts for compensated absences (e.g., unused vacation, sick leave) as
directed by Governmental Accounting Standards.
District employees are granted varying amounts of sick leave in accordance with the districts
personnel policy. Unused sick leave may be accumulated and carried forward to the
subsequent years. Upon separation the District shall pay the employee for unused sick leave
in accordance with the Districts' agreements with the various employees. Vacation days not
used during the year may only be carried forward with approval from the Superintendent.
The liability for vested compensated absences of the governmental fund types is recorded in
the Statement of Net Position.
The liability for vested compensated absences of the proprietary fund types is recorded within
those funds as the benefits accrue to employees.
12.
DEFERRED COMPENSATION
The Board offers its employees a choice of various deferred compensation plans created in
accordance with Internal Revenue Code Section 403(b). The plans, which are administered
by the entities listed below, permit participants to defer a portion of their salary until future
years. Amounts deferred under the plans are not available to employees until termination,
retirement, death or unforeseeable emergency. The plan administrators are as follows:
Lincoln Investment Planning, Inc.
AXA/Equitable
50
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
13.
RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
Property and Liability Insurance – The District maintains commercial insurance coverage for
property, liability, student accident and surety bonds. A complete schedule of insurance
coverage can be found in the Statistical Section of this Comprehensive Annual Financial
Report. There have been no significant reductions in insurance coverage from prior year and
no settlements have exceeded insurance coverage’s over the past three years.
New Jersey Unemployment Compensation Insurance – The District has elected to fund its New
Jersey Unemployment Compensation Insurance under the “Benefit Reimbursement Method”.
Under this plan, the District is required to reimburse the New Jersey Unemployment Trust Fund
for benefits paid to its former employees and charged to its account with the State. The District
is billed quarterly for amounts due to the State. The following is a summary of District
contributions, employee contributions, reimbursements to the State for benefits paid and the
ending balance of the District’s expendable trust fund for the current and prior two years:
Fiscal Year
2014-2015
2013-2014
2012-2013
14.
District
Contributions
$
70
70
100,058
Employee
Contributions
$
79,650
73,112
76,287
Amount
Reimbursed
$ 107,781
71,272
82,684
Ending
Balance
$ 709,722
739,275
738,876
INTERFUND BALANCES AND ACTIVITY
The following interfund balances remained on the balance sheet at June 30, 2015:
Fund
General Fund
Special Revenue Fund
Capital Projects Fund
Debt Service Fund
Enterprise Fund
Trust and Agency Fund
Interfund
Receivable
$
7,832
$
7,832
Interfund
Payable
$
7,800
32
$
7,832
The General Fund had to fund Special Revenue and Debt Service Funds for shortages due to
the delay in the District receiving State aid funds. All interfund balances are expected to be
repaid within one year.
51
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
15.
INVENTORY
Inventory in the Food Service Fund at June 30, 2015 consisted of the following:
Food
Supplies
Commodities
$
$
12,876
6,695
2,469
22,040
The value of Federal donated commodities as reflected on Schedule A (required by the Single
Audit Law of 1984) is the difference between market value and cost of the commodities at the
date of purchase and has been included as an item of non-operating revenue in the financial
statements.
16.
CONTINGENT LIABILITIES
Grant Programs
The school district participates in federal awards and state financial assistance grant
programs. These programs are subject to program compliance audits by the grantors or their
representatives. The school district is potentially liable for expenditures which may be
disallowed pursuant to the terms of these grant programs. Management is not aware of any
material items of noncompliance which would result in the disallowance of program
expenditures.
The District is also involved in several claims and lawsuits incidental to its operations. In the
opinion of the administration and legal counsel, the ultimate resolution of these matters will
not have a material adverse effect on the financial position of the Board.
17.
FUND BALANCES
General Fund – Of the $9,860,167 General Fund balance at June 30, 2015, $852,305 of
encumbrances is committed to other purposes, $2,000,000 is restricted for excess surplus,
$1,972,162 is restricted for excess surplus designated for subsequent year’s expenditures,
$850,000 is assigned to offset 2015-16 general fund expenditures, $1,575,769 is restricted for
capital reserve, $2,850,000 is restricted for maintenance reserve, and $(240,069) is unreserved
and undesignated.
52
MANALAPAN-ENGLISHTOWN REGIONAL SCHOOL DISTRICT
Notes to Basic Financial Statements
18.
DEFICIT FUND BALANCES
The District has a deficit fund balance of $240,069 in the General Fund as of June 30, 2015 as
reported in the fund statements. N.J.S.A. 18A:22-44.2 provides that in the event a state school
aid payment is not made until the following school budget year, districts must record the
delayed one or more June state aid payments as revenue, for budget purposes only, in the
current school budget year. The bill provides legal authority for school districts to recognize this
revenue in the current budget year. For intergovernmental transactions, Governmental
Accounting Standards require that recognition revenue, expenditure, asset, liability should be in
symmetry, i.e., if one government recognizes an asset, the other government recognizes a
liability. Since the State is recording the June state aid payments in the subsequent fiscal year,
the school district can not recognize the June state aid payments (on the GAAP financial
statements) until the year the State records the payable. Due to the timing difference of
recording the June state aid payments, the General Fund balance deficit does not alone
indicate that the district is facing financial difficulties.
Pursuant to N.J.S.A. 18A:22-44.2 any negative unreserved, undesignated general fund balance
that is reported as a direct result from a delay in June payments of state aid until the following
fiscal year is not considered in violation of New Jersey statute and regulation nor in need of
corrective action. The District deficit in the GAAP funds statements of $201,884 is less than the
two state aid payments.
19.
CALCULATION OF EXCESS SURPLUS
In accordance with N.J.S.A. 18A:7F-7, as amended by P.L. 2004, c.73 (S1701), the
designation for Reserved Fund Balance - Excess Surplus is a required calculation pursuant
to the New Jersey Comprehensive Educational Improvement and Financing Act of 1996
(CEIFA). New Jersey school districts are required to reserve General Fund balance at the
fiscal year end of June 30 if they did not appropriate a required minimum amount as
budgeted fund balance in their subsequent years' budget. The excess fund balance at June
30, 2015 is $2,000,000.
20.
UNCERTAIN TAX POSITIONS
The school district had no unrecognized tax benefits at June 30, 2015. The school district
files tax returns in the U.S. federal jurisdiction and various states. The school district has no
open year prior to June 30, 2012.
21.
SUBSEQUENT EVENTS
Management has evaluated subsequent events through November 20, 2015, the date the
financial statements were available to be issued.
22.
PRIOR PERIOD ADJUSTMENT
The implementation of GASB 68 resulted in recording the Deferred Outflows, Deferred Inflows
and Pension liability on the June 30, 2015 district-wide financials. The balances at June 30,
2014 have been recorded into the beginning net position (A-1) for a total adjustment of
$32,589,535. This net recording into the net position created non-comparability in the MD&A
and has been acknowledged and allowed by the GASB.
53
[ THIS PAGE INTENTIONALLY LEFT BLANK ]
APPENDIX C
FORM OF OPINION OF BOND COUNSEL
[ THIS PAGE INTENTIONALLY LEFT BLANK ]
WATERS, McPHERSON, McNEILL
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
SECAUCUS – TRENTON – NEW YORK
MEADOWLANDS OFFICE
300 LIGHTING WAY
P.O. BOX 1560
SECAUCUS, NEW JERSEY 07096
FAX
201-863-4400
201-863-2866
www.lawwmm.com
[ FORM OF APPROVING OPINION ]
July __, 2016
The Board of Education of the Regional
School District Including the School Districts of
Manalapan Township and Englishtown Borough
Englishtown, New Jersey
RBC Capital Markets, LLC
Philadelphia, Pennsylvania
Ladies and Gentlemen:
We have examined a record of proceedings relating to the issuance of $___________
Refunding School Bonds, Series 2016 (the “Bonds”) of The Board of Education of the Regional
School District including the School Districts of Manalapan Township and Englishtown
Borough, a school district of the State of New Jersey (the “School District”) dated July __, 2016.
The Bonds are issued pursuant to the Education Law of the State of New Jersey (N.J.S.A.
18A:24-1, et seq.) and authorized by a refunding bond ordinance of the School District finally
adopted on May 3, 2016 and entitled “REFUNDING BOND ORDINANCE PROVIDING FOR
THE REFUNDING OF OUTSTANDING REFUNDING SCHOOL BONDS BY THE
REGIONAL
BOARD
OF
EDUCATION
OF
MANALAPAN-ENGLISHTOWN,
APPROPRIATING $19,545,000 THEREFOR AND AUTHORIZING THE ISSUANCE OF
$19,545,000 REFUNDING BONDS OF THE SCHOOL DISTRICT TO FINANCE THE COST
THEREOF”; and a resolution of the School District adopted on May 3, 2016, each in all respects
duly approved and published as required by law (the “Authorization Proceedings”).
The Bonds are issued in fully registered form to The Depository Trust Company, New
York, New York, and registered in the name of its nominee, Cede & Co. One bond certificate is
issued for each year of maturity of the Bonds, numbered RSB-1 to RSB-__ in order of maturity.
The Bonds mature in the principal amounts on October 1, and bear interest at the rates
per annum payable on October 1, 2016 and semiannually thereafter on April 1 and October 1, in
each year until maturity as described in the following schedule:
REFUNDING SCHOOL BONDS, SERIES 2016
Year
Principal Amount
$
Interest Rates
%
Yields
%
The Bonds are subject to redemption prior to maturity. The Bonds maturing on or after
October 1, 2027 are redeemable at the option of the School District in whole or in part on any
date on or after October 1, 2026 at a redemption price equal to the principal amount thereof, plus
accrued interest to the date fixed for redemption.
In our opinion, the Authorization Proceedings have been validly adopted, executed and
delivered, and are in full force and effect. The Bonds are valid and legally binding general
obligations of the School District, enforceable in accordance with its terms and the Authorization
Proceedings, except insofar as the enforcement thereof may be limited by any applicable
bankruptcy, moratorium or similar laws relating to the enforcement of creditors’ rights. The
Bonds, unless paid from other sources, are payable from ad valorem taxes to be levied upon all
the taxable property within the School District without limitation as to rate or amount. Further,
the Bonds are secured under the provisions of the New Jersey School Bond Reserve Act
(N.J.S.A. 18A:56-17 et seq.).
The School District has covenanted to comply with any continuing requirements that may
be necessary to preserve the tax exempt status of the Bonds under the Internal Revenue Code of
1986, as amended (the “Code”). In the event that the School District continuously complies with
its covenant, it is our opinion that interest on the Bonds is not includable in gross income for
federal income tax purposes under the current law. It is also our opinion that interest on the
Bonds is not an item of tax preference under Section 57 of the Code when calculating the federal
alternative minimum tax on individuals. However, interest on the Bonds is included in the
relevant income computation for purposes of calculating the federal alternative minimum tax on
corporations as a result of the inclusion of interest on the Bonds in “adjusted current earnings”.
The Bonds are not “private activity bonds” as defined in the Code. We express no opinion
regarding other federal tax consequences or other federal taxes arising with respect to the Bonds.
Further, in our opinion, under current law interest on the Bonds, and any gain on the sale
thereof, is not includable as gross income under the New Jersey Gross Income Tax Act.
Very truly yours,
WATERS, McPHERSON, McNEILL, P.C.
APPENDIX D
FORM OF SECONDARY MARKET DISCLOSURE UNDERTAKING
[ THIS PAGE INTENTIONALLY LEFT BLANK ]
FORM OF SECONDARY MARKET DISCLOSURE UNDERTAKING
This UNDERTAKING is made as of July __, 2016 by The Board of Education of
the Regional School District including the School Districts of Manalapan Township and
Englishtown Borough, a school district of the State of New Jersey (the “Issuer”) in order to
comply with the secondary market disclosure requirements contemplated by Rule 15c2-12
adopted by the United States Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 (the “Rule”). Defined terms used in this UNDERTAKING shall have the
definitions set forth in the Rule unless the context of this UNDERTAKING clearly indicates
otherwise.
Section 1.
The obligations with respect to which this UNDERTAKING
applies are described herein, and more fully in Appendix A attached hereto, as follows:
$_________ Refunding School Bonds, Series 2016, which are
dated the date of delivery, mature in the principal amounts on
October 1, and bear interest at the rates per annum payable on
October 1, 2016 and semiannually thereafter on April 1 and
October 1 in each year until maturity (the “Municipal Securities”).
Section 2.
The term of this UNDERTAKING is from the date of delivery of
the Municipal Securities to the date of the last payment of the principal amount or redemption
price, if any, and interest to accrue thereon, of the Municipal Securities.
Section 3.
Municipal Securities.
The Issuer is the only Obligated Person with respect to the
Section 4.
The Issuer undertakes to provide the following Annual Financial
Information and Operating Data to the Municipal Securities Rulemaking Board in an electronic
format to be filed with the Electronic Municipal Market Access system (“EMMA”,
www.emma.msrb.org) for each fiscal year ending on or after June 30, 2017:
(1)
Audited Financial Statements (or Unaudited Financial Statements as set
forth in Section 5(1) of this UNDERTAKING);
(2)
Property Valuation;
(3)
Tax Rate;
(4)
Tax Levy and Collection Data;
(5)
New Debt; and
(6)
Litigation.
Section 5.
The Issuer shall file the Annual Financial Information and
Operating Data with EMMA on or before April 1 following the close of the Issuer’s fiscal year
ending on the preceding June 30.
(1)
If the Issuer’s Audited Financial Statements are not available by the
April 1 filing deadline, the Issuer shall file its Unaudited Financial
Statements on or before the April 1 filing deadline and thereafter file its
Audited Financial Statements as soon as it becomes available.
(2)
If the Issuer fails to file the Annual Financial Information and Operating
Data with EMMA by the April 1 filing deadline, the Issuer shall file a
notice with EMMA of such failure on April 2, and thereafter file the
Annual Financial Information and Operating Data with EMMA as soon it
becomes available.
(3)
If the fiscal year of the Issuer changes, notice of such change and of the
subsequent change in the aforementioned filing deadlines shall be filed
with EMMA within 10 days after such occurrence.
Section 6.
The accounting principles followed by the Issuer are the Generally
Accepted Accounting Principles (“GAAP”) and GASB #34 and Budgetary Basis of accounting.
If the Issuer is required by law or regulation to adopt different accounting principles, notice of
such change shall be provided at the time the Issuer files its next succeeding Annual Financial
Information and Operating Data.
Section 7.
The Issuer undertakes to file notices with EMMA of the
occurrence of any of the following events of which it has direct knowledge with respect to the
Municipal Securities, within 10 days after such occurrence:
(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
difficulties;
(5)
Substitution of credit or liquidity providers, or of 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 Municipal Securities, or other material
events affecting the tax status of the Municipal Securities;
draws
on
credit
enhancements
reflecting
financial
(7)
Modifications to the rights of the holders of the Municipal Securities, if
material;
(8)
Bond calls, if material, and tender offers;
(9)
Defeasances;
(10)
Release, substitution, or sale of property securing repayment of the
Municipal Securities, if material;
(11)
Rating changes of the Issuer, but not of a credit enhancement provider
such as a Bond Insurer, if any, for the Municipal Securities, unless the
Issuer has direct knowledge of such ratings changes;
(12)
Bankruptcy, insolvency, receivership or similar event of the Issuer;
(13)
The consummation of a merger, consolidation, or acquisition involving the
Issuer or the sale of all or substantially all of the assets of the Issuer, 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; and
(14)
Appointment of a successor or additional trustee, or the change of name of
a trustee, if material.
The Issuer, from time to time, may choose to file notices with EMMA of the
occurrence of any event, in addition to those listed above. Nevertheless, the Issuer does not
undertake to file any such notice with EMMA of the occurrence of any event except those events
set forth and enumerated (1) through (14) above. Notices filed with EMMA pursuant to this
UNDERTAKING shall be drafted substantially in the form attached hereto as Appendix B.
Section 8.
This UNDERTAKING is made for the benefit of the holders or
beneficial owners of the Municipal Securities and may be enforced by any such holder or
beneficial owner. The sole remedy of any such holder or beneficial owner shall be for specific
performance of this UNDERTAKING and not for money damages in any amount.
Section 9.
The Issuer designates its Business Administrator / Board Secretary
as the person charged with the responsibility to execute the obligations set forth in this
UNDERTAKING. The Issuer, from time to time, may hereafter designate an Agent with such
responsibility by resolution of its governing body.
Section 10.
The Issuer may amend any provision of this UNDERTAKING if
the Issuer’s bond counsel issues an opinion supporting a determination that:
(1)
This UNDERTAKING, as amended, would have complied with the
requirements of the Rule at the time of the primary offering of the
Municipal Securities, after taking into account any amendments or
interpretations of the Rule; and
(2)
The amendment does not materially impair the interests of the holders or
beneficial owners of the Municipal Securities.
Notice of any amendment to this UNDERTAKING shall be filed with EMMA in
a timely manner.
Section 11.
The Issuer may rely on an opinion of its bond counsel when
determining questions of materiality relating to any provision of this UNDERTAKING and the
Rule.
IN WITNESS WHEREOF, The Regional Board of Education of ManalapanEnglishtown has caused this UNDERTAKING to be executed in its name by its Board President,
and its corporate seal to be affixed hereto and attested by its Board Secretary, all as of the ____
day of July, 2016.
[ SEAL ]
THE BOARD OF EDUCATION OF THE
REGIONAL SCHOOL DISTRICT INCLUDING
THE SCHOOL DISTRICTS OF MANALAPAN
TOWNSHIP AND ENGLISHTOWN BOROUGH
By: _______________________________
Veronica Wolf
Board Secretary
By: ________________________________
Dotty Porcaro
Board President
Appendix A
DESCRIPTION OF THE MUNICIPAL SECURITIES
Appendix B
FORM OF
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE VIA
ELECTRONIC MUNICIPAL MARKET ACCESS
Name of Issuer/
Obligated Person:
The Board of Education of the Regional School District including the
School Districts of Manalapan Township and Englishtown Borough
NOTICE IS HEREBY GIVEN that the Issuer/Obligated Person failed to file, in a timely manner,
as required pursuant to its prior secondary market disclosure undertakings: (1) Annual Financial
Information for the fiscal years ending June 30, ________ and ________; and (2) Operating Data
for the fiscal years ending June 30, ________, and ________. The Issuer/Obligated Person has
subsequently filed the required information.
DATED: ________
THE BOARD OF EDUCATION OF THE
REGIONAL
SCHOOL
DISTRICT
INCLUDING THE SCHOOL DISTRICTS
OF MANALAPAN TOWNSHIP AND
ENGLISHTOWN BOROUGH