S&P Rating (Direct Deposit Program): AA+

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY S&P Rating (Direct Deposit Program): AA+ S&P Underlying Rating: AA- See BOND RATINGS herein The interest on the Bonds is included in gross income for federal income tax purposes and is not exempt from Missouri income taxation. See TAX MATTERS in this Official Statement. NORTHWEST R-I SCHOOL DISTRICT OF JEFFERSON COUNTY, MISSOURI $8,740,000 TAXABLE GENERAL OBLIGATION REFUNDING BONDS (MISSOURI DIRECT DEPOSIT PROGRAM) SERIES 2012 Dated: Date of Delivery Due: March 1, as shown on the inside cover Taxable General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2012 (the Bonds ) will be issued by the Northwest R-I School District of Jefferson County, Missouri (the District ) for the purpose of providing funds to (1) refund a portion of the District s outstanding General Obligation Improvement and Refunding Bonds (Missouri Direct Deposit Program), Series 2004, as further described herein under the section captioned PLAN OF FINANCING Refunding of the Refunded Bonds, and (2) pay the costs of issuance related to the Bonds. The Bonds will be issued as fully registered bonds in the denomination of $5,000 or integral multiples thereof. Principal on the Bonds will be payable annually as set forth on the inside cover of this Official Statement. Interest on the Bonds is payable semiannually on each March 1 and September 1, commencing March 1, 2013, by check or draft mailed (or by wire transfer in certain circumstances as described herein) to the persons who are the registered owners of the Bonds as of the close of business on the 15th day of the month preceding the applicable interest payment date. The Bonds are not subject to redemption prior to maturity. THE BONDS AND INTEREST THEREON WILL CONSTITUTE GENERAL OBLIGATIONS OF THE DISTRICT, PAYABLE FROM AD VALOREM TAXES WHICH MAY BE LEVIED WITHOUT LIMITATION AS TO RATE OR AMOUNT UPON ALL OF THE TAXABLE TANGIBLE PROPERTY, REAL AND PERSONAL, WITHIN THE TERRITORIAL LIMITS OF THE DISTRICT. See inside cover for maturities, principal amounts, interest rates, prices and CUSIP numbers. The Bonds are offered when, as and if issued by the District and accepted by the Underwriter, subject to the approval of validity by Gilmore & Bell, P.C., St. Louis, Missouri, Bond Counsel, and subject to certain other conditions. Bond Counsel will also pass on certain matters relating to this Official Statement. It is expected that the Bonds will be available for delivery through the facilities of The Depository Trust Company in New York, New York on or about October 2, The date of this Official Statement is September 20, 2012.

2 NORTHWEST R-I SCHOOL DISTRICT OF JEFFERSON COUNTY, MISSOURI $8,740,000 TAXABLE GENERAL OBLIGATION REFUNDING BONDS (MISSOURI DIRECT DEPOSIT PROGRAM) SERIES 2012 MATURITY SCHEDULE Base CUSIP: Due (March 1) Principal Amount Interest Rate Price CUSIP 2013 $ 60, % % DY , DZ , EA ,365, EB ,470, EC ,625, ED ,700, EE ,000, EF2

3 NORTHWEST R-I SCHOOL DISTRICT OF JEFFERSON COUNTY, MISSOURI 2843 Community Lane High Ridge, Missouri BOARD OF EDUCATION Sherri K. Talbott, President and Member Nancy Bergfeld, Vice-President and Member Retta Susan Tuggle, Treasurer and Member Gary Bonacker, Secretary and Member Chris Shelton, Member Victoria James, Member Nelson O. Weber, Member DISTRICT ADMINISTRATION Dr. Paul T. Ziegler, Superintendent Mrs. Patty Bedborough, Executive Director of Finance PAYING/ESCROW AGENT UMB Bank, N.A. St. Louis, Missouri BOND COUNSEL Gilmore & Bell, P.C. St. Louis, Missouri UNDERWRITER Stifel, Nicolaus & Company, Incorporated St. Louis, Missouri

4 REGARDING USE OF THIS OFFICIAL STATEMENT THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 3(a)(2) OF SUCH ACT. The information set forth herein has been obtained from the District and other sources which are deemed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the District. 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 laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. No dealer, broker, salesperson or any other person has been authorized by the District to give any information or make any representations, other than those contained in this Official Statement, in connection with the offering of the Bonds, and if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. 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 state in which it is unlawful for such person to make such offer, solicitation or sale. The information herein is subject to change without notice, and neither the delivery of this Official Statement nor the sale of any of the Bonds hereunder shall under any circumstances create any implication that there has been no change in the affairs of the District or the other matters described herein since the date hereof. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

5 TABLE OF CONTENTS INTRODUCTION... 1 General... 1 Purpose of the Bonds... 1 Security for the Bonds... 1 Continuing Disclosure... 2 THE BONDS... 2 General... 2 Book-Entry Only System... 2 Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System... 5 No Optional Redemption... 5 SECURITY FOR THE BONDS... 5 Pledge of Full Faith and Credit... 5 Levy and Collection of Annual Tax... 5 Direct Deposit of State Aid Payments... 5 PLAN OF FINANCING... 6 Refunding of the Refunded Bonds... 6 Sources and Uses of Funds... 7 VERIFICATION OF MATHEMATICAL COMPUTATIONS... 7 THE DISTRICT... 7 LEGAL MATTERS... 8 BOND RATING... 8 TAX MATTERS... 8 IRS Circular 230 Notice... 9 Tax Status of the Bonds Federal and State of Missouri... 9 Other Tax Consequences... 9 CONTINUING DISCLOSURE UNDERTAKING ABSENCE OF LITIGATION UNDERWRITING CERTAIN RELATIONSHIPS MISCELLANEOUS APPENDIX A - INFORMATION REGARDING THE DISTRICT APPENDIX B - AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Page (i)

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7 OFFICIAL STATEMENT NORTHWEST R-I SCHOOL DISTRICT OF JEFFERSON COUNTY, MISSOURI $8,740,000 TAXABLE GENERAL OBLIGATION REFUNDING BONDS (MISSOURI DIERCT DEPOSIT PROGRAM) SERIES 2012 INTRODUCTION The following introductory information is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, including the appendices hereto, are not to be deemed to be a determination of relevance, materiality or relative importance, and this Official Statement, including the cover page and appendices should be considered in its entirety. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. General This Official Statement, including the cover page and appendices hereto, is furnished to prospective purchasers in connection with the offering and sale of $8,740,000 aggregate principal amount of Taxable General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2012 (the Bonds ) by the Northwest R-I School District of Jefferson County, Missouri (the District ). The issuance and sale of the Bonds is authorized by a resolution of the Board of Education of the District adopted on September 20, 2012 (the Resolution ). All capitalized terms used herein and not otherwise defined herein have the meanings assigned to those terms in the Resolution. Purpose of the Bonds The Bonds are being issued for the purposes of providing funds to (a) refund the District s outstanding General Obligation Improvement and Refunding Bonds (Missouri Direct Deposit Program), Series 2004, maturing in the years 2015 and thereafter, and (b) pay the costs of issuing the Bonds. See the section herein captioned PLAN OF FINANCING. Security for the Bonds The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes, which may be levied without limitation as to rate or amount upon all of the taxable tangible property, real and personal, within the territorial limits of the District. See the section herein captioned SECURITY FOR THE BONDS - Pledge of Full Faith and Credit. Pursuant to a Direct Deposit Agreement among the Office of the Treasurer of the State of Missouri, the Department of Elementary and Secondary Education of the State of Missouri, the Health and Educational Facilities Authority of the State of Missouri, Wells Fargo Bank, N.A. and the District, the District will agree that a portion of its State Aid payments will be transferred to Wells Fargo Bank, N.A., as Direct Deposit Trustee, in order to pay the debt service on the Bonds. See the section herein captioned SECURITY FOR THE BONDS Direct Deposit of State Aid Payments.

8 Continuing Disclosure The District will agree in a Continuing Disclosure Certificate (the Continuing Disclosure Certificate ), to be executed by the District to provide certain financial information and operating data relating to the District and to provide notices of the occurrence of certain enumerated events relating to the Bonds. The financial information, operating data and notice of events will be filed in compliance with Rule 15c2-12 promulgated by the Securities and Exchange Commission. See the section herein captioned CONTINUING DISCLOSURE UNDERTAKING. General THE BONDS The Bonds are being issued in the aggregate principal amount of $8,740,000. The Bonds are dated as of the date of original delivery of and payment for such Bonds and the principal is payable on March 1 in the years and in the principal amounts set forth on the inside cover page hereof. Interest on the Bonds is calculated at the rates per annum set forth on the inside cover page, computed on the basis of a 360-day year of twelve 30-day months. The Bonds shall consist of fully-registered bonds in denominations of $5,000 or any integral multiple thereof. Interest on the Bonds is payable from the date thereof or the most recent date to which said interest has been paid and is payable semiannually on March 1 and September 1 in each year, beginning March 1, Payment of the interest on the Bonds will be made to the person in whose name such Bond is registered on the registration books (the Bond Register ) at the close of business on the 15th day (whether or not a Business Day) of the calendar month next preceding an interest payment date (the Record Date ). Interest on the Bonds will be paid to the Registered Owners thereof by check or draft mailed by UMB Bank, N.A. (the Paying Agent ), to each Owner at the address shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner, or by electronic transfer to such Registered Owner upon written notice signed by such Registered Owner and given to the Paying Agent not less than 15 days prior to the Record Date for such interest payment, containing the electronic transfer instructions including the name and address of the bank (which shall be in the continental United States), the ABA routing number and the account number to which such Owner wishes to have such transfer directed and an acknowledgement that an electronic transfer fee is payable. Principal of the Bonds will be paid by check or draft to the Registered Owner of such Bond at the maturity of such Bond or otherwise, upon presentation and surrender of such Bond at the payment office of the Paying Agent in St. Louis, Missouri or at such other payment office as designated by the Paying Agent. Book-Entry Only System General. The Bonds are available in book-entry only form. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Ownership interests in the Bonds will be available to purchasers only through a book-entry system (the Book-Entry System ) maintained by The Depository Trust Company ( DTC ), New York, New York. -2-

9 The following information concerning DTC and DTC s book-entry system has been obtained from DTC. The District takes no responsibility for the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity and will be deposited with DTC. DTC and its Participants. 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 DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Ownership Interests. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. Transfers. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The -3-

10 Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal and Interest. Payment of principal of and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the District or the Paying Agent, on the payment date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent or District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry System. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Direct Participants holding a majority position in the Bonds may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed, 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), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Bonds from DTC (or such successor securities depository), Bond certificates may be delivered to Beneficial Owners in the manner described herein under the caption Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book Entry Only System. -4-

11 Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System The Paying Agent will keep or cause to be kept the Bond Register at its principal payment office or such other office designated by the Paying Agent. Upon surrender of any Bond to the Paying Agent, the Paying Agent shall transfer or exchange Bonds as provided in the Resolution. Any Bond may be transferred upon the Bond Register by the person in whose name it is registered and shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Registered Owner thereof or by the Registered Owner s duly authorized agent. The Owner requesting such transfer or exchange will be required to pay any additional costs or fees that might be incurred in the secondary market with respect to such exchange. In the event any Registered Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Registered Owner sufficient to pay any governmental charge required to be paid as a result of such failure. No Optional Redemption The Bonds are not subject to optional redemption prior to their Stated Maturity. Pledge of Full Faith and Credit SECURITY FOR THE BONDS The Bonds will constitute general obligations of the District and will be payable as to both principal of and interest on the Bonds from ad valorem taxes, which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the District. Levy and Collection of Annual Tax Under the Resolution, there is levied upon all of the taxable tangible property within the District a direct annual tax sufficient to produce the amounts necessary for the payment of the principal of and interest on the Bonds as the same become due and payable in each year. Such taxes shall be extended upon the tax rolls in each year, and shall be levied and collected at the same time and in the same manner as the other ad valorem taxes of the District are levied and collected. Except as otherwise provided under the heading SECURITY FOR THE BONDS Direct Deposit of State Aid Payments, the proceeds derived from said taxes shall be deposited in the Debt Service Fund, shall be kept separate and apart from all other funds of the District, and shall be used solely for the payment of the principal of and interest on the Bonds as and when the same become due, taking into account scheduled mandatory redemptions, if any, and the fees and expenses of the Paying Agent. Direct Deposit of State Aid Payments Pursuant to Section et seq. of the Revised Statutes of Missouri, as amended, and related statutes (the Deposit Law ), the State of Missouri (the State ) and the District may agree to transfer to Wells Fargo Bank, N.A., as direct deposit trustee (the Deposit Trustee ), a portion of the District s State aid payments and distributions normally used for operational purposes ( State Aid ) in order to provide for payment of debt service on the Bonds. On the date of issuance of the Bonds, the District will enter into a Direct Deposit Agreement (the Deposit Agreement ) with the Office of the Treasurer of the State of Missouri ( Treasurer s Office ), the Department of Elementary and Secondary Education of the State of Missouri ( DESE ), the Health and Educational Facilities Authority of the State of Missouri and the Deposit Trustee. The Deposit Agreement will provide for payment of one-half (1/2) of the debt service due on -5-

12 March 1, 2013 to be paid in each of the months of November 2012 and December 2012 and one-tenth (1/10 th ) of the debt service due in the next bond year to be paid in each of the ten (10) months of March 2013 through December 2013 and each succeeding ten (10) similar months (i.e., March through December) for each bond year after the Bonds are issued as long as the Bonds are outstanding. Amounts of State Aid to the District in excess of the one-tenth (1/10 th ) monthly deposit will not be deposited with the Deposit Trustee but will be transferred directly to the District, as has historically been the case with all State Aid. Each month, pursuant to the terms of the Deposit Agreement, DESE will advise the Treasurer s Office of the amount of the District s State Aid to be deposited with the Deposit Trustee for the purpose of paying the Bonds, as specified in the Deposit Agreement. If there is a shortfall in a monthly payment, it is to be made up in the succeeding monthly payment of State Aid. Following receipt of the deposits, the Deposit Trustee will invest the amounts for the benefit of the District. The Deposit Trustee will transfer to the Paying Agent the amount necessary for payment of debt service on the Bonds not later than the day prior to each payment date with respect to the Bonds. The District remains obligated to provide funds to the Paying Agent for debt service on the Bonds if the amounts of State Aid transferred are not sufficient to pay the Bonds when due. Nothing in the Deposit Law or the Deposit Agreement relieves the District of its obligation to make payments of principal and interest on the Bonds, or to impose any debt service levy sufficient to retire the Bonds. Moneys of the District which would otherwise be used to pay the Bonds on each payment date may be transferred to the District s operational funds to replace State Aid funds used to pay the Bonds. The State has not committed pursuant to the Deposit Law, the Deposit Agreement or otherwise to maintain any particular level of State Aid on behalf of the District, and the State is not obligated in any manner, contractually or morally, to make payments of debt service on the Bonds, other than its obligation to make transfers to the Deposit Trustee as described above. No assurance can be made that the amount of annual State Aid to the District will not in the future drop below that of the annual debt service requirements on the Bonds. Refunding of the Refunded Bonds PLAN OF FINANCING The proceeds of the Bonds will be used for the purpose of refunding the District s outstanding General Obligation Improvement and Refunding Bonds (Missouri Direct Deposit Program), Series 2004, maturing in the years 2015 and thereafter, outstanding in the aggregate principal amount of $8,770,000 (the Refunded Bonds ). The District will enter into an Escrow Trust Agreement dated as of October 1, 2012 (the Escrow Trust Agreement ), with UMB Bank, N.A., as escrow agent (the Escrow Agent ). Pursuant to the Escrow Trust Agreement, the District will transfer a portion of the proceeds of the Bonds to the Escrow Agent for deposit in the Escrow Fund (the Escrow Fund ) established under the Escrow Trust Agreement to purchase direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (the Escrowed Securities ). The Escrowed Securities will mature in such amounts and at such times as shall be sufficient, together with interest to accrue thereon and any cash deposit to the Escrow Fund, to pay the principal of, redemption premium, if any, and interest on the Refunded Bonds as the same become due and payable, including the redemption of the Refunded Bonds on March 1, 2014 at a redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the date of redemption. -6-

13 Robert Thomas CPA, LLC, Shawnee Mission, Kansas (the Escrow Verifier ), a firm of independent certified public accountants, will provide a report to the effect that the principal of and interest income on the Escrowed Securities, together with any cash deposit in the Escrow Fund, will provide sufficient moneys to make the required payments in accordance with the District s refunding plan as set forth herein. See the section herein captioned VERIFICATION OF MATHEMATICAL COMPUTATIONS. After the issuance of the Bonds and the deposit of the proceeds thereof with the Escrow Agent, the principal of and interest on the Refunded Bonds will be payable from the maturing principal of the Escrowed Securities and other funds on deposit in the Escrow Fund. The Escrow Trust Agreement provides that the Escrowed Securities are irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds and may be applied only to such payment. Sources and Uses of Funds The sources and uses of the proceeds of the Bonds are as follows: Sources of Funds: Total Par Amount of Bonds $8,740, Plus: Original Issue Premium 682, Total $9,422, Uses of Funds: Deposit to Escrow Fund $9,336, Costs of Issuance (including Underwriter s Discount) 85, Total $9,422, VERIFICATION OF MATHEMATICAL COMPUTATIONS Upon delivery of the Bonds, the Escrow Verifier will deliver to the District and the Underwriter (defined herein) a report indicating that such firm has examined, in accordance with standards established by the American Institute of Certified Public Accountants, the information and assertions provided by the Underwriter and the District and its representatives. Included in the scope of its examination will be a verification of the mathematical accuracy of the adequacy of the maturing principal amount of the Escrowed Securities held in the Escrow Fund, interest earned thereon and certain uninvested cash to redeem and pay the principal of, redemption premium, if any, and interest on the Refunded Bonds as the same become due and payable (as described under the caption PLAN OF FINANCING Refunding of the Refunded Bonds ). THE DISTRICT The District, comprising an area of approximately 124 square miles, is located in the northwestern section of Jefferson County and is immediately adjacent to St. Louis County. The District includes the incorporated communities of Parkdale, Byrnes Mill, Scottsdale and Cedar Hill Lakes and the unincorporated communities of High Ridge, House Springs and Cedar Hill. See APPENDIX A INFORMATION REGARDING THE DISTRICT for further information regarding the District. -7-

14 LEGAL MATTERS Legal matters with respect to the authorization, execution and delivery of the Bonds are subject to the approval of Gilmore & Bell, P.C., St. Louis, Missouri, Bond Counsel, whose approving opinion will be available at the time of delivery of the Bonds. Gilmore & Bell, P.C. will also pass upon certain legal matters relating to this Official Statement. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transactions opined upon, or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. BOND RATING Standard & Poor s, a division of The McGraw-Hill Companies, Inc. (the Rating Agency ), has assigned a municipal bond rating of AA+ to the Bonds based upon the District s participation in the Missouri Direct Deposit Program. In addition, the Rating Agency has assigned a municipal bond rating of AA- to the Bonds based on the underlying credit of the District. The District has furnished the Rating Agency with certain information and materials relating to the Bonds and the District that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions made by the rating agencies. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the rating agency originally establishing such rating, circumstances so warrant. The Underwriter has not undertaken any responsibility to bring to the attention of the holders of the Bonds any proposed revision or withdrawal of the rating of the Bonds or to oppose any such proposed revision or withdrawal. Pursuant to the Continuing Disclosure Certificate, the District is required to bring to the attention of the holders of the Bonds any proposed revision or withdrawal of the ratings of the Bonds, but has not undertaken any responsibility to oppose any such proposed revision or withdrawal. See the section herein captioned CONTINUING DISCLOSURE UNDERTAKING. Any such revision or withdrawal of the ratings could have an adverse effect on the market price and marketability of the Bonds. TAX MATTERS The following is a summary of the material federal and State of Missouri income tax consequences of holding and disposing of the Bonds. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Bonds as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Missouri, does not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Bonds in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Bonds. -8-

15 IRS Circular 230 Notice TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, OWNERS OF THE BONDS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS OFFICIAL STATEMENT RELATING TO THE BONDS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY OWNERS OF THE BONDS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THOSE OWNERS UNDER THE INTERNAL REVENUE CODE; (B) THE DISCUSSION OF FEDERAL TAX ISSUES IN THIS OFFICIAL STATEMENT RELATING TO THE BONDS WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THOSE BONDS; AND (C) OWNERS OF THE BONDS SHOULD SEEK ADVICE FROM AN INDEPENDENT TAX ADVISOR BASED ON THEIR PARTICULAR CIRCUMSTANCES. Tax Status of the Bonds Federal and State of Missouri No Federal or Missouri Tax Exemption. The interest on the Bonds will be included in gross income for federal income tax purposes and is not exempt from income taxation by the State of Missouri, both in accordance with the owner s normal method of accounting. No Opinion. Bond Counsel is not rendering any opinion to owners of the Bonds regarding the treatment of interest on the Bonds for federal or Missouri income taxation. Purchasers of Bonds should consult their tax advisors as to the applicability of these tax consequences and other income tax consequences of the purchase, ownership and disposition of the Bonds, including the possible application of state, local, foreign and other tax laws. Other Tax Consequences Original Issue Premium. If a Bond is issued at a price that exceeds the stated redemption price at maturity of the Bond, the excess of the issue price over the stated redemption price at maturity constitutes premium on the Bond (a Premium Bond ). Under Section 171 of the Code, the purchaser of a Premium Bond may elect to amortize the premium over the term of the Premium Bond using constant yield principles, based on the purchaser s yield to maturity. An owner of a Premium Bond amortizes bond premium by offsetting the qualified stated interest allocable to an accrual period with the bond premium allocable to that accrual period. This offset occurs when the owner takes the qualified stated interest into income under the owner s regular method of accounting. If the premium allocable to an accrual period exceeds the qualified stated interest for that period, the excess is treated by the owner as a deduction under Section 171(a)(1) of the Code. As premium is amortized, the owner s basis in the Premium Bond will be reduced by the amount of amortizable premium properly allocable to the owner. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange or Retirement of Bonds. Upon the sale, exchange or retirement (including redemption) of a Bond, an owner of the Bond generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Bond (other than in respect of accrued and unpaid interest) and such owner s adjusted tax basis in the Bond. To the extent a Bond is held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Bond has been held for more than 12 months at the time of sale, exchange or retirement. -9-

16 Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on the Bonds, and to the proceeds paid on the sale of the Bonds, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner s federal income tax liability. Collateral Federal Income Tax Consequences. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Bonds, including the possible application of state, local, foreign and other tax laws. CONTINUING DISCLOSURE UNDERTAKING The District will covenant in the Continuing Disclosure Certificate to file or cause to be filed certain financial information and operating data relating to the District (updated within not later than 180 days following the end of its fiscal year, which currently ends June 30) (the Annual Report ) commencing with the Annual Report for the fiscal year ended June 30, 2012, and to file notices of the occurrence of certain enumerated events. The Annual Report shall be filed by or on behalf of the District with the Municipal Securities Rulemaking Board (the MSRB ) through the Electronic Municipal Market Access system ( EMMA ). The Annual Report shall include: (a) (b) The audited financial statements of the District for the prior fiscal year, prepared in accordance with the accounting principles described in the notes to the financial statements set forth in APPENDIX B of this Official Statement. The information relating to the District and its operations set forth in APPENDIX A of this Official Statement, set forth in the tables under the sections captioned: THE DISTRICT - Enrollment, PROPERTY TAX INFORMATION - Historical Assessed Valuation, - Current Assessed Valuation and Estimated Actual Value, - Tax Rates, - Tax Collection Record, and DEBT STRUCTURE OF THE DISTRICT - Debt Ratios and Related Information (excluding information relating to Overlapping Indebtedness) and information with respect to litigation if, in the judgment of the District, such litigation would have a material adverse effect on the financial condition of the District. Within 10 business days after the occurrence of any of the following events, the District shall give, or cause to be given to the MSRB through EMMA, notice of the occurrence of any of the following events with respect to the Bonds ( Material Events ): -10-

17 (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions; the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 570-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of bondholders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the District; (13) the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of the Paying Agent, if material. Nothing in the Continuing Disclosure Certificate shall be deemed to prevent the District from disseminating any other information using the means of dissemination set forth in the Continuing Disclosure Certificate, or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by the Continuing Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required, the District shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12 promulgated by the Securities and Exchange Commission. The District has previously failed to timely file its audited financial statements and information relating to the District and its operations and, therefore, has not been in compliance with respect to certain previous continuing disclosure obligations under the Rule. As of the date hereof, the District has made all necessary filings in compliance with its previous undertakings. The District has covenanted in the Continuing Disclosure Certificate to make the required filings in the future. ABSENCE OF LITIGATION As of the date hereof, there is no controversy, suit or other proceeding of any kind pending or, to the District s knowledge, threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the District or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act in connection with the authorization, issuance and sale of the Bonds, or the constitutionality or validity of the Bonds or any of the proceedings had in relation to the authorization, issuance or sale thereof, or the levy and collection of a tax to pay the principal and interest thereof, or which might affect the District s ability to meet its obligations to pay the Bonds. -11-

18 UNDERWRITING Stifel, Nicolaus & Company, Incorporated, St. Louis, Missouri (the Underwriter ), has agreed to purchase the Bonds at a price of $9,369, (which is equal to the aggregate principal amount of the Bonds, less an underwriting discount of $52,440.00, plus original issue premium of $682,401.80). The Underwriter is purchasing the Bonds for resale in the normal course of the Underwriter s business activities. The Underwriter reserves the right to offer any of the Bonds to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, shall determine. CERTAIN RELATIONSHIPS Gilmore & Bell, P.C., Bond Counsel, has represented the Underwriter and the Paying Agent in transactions unrelated to the issuance of the Bonds, but is not representing them in connection with the issuance of the Bonds. MISCELLANEOUS The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is made to all such documents for full and complete statements of all matters of fact relating to the Bonds, the security for the payment of the Bonds and the rights of the Owners thereof. During the period of the offering, copies of drafts of such documents may be examined at the offices of the Underwriter. The information contained in this Official Statement has been compiled from official and other sources that are deemed to be reliable, and while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. 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 information presented herein since the date hereof. This Official Statement is not to be construed as a contract or agreement between the District, the Paying Agent, or the Underwriter and the purchasers or Owners of any Bonds. The District has duly authorized the delivery of this Official Statement. NORTHWEST R-I SCHOOL DISTRICT OF JEFFERSON COUNTY, MISSOURI By: /s/ Nancy Bergfeld Vice President of the Board of Education -12-

19 APPENDIX A INFORMATION REGARDING THE DISTRICT

20 TABLE OF CONTENTS Page THE DISTRICT... A-1 General... A-1 Board of Education... A-1 Administration... A-1 Professional Staff... A-2 Enrollment... A-2 School Rating and Accreditation... A-3 School Facilities... A-3 Employee Relations; Early Separation Incentive Plan... A-3 Pension Plan... A-4 Insurance Program... A-5 FINANCIAL INFORMATION CONCERNING THE DISTRICT... A-5 Accounting, Budgeting and Auditing Procedures... A-5 Sources of Revenue... A-7 Local Revenue... A-7 County Revenue... A-8 State Revenue... A-8 Federal Revenue... A-8 Missouri School Finance Laws... A-9 Tax Limitation Provisions... A-12 Summary of Revenues and Expenditures... A-13 PROPERTY TAX INFORMATION... A-15 Property Valuations... A-15 Historical Assessed Valuation... A-15 Current Assessed Valuation and Estimated Actual Value... A-16 Tax Assessments and Collections... A-16 Tax Rates... A-17 Tax Collection Record... A-18 Major Taxpayers... A-18 District s Rights in the Event of Tax Delinquencies... A-19 ECONOMIC INFORMATION CONCERNING THE DISTRICT... A-20 Major Employers... A-20 Unemployment... A-20 Population and Other Statistics... A-20 DEBT STRUCTURE OF THE DISTRICT... A-21 General... A-21 General Obligation Bonds Outstanding... A-22 History of General Obligation Indebtedness... A-22 General Obligation Debt Service Requirements... A-23 Debt Limitation and Debt Capacity... A-23 Overlapping or Underlying Indebtedness... A-23 Debt Ratios and Related Information... A-24 Lease Obligations... A-24 Other Long-Term Obligations... A-25

21 THE DISTRICT General Northwest R-I School District of Jefferson County, Missouri (the District ) was organized in 1949, resulting from the reorganization of two consolidated school districts, two enlarged three-director school districts and one common school district. The territory that made up these various districts at one time was divided into seventeen common school districts located in three of the seven townships in Jefferson County. The District, comprising an area of approximately 124 square miles, is located in the northwestern section of Jefferson County and is immediately adjacent to St. Louis County. The District includes the incorporated communities of Parkdale, Byrnes Mill, Scottsdale and Cedar Hill Lakes and the unincorporated communities of High Ridge, House Springs and Cedar Hill. The 2010 population of the District was estimated at 45,694 by the U.S. Census Bureau. The District is located 15 miles from the city limits of the City of St. Louis, Missouri and is connected to the City of St. Louis by State Highway 30 (a four-lane highway). Board of Education The District is a seven-director school district organized and governed pursuant to Chapter 162 of the Revised Statutes of Missouri, as amended. The District is governed by a seven-member Board of Education (the Board ). Voters of the District elect the members of the Board for staggered three-year terms, with two to three members being elected each year. All Board members are elected at large and serve without compensation. The President of the Board is elected from among its members for a term of one year and has no regular administrative duties. The Secretary and Treasurer are appointed by the Board and may or may not be members. Currently, the Secretary and Treasurer are members of the Board. The Board is responsible for all policy decisions, provides for the general operation and personnel of the District and oversees the property and affairs of the District. The present members of the Board are as follows: Name Title Current Term Expires (April) Sherri K. Talbott President and Member 2014 Nancy Bergfeld Vice President and Member 2013 Retta Susan Tuggle Treasurer and Member 2014 Gary Bonacker Secretary and Member 2013 Chris Shelton Member 2015 Victoria James Member 2015 Nelson O. Weber Member 2014 Administration The Board appoints the Superintendent of Schools who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. Upon recommendation by the Superintendent, the Board appoints additional members of the administrative staff and all other employees. The Superintendent of Schools is Dr. Paul Ziegler. Dr. Ziegler s career in education began at Francis Howell School District in St. Charles County. He started as a special education teacher in In 1997, Dr. Ziegler joined the District as an assistant principal at the high school. In 1998, he returned to Francis Howell School District as an assistant principal at the middle school level. In 2000, Dr. Ziegler returned to the District as the Director of Administrative Services. He left the District a few years later to practice law but A-1

22 became the Assistant Superintendent of Funds and Facilities for the District in July In total, Dr. Ziegler is completing his 18 th year in education. He earned both his bachelor and master degrees from Truman State University in Kirksville, Missouri. Dr. Ziegler earned his administration certification through Lindenwood University and his J.D. from Saint Louis University and was admitted to both the Missouri and Illinois bars in Dr. Ziegler currently serves on the executive board of the Missouri Association of School Administrators (MASA). Professional Staff For the school year, the average teacher employed by the District had 14.2 years of teaching experience, compared to a statewide average of 12.5 years, and 71.3% of the District s teachers held advanced degrees, compared to 57.7% of teachers statewide holding advanced degrees. For the school year, the average salary for all teaching staff was $54,415, compared to the statewide average of $46,291. The following table shows the number of the District s certificated and non-certificated personnel for the preceding five school years: School Year Certificated Personnel Non-Certificated Personnel Total Staff (1) (1) The reduction in staff has occurred primarily through normal attrition and as a result of the District s Early Separation Incentive Plan, which is designed to help reduce the number of layoffs during mandatory staff reductions. See the caption THE DISTRICT Employee Relations; Early Separation Incentive Plan herein. Enrollment Listed below are the District s fall enrollment figures for the preceding four school years: Grades: K st nd rd th th th th th th th th th Total 6,719 6,647 6,664 6,652 % Change N/A -1.07% +0.26% -0.18% Source: Missouri Department of Elementary and Secondary Education. A-2

23 School Rating and Accreditation Missouri law requires the Department of Elementary and Secondary Education ( DESE ) to regularly evaluate each public school district. The process of accrediting school districts is mandated by state law, and the specific responsibilities are outlined both by rules of the State Board of Education and in Section of the Revised Statutes of Missouri, as amended. Under DESE s current accreditation system, school districts are evaluated every five years based on DESE standards in three areas: resource standards, educational process standards and performance standards. Districts receive an evaluation judgment for each of the three sets of standards and an overall evaluation, which evaluations are in one of three categories: accredited, provisionally accredited or unaccredited. As of September 2011, 510 (97.7%) of all school districts in the State were accredited, 9 (1.7%) were provisionally accredited and 3 (0.6%) were unaccredited under the Missouri School Improvement Program ( MSIP ) rating system. Following the District s MSIP review in March 2010, DESE re-assigned the District accredited status, the highest accreditation status given by DESE. The District s next MSIP review is scheduled for Each year, DESE identifies school districts that qualify for an annual Distinction in Performance Award. To qualify for this award, K-12 districts and K-8 districts must meet all but one of the MSIP performance measures, and all Missouri Assessment Program ( MAP ) and reading standards according to each district s most recent Annual Performance Report. The District has received the Distinction in Performance Award every year since the school year. School Facilities The District presently includes 10 instructional facilities, including six elementary schools (serving grades kindergarten through five), two middle schools (serving grades six through eight), one high school (serving grades nine through twelve) and an early childhood center. The District currently operates the schools listed below. Brennan Woods Elementary (K 5 th grades) Location: 4630 Brennan Road High Ridge, Missouri High Ridge Elementary (K 5 th grades) Location: 2901 High Ridge Boulevard High Ridge, Missouri Maple Grove Elementary (K 5 th grades) Location: 7887 Dittmer Ridge Road Dittmer, Missouri Northwest Early Childhood Center (Preschool) Location: 6180 Highway MM House Springs, Missouri Northwest Valley Middle School (6 th - 8 th grades) Location: 4300 Gravois Road House Springs, Missouri Cedar Springs Elementary (K 5 th grades) Location: 6922 Rivermont Trails House Springs, Missouri House Springs Elementary (K 5 th grades) Location: 4380 Gravois Road House Springs, Missouri Murphy Elementary (K 5 th grades) Location: 2101 Valley Drive High Ridge, Missouri Northwest High School (9 th 12 th grades) Location: 6005 Cedar Hill Road Cedar Hill, Missouri Woodridge Middle School (6 th 8 th grades) Location: 2109 Gravois Road High Ridge, Missouri Employee Relations; Early Separation Incentive Plan The teaching staff is reviewed after the first year of employment and thereafter is reviewed annually until they achieve tenure. Thereafter, tenured teachers are reviewed every other year. During their initial five years of employment, teachers are retained on a probationary basis. A-3

24 Pursuant to an early separation incentive plan offered only until 2008, to help reduce the number of layoffs during mandatory staff reductions, the District agreed to provide a financial incentive, payable over a period of seven years, to eligible employees who elected early separation from the District. The table below shows the annual amounts of remaining benefits payable to those who elected participation in the plan: Fiscal Year Ending June 30 Benefits Payable 2012 $504, , , , The District currently offers an early separation benefit that provides for payment of accumulated unused sick leave to eligible personnel. For the current plan, an employee must have been continuously employed by the District for at least seven years and meet certain other eligibility criteria. The benefits under the sick leave compensation plan are payable in full during the fiscal year following the employee s separation from the District. Approximately $737,910 in benefits will be paid under this sick leave compensation policy in the fiscal year ended June 30, Pension Plan The District contributes to The Public School Retirement System of Missouri ( PSRS ), a mandatory cost-sharing multiple-employer, defined-benefit pension plan, for all full-time certificated employees and certain part-time certificated employees of all public school districts in Missouri (except the school districts of St. Louis and Kansas City) and all public community colleges. The PSRS also includes certificated employees of PSRS, Missouri State Teachers Association, Missouri State High School Activities Association, and certain employees of the State of Missouri, as permitted by State law. PSRS is an independent trust fund, governed by Sections and Sections RSMo. PSRS provides retirement and disability benefits to certified employees and death benefits to members and beneficiaries. PSRS benefit provisions are set forth in the Missouri Revised Statutes. The contribution rate is set each year by the Board of Trustees of PSRS upon the recommendation of an independent actuary, within the contribution restrictions set in Section RSMo, which limits the annual increase in the total contribution rate to 1% of a member s covered salary. Based upon annual recommendations of an independent actuary, the PSRS board of trustees has set the PSRS contribution rate for the current fiscal year and the previous three years at the amounts shown below: Fiscal Year Ending June 30 PSRS Member Contribution Rate District s Matching Contribution Rate % 13.5.% The District s contributions to PSRS for the years ending June 30, 2011 and June 30, 2012, equaled the required contributions, and were $4,720, and $4,836,745.98, respectively. The District also contributes to The Public Education Employee Retirement System of Missouri ( PEERS ), a mandatory cost-sharing multiple-employer, defined benefit pension plan for all public school district employees (except the school districts of St. Louis and Kansas City), employees of the Missouri A-4

25 Association of School Administrators, and community college employees (except the Community College of St. Louis). Employees of covered districts who work 20 or more hours per week on a regular basis and who are not contributing members of the PSRS must contribute to PEERS. Employees of PSRS who do not hold Missouri teaching certificates also contribute to PEERS. PEERS is a trust fund, governed by Sections and Sections RSMo. Benefit provisions are set forth in the Missouri Revised Statutes. The statutes assign responsibility for the administration of the system to the Board of Trustees of PSRS. The contribution rate is set each year by the Board of Trustees of PSRS upon the recommendation of an independent actuary, within the contribution restrictions set in Section RSMo, which limits the annual increase in the total contribution rate to 0.5% of a member s covered salary. Based upon annual recommendations of an independent actuary, the PSRS board of trustees has set the PEERS contribution rate for the current fiscal year and the previous three years at the amounts shown below: Fiscal Year Ending June 30 PEERS Member Contribution Rate District s Matching Contribution Rate % 6.50% The District s contributions to PEERS for the years ending June 30, 2011 and June 30, 2012, equaled the required contributions, and were $584, and $623,728.49, respectively. Insurance Program The District, along with various other local school districts, participates in the Missouri United School Insurance Council ( MUSIC ), an insurance association for workers compensation, general liability and property casualty insurance. The purpose of MUSIC is to distribute the cost of self-insurance over similar entities. MUSIC requires an annual premium payment to cover estimated claims payable and reserves for claims for each entity. Part of the assessment then goes to buy excess insurance contracts for the group as a whole. Should the contributions received by MUSIC not be sufficient, special assessments can be made of the member districts. Since October 1, 2009, the District has provided for employee health insurance under a self-insured plan, which is administered by United Healthcare, a third-party administrator. The District maintains stop loss insurance with a commercial insurance carrier to protect the plan from catastrophic claims. The plan s funding and existing reserve approximately equals the stop loss carrier s expected claims, fixed costs and incurred but not reported claims. As of June 30, 2012, the District held $2,914, in restricted funds for the plan. Although the District continues to increase the reserve for the plan, according to a report of J.W. Terrill, the District s plan consultants, as of August 31, 2012, there existed a potential unfunded liability of approximately $1,112,883 in a maximum claims scenario. FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures The accounts of the District are organized on the basis of legally established funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and A-5

26 expenditures. District resources are allocated to, and accounted for, individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following fund types and account groups are used by the District: General (Incidental) Fund This fund is the general operating fund of the District and accounts for expenditures for non-certified employees, pupil transportation costs, plant operation, fringe benefits, student body activities, community services, the food service program and any expenditures not required or permitted to be accounted for in other funds. Special Revenue (Teachers ) Fund This fund accounts for revenues derived from specific taxes or other earmarked revenue sources. This fund is used to account for expenditures for certified employees involved in administration and instruction. It includes revenues restricted by the State for the payment of teacher salaries and certain employee benefits. Debt Service Fund This fund is used to account for the accumulation of resources for, and the payment of, principal, interest and fiscal charges on long-term debt. Capital Projects Fund This fund is used to account for the proceeds of long-term debt, taxes and other revenues restricted for acquisition or construction of major capital assets and all other capital outlay. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The financial statements are presented on the modified cash basis of accounting. This basis of accounting recognizes assets, net assets/fund equity, revenues, and expenditures/expenses when they result from cash transactions except that the purchase of investments are recorded as assets. This basis is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. As a result of the use of this modified cash basis of accounting, certain assets (such as accounts receivable and capital assets), certain revenues (such as revenue for billed or provided services not yet collected), certain liabilities (such as accounts payable, general obligation bonds and obligations under capital leases) and certain expenses (such as expenses for goods or services received but not yet paid) are not recorded in the financial statements. Budgets and Budgetary Accounting The District follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In accordance with Chapter 67 of the Revised Statutes of Missouri, the District adopts a budget for each fund. 2. Prior to June 30, the Superintendent, who serves as the budget officer, submits to the Board a proposed budget for the fiscal year beginning July 1. The proposed budget includes estimated revenues and proposed expenditures for all District funds. Budgeted expenditures cannot exceed beginning available monies plus estimated revenues for the year. 3. A public hearing is conducted to obtain taxpayer comments. Prior to its approval by the Board, the budget document is available for public inspection. 4. Prior to July 1, the budget is legally enacted by a vote of the Board. A-6

27 5. Subsequent to its formal approval of the budget, the Board has the authority to make necessary adjustments to the budget by formal vote of the Board. Adjustments made during the year are reflected in the budget information included in the financial statements. 6. Budgets are adopted on the modified cash basis of accounting for all Governmental Funds. The financial statements of the District are audited annually by a firm of independent certified public accountants in accordance with generally accepted auditing standards. The firm of Daniel Jones & Associates, Arnold, Missouri, audited the financial statements of the District for the fiscal year ended June 30, 2011, a copy of which is included in this Official Statement as Appendix B. A summary of significant accounting policies of the District is contained in the Notes to the financial statements in Appendix B. Sources of Revenue Missouri school districts finance their operations through the local property tax levy, State sales tax, State Aid, federal grant programs and miscellaneous sources including State Aid for Transportation, State Aid for Handicapped Students, a State sales tax on cigarettes ( fair share revenues) and a pro rata share of interest income from the counties in which each school district operates. Debt service is financed primarily through local property taxes. The following table shows the District s sources of revenues for the last five fiscal years: Fiscal Year Ended June 30 Local Revenue County Revenue State Revenue Federal Revenue Other Revenue Total Revenue 2008 $33,295,127 $1,431,944 $33,458,776 $ 7,423,964 $ 120,157 $75,729, ,331,288 1,406,146 32,517,290 4,640,957 18,919,637 (1) 91,815, ,644,873 1,407,559 27,212,213 11,246, ,254 72,679, ,753,539 1,154,017 26,048,389 7,965, ,834 68,202, ,566,920 2,013,471 27,472,189 5,350,271 4,499,958 (1) 72,902,809 Source: Annual Secretary of the Board Reports for fiscal years ended June 30, (1) Includes sale of bonds. The following table shows the allocation of the District s budgeted revenue from the various sources for the fiscal year ending June 30, Revenue Source % of Total State Revenue 42% Local Revenue 50 Federal Revenue 6 County Revenue 2 Total 100% Source: District s Budget for the Fiscal Year ending June 30, Local Revenue The primary sources of local revenue are (1) taxes upon real and personal property within a district, excluding railroad and utility property taxes, which are more fully described below under the caption A-7

28 PROPERTY TAX INFORMATION CONCERNING THE DISTRICT, and (2) receipts from a 1% state sales tax (commonly referred to as Proposition C revenues ) approved by the voters in Proposition C sales tax proceeds are deemed to be local revenues for school district accounting purposes. Proposition C revenue is distributed to districts based on weighted average daily attendance. County Revenue For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. No determination is made of the assessed value of the railroad and utility property that is physically located within the boundaries of each school district. Such tax collections for each county are distributed to the school districts within that county according to a formula based in part on total student enrollments in each district and in part on the taxes levied by each district. County revenue also includes certain fines and forfeitures collected with respect to violations within the boundaries of the school district. State Revenue The primary source of state revenue or State Aid is provided under a formula enacted under Chapter 163 of the Revised Statutes of Missouri, as amended. In its 2005 regular session, the Missouri General Assembly approved significant changes to the formula by adoption of Senate Bill 287 ( SB 287 ), which became effective July 1, The changes to State Aid distribution laws are more fully described below under Missouri School Finance Laws. Federal Revenue School districts receive certain grants and other revenue from the federal government, which are usually required to be used for the specified purposes of the grant or funding program. The federal No Child Left Behind law requires that every public school student must score at a proficient level or higher in math and reading by Each state establishes its own proficiency levels. Federal sanctions for school districts that fail to meet established proficiency standards include providing parents and students from underperforming schools within a district the right to request a transfer to a school within the district that meets proficiency standards. In addition, schools that continue to fail to meet proficiency standards must, in addition to transfers and tutoring, make additional changes in staffing, curriculum and management. Federal sanctions apply only to public schools that receive Title I federal money. In July of 2012, the State of Missouri earned a waiver from the No Child Left Behind law when the United States Department of Education approved the State s proposed accountability system aimed at replacing the existing accountability measures of the No Child Left Behind law. [Remainder of Page Intentionally Left Blank.] A-8

29 Missouri School Finance Laws State Aid. Adoption of SB 287 transitioned the State away from a local tax rate based formula to a formula that is primarily student-needs based. The new formula is being phased in over a seven-year period that started with the fiscal year. During the phase-in period, State Aid for each school district will be based on a percentage of both the old local tax rate based formula (determined as a percentage of the State Aid Payments), and the new student-needs based formula. State aid will be calculated using the following percentages of the old and new formulas: Percentage of State Aid Payment Percentage of SB 287 Formula Phase-In Year % 15% The basic formula for State Aid has not been fully funded since the fiscal year. To lessen the impact of the funding shortfall, in 2010, the General Assembly approved an amendment to Chapter 163 of the Revised Statutes of Missouri, which provides that, in fiscal years , and , if the State s basic formula appropriation is less than the amount needed to fully fund the phased-in formula, or the appropriation for transportation is funded at a level that provides less than 75% of the allowable transportationrelated costs, school districts will be excused from compliance with certain spending requirements for professional development, as well as certain fund placement and expenditure requirements, described below under the Mandatory Deposit and Expenditures of Certain Amounts in the Teachers Fund. School districts will also be excused from complying with these requirements if the Governor withholds funds appropriated for funding the basic formula in any of the same three years. Property Tax Levy Requirements. The sum of a district s local property tax levies in its Incidental and Teachers Funds must be at least $2.75 per $100 assessed valuation in order for the district to receive increases in State Aid above the level of State Aid it received in the fiscal year. Levy reductions required as a result of a Hancock rollback or an SB 711 rollback (See PROPERTY TAX INFORMATION CONCERNING THE DISTRICT Tax Rates Tax Limitations Provisions below) will not affect a district s eligibility for State Aid increases. The Formula. A district s State Aid is determined by first multiplying the district s weighted average daily attendance ( ADA ) by the state adequacy target (discussed below). This figure may be adjusted upward by a dollar value modifier, which is an index of the relative purchasing power of a dollar, calculated as one plus 15% of the difference of the regional wage ratio minus one. The product of the weighted ADA multiplied by the state adequacy target is then reduced by a district s local effort (discussed below) to calculate a district s final State Aid amount. Weighted ADA. Weighted ADA is based upon regular term ADA plus summer school ADA, with additional weight assigned in certain circumstances for students who qualify for free and reduced lunch, receive special education services, or possess limited English language proficiency. Students receive additional weighted treatment if, categorically, they exceed certain thresholds (based on the percentage of students in each of the categories in Performance Districts, as defined below). As of June 30, 2012, additional weight is assigned to students above the following thresholds: above 32% for students who qualify for free or reduced lunch, above 13.7% for students receiving special education services, and above.90% for students possessing limited English language proficiency. The District s State Aid revenues would be A-9

30 adversely affected by decreases in its weighted ADA resulting from decreased enrollment generally and, specifically, decreased enrollment of students eligible for free and reduced lunch, special education students, or students with limited English language proficiency. State Adequacy Target. The new State Aid formula requires DESE to calculate a state adequacy target, which is intended to be the minimum amount of funds a school district needs in order to educate each student. DESE s calculation of the state adequacy target will be based upon amounts spent, excluding federal and state transportation revenues, by certain high performing districts (known as Performance Districts ). Every two years, using the most current list of Performance Districts, DESE will recalculate the state adequacy target. The recalculation can never result in a decrease from the previous state adequacy target amount. DESE has established the state adequacy target at $6,131, which is effective for fiscal years through June 30, Local Effort. For the fiscal year, the local effort figure utilized in a district s State Aid calculation is the amount of locally generated revenue that the district would have received in the fiscal year if its operating levy was set at $3.43. The $3.43 amount is called the performance levy. For all subsequent years, a district s local effort amount will be frozen at the amount, except for adjustments due to increased locally collected fines or decreased assessed valuation in the district. Growth in assessed valuation and operating levy increases will result in additional local revenue to the district, without affecting State Aid payments. Categorical-Source Add-Ons. In addition to State Aid distributed pursuant to the formula as described above, the formula provides for the distribution of certain categorical sources of State Aid to school districts. These include (1) 75% of allowable transportation costs, (2) the career ladder entitlement, (3) the vocational education entitlement, and (4) educational and screening program entitlements. Classroom Trust Fund (Gambling Revenue) Distribution. A portion of the state aid received under the formula will be in the form of a distribution from the Classroom Trust Fund a fund of the state treasury containing a portion of the State s gambling revenues. This money is distributed to school districts on the basis of average daily attendance (versus weighted ADA, which applies to the basic formula distribution). The funds deposited into the Classroom Trust Fund are not earmarked for a particular fund or expense and may be spent at the discretion of the local school district, except that, beginning with the fiscal year, all proceeds of the Classroom Trust Fund in excess of amounts received in the fiscal year must be placed in the Teachers or Incidental Funds. Mandatory Deposit and Expenditures of Certain Amounts in the Teachers Fund. The following state and local revenues must be deposited in the Teachers Fund: (1) 75% of basic formula State Aid, excluding State Aid distributed from the Classroom Trust Fund (gambling revenues); (2) 75% of one-half of the district s local share of Proposition C revenues; (3) 100% of the career ladder state matching payments; and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the district s boundaries. In addition to these mandatory deposits, school districts are also required to spend for certificated staff compensation and tuition expenditures each year the amounts described in clauses (1) and (2) of the preceding paragraph. School districts are further required to spend for certificated staff compensation and tuition expenditures each year, per the second preceding year s weighted ADA, as much as was spent in the previous year from local and county tax revenues deposited in the Teachers Fund, plus the amount of any transfers from the Incidental Fund to the Teachers Fund that are calculated to be local and county tax sources. This amount is to be determined by dividing local and county tax sources in the Incidental Fund by total revenue in the Incidental Fund. The formula provides that certificated staff compensation includes the costs of public school retirement and Medicare for those staff members. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers Fund will result in a deduction of the amount of the expenditure shortfall from a district s basic formula State Aid for the A-10

31 following year, unless the district receives an exemption from the State Board of Education. In fiscal years , and , under certain circumstances described above under State Aid, school districts will be excused from compliance with certain spending requirements for professional development, as well as certain of these fund placement and expenditure requirements. School districts will also be excused from complying with these requirements if the Governor withholds funds appropriated for funding the basic formula in any of the same three years. A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers Fund. Any district that uses a transfer from the Incidental Fund to pay for more than 25% of the annual certificated compensation obligation of the district, and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers Fund expenditures for the fiscal year just ended, will be required to transfer the excess from the Incidental Fund to the Teachers Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays from the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are limited to: (i) proceeds of general obligation bonds (which are repaid from a Debt Service Fund levy), (ii) revenue from the school district s local property tax levy for the Capital Projects Fund; (iii) certain permitted transfers from the Teachers and Incidental Funds, and (iv) a portion of the funds distributed to school districts from the Classroom Trust Fund. Capital Projects Fund Levy. Prior to setting tax rates for the Teachers and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, except that the tax rate set for the Capital Projects Fund may not be in an amount that would result in the reduction of the equalized combined tax rates for the Teachers and Incidental Funds to an amount below $2.75. Transfers from Incidental Fund to Capital Projects Fund. In addition to money generated from the Capital Projects Fund levy, each school district may transfer money from the Incidental Fund to the Capital Projects Fund under the following limited circumstances: (1) The amount to be expended for transportation equipment that is considered an allowable cost under the State Board of Education rules for transportation reimbursements during the current year; (2) Current year obligations for lease-purchase obligations entered into prior to January 1, 1997; (3) The amount necessary to repay costs of one or more guaranteed energy savings performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be required from the school district until at least an equal total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and (4) To satisfy current year capital project expenditures, an amount not to exceed the greater of: a. $162,326; or b. Seven percent (7%) of the state adequacy target ($6,131 for ) times the district s weighted ADA. Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund. If a school district is not using the seven percent (7%) or the $162,326 transfer (as discussed above) and is not making A-11

32 payments on lease purchases pursuant to Section , Revised Statutes of Missouri, then the school district may transfer from the Incidental Fund to the Debt Service and/or the Capital Projects Fund the greater of: (1) The State Aid received in the school year as a result of no more than eighteen (18) cents of the sum of the debt service and capital projects levy used in the foundation formula and placed in the Capital Projects or Debt Service fund; or (2) Five percent (5%) of the state adequacy target ($6,131 for ) times the district s weighted ADA. Tax Limitation Provisions The operating levy of a school district (consisting of all ad valorem taxes levied except the debt service levy) cannot exceed the tax rate ceiling for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the district s assessed valuation for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by the lesser of actual assessment growth, 5% or the Consumer Price Index. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment, more fully explained below). Under Article X, Section 11(b) of the Missouri Constitution, a school district may increase its operating levy up to $2.75 per $100 assessed valuation without voter approval. Any increase above $2.75, however, must be approved by a majority of the voters voting on the proposition. Further, pursuant to Article X, Section 11(c) of the Missouri Constitution, any increase above $6.00 must be approved by twothirds of the voters voting on the proposition. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment and SB 711, more fully explained below). The tax levy for debt service on a school district s general obligation bonds is exempt from these limitations upon the tax rate ceiling. Article X, Section 22(a) of the Missouri Constitution (popularly known as the Hancock Amendment ), approved in 1980, places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of total state revenues to exclude voter-approved tax increases. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than the increase in the Consumer Price Index from the previous year (or 5%, if greater), the maximum authorized current levy must be reduced to yield the same gross revenue from existing property, adjusted for changes in the Consumer Price Index, as could have been collected at the existing authorized levy on the prior assessed value. This reduction is often referred to as a Hancock rollback. The limitation on local governmental units does not apply to taxes levied in the Debt Service Fund for the payment of principal and interest on general obligation bonds. In 2008, through the enactment of Senate Bill 711 ( SB 711 ), the Missouri General Assembly approved further limitations on the amount of property taxes that can be imposed by a local governmental unit. Prior to the enactment of SB 711, a Hancock rollback would not necessarily result in a reduction of a district s actual operating tax levy if its current tax levy was less than its current tax levy ceiling, due to the district s voluntary rollback from the maximum authorized tax levy. Under SB 711, in reassessment years (oddnumbered years), the Hancock rollback is applied to a district s actual operating tax levy, regardless of whether that levy is at the district s tax levy ceiling. This further reduction is sometimes referred to as an SB 711 rollback. In non-reassessment years (even-numbered years), the operating levy may be increased to A-12

33 the district s tax levy ceiling (as adjusted by the Hancock rollback), only after a public hearing and adoption of a resolution or policy statement justifying the action. Summary of Revenues and Expenditures Shown below is a summary of revenues, expenditures and fund balances for the General (Incidental) Fund, Special Revenue (Teacher s) Fund, Debt Service Fund and the Capital Projects Fund for each of the three preceding fiscal years. A copy of the District s audited financial statements for the fiscal year ended June 30, 2011, is located in Appendix B herein. Copies of the audited financial statements of the District for the prior years shown on the table are available upon request from the District. [Remainder of Page Intentionally Left Blank] A-13

34 SUMMARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Fiscal Years Ended June General (Incidental) Fund Balance--Beginning of Year $15,593,653 $13,599,149 $15,099,464 $15,910,986 $15,849,963 Cash Receipts 36,324,120 32,932,229 34,688,653 30,386,643 31,000,832 Cash Disbursement (28,698,273) (26,551,896) 25,275,796 (22,588,240) (22,894,371) Other Financing Sources (Uses) (9,620,350) (4,880,018) (8,601,334) (7,859,427) (8,544,279) Balance--End of Year $13,599,150 $15,099,464 $15,910,987 $15,849,962 $15,412,145 Special Revenue (Teachers) Fund Balance--Beginning of Year $ 0 $ 0 $ 0 $ 0 $ 0 Cash Receipts 35,437,823 35,970,062 34,754,633 33,472,865 32,856,149 Cash Disbursement (44,264,370) (40,723,236) (41,999,113) (40,645,926) (40,689,757) Other Financing Sources (Uses) 8,826,547 4,753,174 7,244,480 7,173,061 7,833,608 Balance--End of Year $ 0 $ 0 $ 0 $ 0 $ 0 Debt Service Fund Balance--Beginning of Year $ 6,766,249 $ 7,119,246 $ 3,667,956 $ 3,385,901 $3,079,691 Cash Receipts 2,813,454 11,276,296 2,762,791 2,823,060 3,339,386 Cash Disbursement (2,460,457) (14,727,586) (3,044,846) (3,129,269) (7,660,578) Other Financing Sources (Uses) ,330,000 Balance--End of Year $ 7,119,246 $ 3,667,956 $ 3,385,901 $ 3,079,692 $3,088,499 Capital Projects Fund Balance--Beginning of Year $ 323,689 $ 278,400 $ 4,452,054 $ 810,232 $ 1,013,447 Cash Receipts 1,034,413 11,419, ,297 1,238,620 1,206,483 Cash Disbursement (1,993,663) (7,589,921) (5,472,228) (2,002,603) (2,975,559) Other Financing Sources (Uses) 913, ,315 1,525, , ,629 Balance--End of Year $ 278,399 $ 4,452,054 $ 810,231 $ 1,013,448 $ 125,000 Total Funds Balance--Beginning of Year $22,683,591 $20,996,795 $23,219,474 $20,107,119 $19,943,102 Cash Receipts 75,609,810 91,597,847 72,511,374 67,921,188 68,402,851 Cash Disbursement (77,416,763) (89,592,640) (75,791,982) (68,366,039) (74,220,265) Other Financing Sources (Uses) 120, , , ,834 4,499,958 Balance--End of Year $20,996,795 $23,219,474 $20,107,119 $19,943,102 $18,625,646 Source: Audited Financial Statements for the Fiscal Years ended June 30, Unaudited numbers provided by the District for fiscal year ended June 30, A-14

35 PROPERTY TAX INFORMATION Property Valuations All taxable, real and personal, property within the District is assessed annually by the County Assessor. Missouri law requires that real property be assessed at the following percentages of true value: Residential real property... 19% Agricultural and horticultural real property... 12% Utility, industrial, commercial, railroad and all other real property... 32% On January 1 in every odd-numbered year, each County Assessor must adjust the assessed valuation of all real property located within the county in accordance with a two-year assessment and equalization maintenance plan approved by the State Tax Commission. The assessment ratio for personal property is generally 33% of true value. However, subclasses of tangible personal property are assessed at the following assessment percentages: grain and other agricultural crops in an unmanufactured condition, ½%; livestock, 12%; farm machinery, 12%; historic motor vehicles, 5%; and poultry, 12%. The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll to the County Board of Equalization. The County Board of Equalization has the authority to adjust and equalize the values of individual properties appearing on the tax rolls. Certain properties, such as those used for charitable, educational and religious purposes, are excluded from both the real estate ad valorem tax and the personal property tax. Historical Assessed Valuation The table below shows the assessed valuation of property (excluding State assessed railroad and utility property) in the District as of January 1, as adjusted through December 31, for each of the years shown: Year Total Assessed Valuation Percentage Change (1) 2012 (1) $542,273, % ,356, ,984, ,852, ,158, ,033,447 NA After Board of Equalization; subject to final adjustment. Source: Jefferson County Clerk. [Remainder of Page Intentionally Left Blank.] A-15

36 Current Assessed Valuation and Estimated Actual Value The following table shows the total assessed valuation and the estimated actual value by category, of all taxable tangible property (excluding State assessed railroad and utility property) situated in the District as of January 1, 2012, after Board of Equalization, subject to final adjustment: Total Assessed Valuation Assessment Rate Total Estimated Actual Valuation Real Estate: Residential $329,067,940 19% 1,731,936,526 Commercial 87,992, ,975,938 Agricultural 1,610, ,418,333 Total Real Estate $418,670,440 $2,020,330,797 Personal Property: 121,001, /3 (1) 363,004,428 Locally Assessed Railroad & Utility Property: Commercial & Industrial 1,512, ,725,425 Locally Assessed Railroad & Utility Property: Personal 1,089, /3 (1) 3,267,594 TOTAL PROPERTY $542,273,249 $2,391,328,244 Source: Jefferson County Clerk. (1) Assumes all personal property is assessed at 33-1/3%; because certain subclasses of tangible personal property are assessed at less than 33-1/3%, the estimated actual valuation for personal property would likely be greater than that shown above. See Property Valuations discussed above. Tax Assessments and Collections Tax Collection Procedure. Property taxes are levied and collected for the District by Jefferson County, for which the County receives a collection fee of 1.6% of the gross tax collections. The Board annually prepares an estimate of the amount of money to be raised by taxation for the ensuing school year and the tax rate required to produce such amount, and the rate necessary to sustain the school or schools of the District for the ensuing school year, to meet principal and interest payments on any bonded debt of the District and to provide the funds to meet other legitimate District purposes. Such estimates are based on the annual budget for the coming year and the assessed figures provided by the County Clerk. The Board must certify a final tax rate by October 1. The County Clerk receives the county tax books from the County Assessor, which set forth the assessments of real and personal property. The County Clerk enters the tax rates certified to him or her by the local taxing bodies in the tax books and assesses such rates against all taxable property in the District as shown in the books. By October 31, the County Clerk forwards the tax books to the County Collector who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on the tax rolls and issues the tax statements in early December. Taxes are due by December 31 and become delinquent if not paid to the County Collector by that time. All tracts of land and lots on which delinquent taxes are due are charged with a penalty of 18% of each year s delinquency. All land and lots on which taxes are delinquent and unpaid are subject to sale at public auction in August of each year. A-16

37 The County Collector of Revenue is required to make disbursements of collected taxes to the District each month. Because of the tax collection procedure described above, the District receives the bulk of its moneys from local property taxes in the months of December, January and February. Tax Rates Debt Service Levy. The District is required under Article VI, Section 26(f) of the Missouri Constitution to levy an annual tax on all taxable tangible property therein sufficient to pay the interest and principal of the indebtedness as they fall due and to retire the same within 20 years from the date of issue. The Board may set the tax rate for debt service, without limitation as to the rate or amount, at the level required to make such payments. Section (2), Revised Statutes of Missouri, as amended, provides that the amount of the debt service levy will be prima facie valid if, after making the payment for which the tax is levied, general obligation bonds remain outstanding and the amount remaining in the Debt Service Fund does not exceed the following year s payments. Operating Levy. The operating levy (consisting of all the taxes levied, except those allocated to the Debt Service Fund) cannot exceed the tax rate ceiling for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the newly-received assessed valuation of the District for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1984 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment and SB 711, more fully explained above under the caption FINANCIAL INFORMATION CONCERNING THE DISTRICT Tax Limitation Provisions ). The tax levy for debt service on the District s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Under Article X, Section 11(c) of the Missouri Constitution, any increase in the District s operating levy above $6.00 must be approved by two-thirds of the voters voting on the proposition. Historical Tax Levy. The following table shows the District s adjusted tax levies (per $100 of assessed valuation) for each of the last five fiscal years: Fiscal Year Ended June 30 General (Incidental) Fund Special Revenue (Teachers ) Fund Debt Service Fund Capital Projects Fund Total Levy 2012 $ $ $ $ $ A-17

38 Tax Collection Record The following table sets forth tax collection information for the District for the last five fiscal years: Fiscal Year Ended June 30 Total Adjusted Levy (per $100 of Assessed Value) Assessed Valuation Total Taxes Levied Current and Delinquent Taxes Collected Amount % $ $544,356,246 $24,174,861 $23,745, % ,984,892 23,803,089 23,641, ,852,429 23,628,949 23,205, ,158,244 23,515,901 23,409, ,033,447 22,783,926 22,150, Source: Jefferson County Clerk (Assessed Valuations); Annual Secretary of the Board Reports for Fiscal Years ended June 30, 2006 to 2011 (Adjusted Levy; Current and Delinquent Taxes Collected). Unaudited numbers provided by the District for fiscal year ended June 30, 2012; Total Taxes Levied derived by multiplying Total Adjusted Levy and Assessed Valuation, and dividing by 100. Major Taxpayers The ten largest taxpayers of real property and personal property, according to their 2012 assessed valuations, are listed below. These taxpayers represent a total of 5.21% of the District s 2012 assessed valuation of $542,273,249. Taxpayer 2012 Real Property Type of Business Assessed Valuation % of District s Assessed Valuation 1. Joyce Meyer Ministries (1) Religious Corporation $ 5,088, % 2. Inland American High Ridge Commercial Development 3,635, Inland Western High Ridge Commercial Development 2,578, Walden Pond Apartments Apartment Complex 1,485, Western Wire Products Hardware Retailer 1,420, Engineered Coil Company Equipment Manufacturing 1,418, Eureka Springs Inc. Manufacturing 1,190, Laclede Gas Company Utility 1,114, Wal-Mart Real Estate Trust Retail 1,055, Byrnes Mill LLC Multi-Family Development 927, TOTAL $19,912, % Source: (1) Jefferson County Collector. All property used exclusively for religious worship and not held for private or corporate profit are exempt from property taxation under Missouri law. Due to the mixed use of some of the property owned by Joyce Meyer Ministries, the taxpayer and the County entered into an agreement regarding the taxation of Joyce Meyer Ministries properties. The assessed valuation shown represents the stipulated taxable value pursuant to the agreement. A-18

39 Taxpayer 2012 Personal Property Type of Business Assessed Valuation % of District s Assessed Valuation 1. Bussen Quarries, Inc. Quarry $ 1,933, % 2. Joyce Meyer Ministries (1) Religious Corporation 1,257, Western Wire Products Hardware Retailer 782, First Student Inc. School Bus Transportation 759, Production Castings, Inc. Die Casting and Machining 740, H-J Enterprises Electrical Products 664, Enterprise Leasing Co. Car Rental and Leasing 639, Eagle Industries Unlimited, Inc. Textile Mill 536, Bemes Incorporated Medical Supply Company 528, Sieveking Inc. Petroleum Products Distribution 505, TOTAL $8,346, % Source: (1) Jefferson County Collector. All property used exclusively for religious worship and not held for private or corporate profit are exempt from property taxation under Missouri law. Due to the mixed use of some of the property owned by Joyce Meyer Ministries, the taxpayer and the County entered into an agreement regarding the taxation of Joyce Meyer Ministries properties. The assessed valuation shown represents the stipulated taxable value pursuant to the agreement. District s Rights in the Event of Tax Delinquencies Taxes on real estate become delinquent on January 1 and the collector is required to enforce the state s lien by offering the property for sale on the fourth Monday in August. If the offering does not produce a bid equal to the delinquent taxes plus interest, penalty, and costs, the property is offered for sale again the following year. If the second offering also does not produce a bid adequate to cover the amount due, the property is sold the following year to the highest bidder. Tax sales at the first or second offerings are subject to the owner s redemption rights. Delinquent personal property taxes constitute a debt of the person assessed with the taxes, and a personal judgment can be rendered for such taxes against the debtor. Personal property taxes become delinquent on January 1. Collection suits may be commenced on or after February 1 and must be commenced within three years. [Remainder of Page Intentionally Left Blank.] A-19

40 ECONOMIC INFORMATION CONCERNING THE DISTRICT Major Employers Listed below are major employers located in Jefferson County and the approximate number employed by each: Employer Type of Business Number of Employees 1. Jefferson Regional Memorial Hospital Health care 1, Fox C-6 School District Education 1, Northwest R-I School District Education Dobbs Tire & Auto Centers, Inc. Tire retailer Jefferson County Government Government Jefferson College Education Windsor C-1 School District Education Wal-Mart Super Center Arnold Retail Wal-Mart Super Center Festus Retail Hillsboro R-3 School District Education 413 Source: Economic Development Corporation of Jefferson County. Unemployment The following tables set forth employment statistics for Jefferson County, the State of Missouri and the United States: (1) Jefferson County Labor Force Year Employed Unemployed Total Jefferson County Unemployment Rates State of Missouri United States 2012 (1) 109,288 8, , % % ,368 10, , ,114 11, , ,526 12, , ,487 7, , Figures as of June Source: U.S. Department of Labor, Bureau of Labor Statistics. Population and Other Statistics The following table shows the populations of the District, Jefferson County and the State of Missouri: Year District Jefferson County State of Missouri 1980 N/A 146,183 4,916, , ,380 5,117, , ,099 5,595, , ,733 5,988,927 Source: U.S. Census Bureau. A-20

41 The following table shows population by age categories for the areas indicated: Age District Jefferson County State of Missouri Source: U.S. Census Bureau, Under 5 years 3,049 14, , years 5,813 30, , years 3,099 15, , years 2,600 12, , years 11,927 58,570 1,524, years 14,354 62,613 1,611, years and over 4,852 24, ,294 Median Age The median family income and the median value of owner-occupied housing units for the District, Jefferson County and the State of Missouri, are as follows: Source: U.S. Census Bureau, Median Family Income Median Home Value District $63,058 $147,600 Jefferson County 65, ,700 State of Missouri 57, ,700 The following table presents per capita personal income for Jefferson County and the State of Missouri for the years 2007 through 2010, the latest date for which information is available: Year Jefferson County Per Capita Personal Income (1) State of Missouri Per Capita Personal Income (1) 2010 $33,917 $39, ,341 38, ,284 40, ,242 38,473 Source: U.S. Department of Commerce - Bureau of Economic Analysis. (1) Per Capita Personal Income is the annual total personal income of residents divided by resident population as of July 1. Personal Income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. Net Earnings is earnings by place of work the sum of wage and salary disbursements (payrolls), other labor income, and proprietors income less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal Income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes). General DEBT STRUCTURE OF THE DISTRICT Any general obligation bonds, other than refunding bonds, require voter approval for issuance. Pursuant to the Missouri Constitution, the District is authorized to issue general obligation bonds payable from A-21

42 unlimited ad valorem taxes upon a two-thirds or, at elections held on general municipal election days or state primary or general election days, a four-sevenths majority vote of the qualified voters voting on the specific proposition. General Obligation Bonds Outstanding The following table sets forth the outstanding general obligation indebtedness of the District at the time of issuance of the Bonds (excluding the Refunded Bonds): Description of Indebtedness Amount Outstanding General Obligation Refunding Bonds, Series 2006 $ 1,565,000 General Obligation Bonds, Series ,000,000 General Obligation Refunding Bonds, Series ,860,000 General Obligation Refunding Bonds, Series ,330,000 Taxable General Obligation Refunding Bonds, Series ,740,000 TOTAL $29,495,000 History of General Obligation Indebtedness The following table sets forth debt information pertaining to the District as of the end of each of the last five fiscal years: As of June 30 Total Outstanding Debt Assessed Value Debt as % of Assessed Value 2012 $29,525,000 $544,356, % ,225, ,984, ,990, ,852, ,570, ,158, ,665, ,033, The District has never defaulted on the payment of any of its debt obligations. [Remainder of Page Intentionally Left Blank.] A-22

43 General Obligation Debt Service Requirements The following schedule shows the principal and interest requirements for the District s outstanding general obligation bonds, including the Bonds: Fiscal Year Ended June 30 Outstanding Bonds The Bonds Total Total Debt Debt Service (1) Principal Interest Total Service 2013 $2,807, $ 60, $ 113, $ 173, $ 2,981, ,549, , , , ,854, ,492, , , , ,257, ,535, ,365, , ,624, ,160, ,584, ,470, , ,692, ,276, ,605, ,625, , ,803, ,408, ,644, ,700, , ,825, ,470, ,691, ,000, , ,070, ,761, ,275, ,275, ,538, ,538, ,763, ,763, TOTAL $26,489, $8,740, $1,518, $10,258, $36,747, (1) Excludes the Refunded Bonds. Debt Limitation and Debt Capacity The total principal amount of indebtedness in the District cannot exceed 15% of the value of taxable tangible property in the District according to the last completed assessment for state and county purposes at the time such bonds are approved by the voters. Based on the 2011 assessed valuation ($544,356,246), the current legal debt limit of the District is approximately $81,653, The total outstanding indebtedness of the District, including the $8,740,000 principal amount of the Bonds now being issued, is $29,495,000, resulting in a legal debt margin of the District of approximately $52,158, Overlapping or Underlying Indebtedness Taxing Body General Obligation Debt Approx. Percent Applicable Amount of Overlapping Debt Jefferson County (1) $2,530, % $460,460 Source: Missouri State Auditor, Bond Registration Reports. (1) Neighborhood improvement district bonds are payable from special assessments against real property benefited by certain neighborhood improvement district projects, and, if not so paid, from current income and revenues and surplus funds of the County; provided, however, that the County is not authorized to impose any new or increased ad valorem property tax to pay debt service on such bonds without the voter approval required by the constitution and laws of the State of Missouri. To the knowledge of the District, there are no other political subdivisions with boundaries overlapping the District or lying wholly within the District that have any general obligation bonds outstanding. However, political subdivisions may have ongoing programs requiring the issuance of bonds, the amounts of which cannot be determined at this time. A-23

44 Debt Ratios and Related Information District Population (2010) 45,694 Assessed Valuation (2012, subject to final adjustment) $542,273,249 Estimated Actual Value (2012) $2,391,328,244 Outstanding General Obligation Debt (1) $29,495,000 Overlapping General Obligation Debt $460,460 Total Direct and Overlapping General Obligation Debt (1) $29,955,460 Per Capita Direct Debt (1) $ Per Capita Direct and Overlapping General Obligation Debt (1) $ Ratio of Direct Debt to Assessed Valuation (1) 5.44% Ratio of Direct Debt to Estimated Actual Value (1) 1.23% Ratio of Direct and Overlapping General Obligation Debt to Assessed Valuation (1) 5.52% Ratio of Direct and Overlapping General Obligation Debt to Estimated Actual Value (1) 1.25% (1) Includes the Bonds and excludes the Refunded Bonds. Lease Obligations Obligations secured by annually appropriated funds do not constitute an indebtedness for purposes of any Missouri statutory or constitutional debt limit. Such obligations are payable solely from annually appropriated funds of a governmental body available therefor and neither taxes nor a specific source of revenues can be pledged to make payments on such obligations. Any increase in taxes required to generate sufficient funds with which to make payments on such obligations are subject to voter approval. In May 2010, the District entered into an annually renewable Project Lease Agreement with The Bank of New York Mellon Trust Company, N.A., as lessor in order to pay the costs of paving and improving the parking lot located at the District s high school through the offering and sale by the District of Lease Certificates of Participation, Series 2010 (the Series 2010 Certificates ) evidencing proportionate ownership interest in the right to receive rent payments pursuant to the Lease. The Certificates are currently outstanding in the principal amount of $1,205,000 and the final rent payment date is November 1, The District s obligations with respect to the Series 2010 Certificates are subject to annual appropriation by the Board. The District has also entered into a 60 month lease for copiers. The monthly payments are $10,125. [Remainder of Page Intentionally Left Blank.] A-24

45 The following schedule shows the yearly aggregate Rental Payments that are payable by the District in connection with the Series 2010 Certificates, subject to annual appropriation, and that are distributable to owners of the Series 2010 Certificates. Fiscal Year Ended June 30 Principal Portion Interest Portion Total Rental Payments Other Long-Term Obligations 2013 $115, $40, $155, , , , , , , , , , , , , , , , , , , , , , , , , TOTAL $1,205, $211, $1,416, The District has no other outstanding long-term obligations, other than those previously described herein. There are no current plans for additional long-term borrowing. * * * A-25

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47 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2011

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49 NORTHWEST R-I SCHOOL DISTRICT JEFFERSON COUNTY, MISSOURI AUDITED FINANCIAL STATEMENTS JUNE 30, 2011

50 NORTHWEST R-I SCHOOL DISTRICT TABLE OF CONTENTS FINANCIAL SECTION PAGE Independent Auditor's Report. 1-2 Management's Discussion and Analysis.3-12 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement ofnet Assets - Modified Cash Basis )3 Statement ofactivities - Modified Cash Basis 14 Fund Financial Statements Government Funds Statement ofassets, Liabilities and Fund Balance - All Governmental Funds - Modified Cash Basis 15 Statement ofrevenues, Expenditures and Changes in Fund Balance - All Governmental Funds - Modified Cash Basis.1 6 Reconciliation ofthe Governmental Fund Balance Sheet With the Statement ofnet Assets Modified Cash Basis.1 7 Reconciliation ofthe Governmental Funds Statement ofrevenues, Expenditures and Changes in Fund Balances with the District- Wide Statement ofactivities - Modified Cash Basis. )8 Proprietmy Fund Statement ofnet Assets SelfInsurance Fund - Modified Cash Basis.19 Statement ofrevenues, Expenses, and Changes in Fund Net Assets - SelfInsurance Fund - Modified Cash Basis.20 Statement ofcash Flows SelfInsurance Fund - Modified Cash Basis 21 Fiduciary Funds Statement ofnet Assets Agency Fund - Cafeteria and Flex Plan - Cash Basis 22 Statement ofnet Assets Agency Fund - Cobra/Retiree Insurance - Cash Basis 23 Notes to the Financial Statements

51 NORTHWEST R-I SCHOOL DISTRICT TABLE OF CONTENTS (CONTINUED) REQUIRED SUPPLEMENTARY INFORMATION Statement ofrevenues, Expenditures and Changes in Fund Balance - Non-GAAP Budget Basis and Actual- General Fund - Modified Cash Basis. 38 Statement ofrevenues, Expenditures and Changes in Fund Balance - Non-GAAP Budget and Actual- Special Revenue Fund - Modified Cash Basis..39 Notes to Required Supplementary Information 40 Other Post Employment Benefits AI SUPPLEMENTARY INFORMATION Statement ofrevenues, Expenditures and Changes in Fund Balance - Non-GAAP Budget and Actual- Debt Service Fund - Modified Cash Basis Statement ofrevenues, Expenditures and Changes in Fund Balance - Non-GAAP Budget and Actual- Capital Projects Fund - Modified Cash Basis Statement ofrevenues, Expenditures and Changes in Fund Balance - Non-GAAP Budget and Actual- All Governmental Funds - Modified Cash Basis A2 A3 A4 STATE COMPLIANCE SECTION Independent Auditor's Report on Compliance with Certain Laws and Regulations Specified by Missouri Statue A5 Schedule of Selected Statistics A6-48 Schedule of State Findings 49 FEDERAL COMPLIANCE SECTION Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit offinancial Statements PerfOlmed in Accordance with Government Auditing Standards Report on Compliance with Requirements That Could Have a Direct and Material Effect On Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A Schedule ofexpenditures offederal Awards 55 Notes to Schedule ofexpenditures offederal Awards 55-56

52 NORTHWEST R-I SCHOOL DISTRICT TABLE OF CONTENTS (CONCLUDED) Combined Schedule offindings and Questioned Costs Summary Schedule ofprior Year Audit Findings 59

53 FINANCIAL SECTION

54 Daniel Jones & Associates CERTIFIED PUBLIC ACCOUNTANTS MEMBERS OF MISSOURI SOCIETY OF CPA'S AMERICAN INSTITUTE OF CPA'S INDEPENDENT AUDITOR'S REPORT Board ofeducation Notihwest R-I School District We have audited the accompanying financial statements of the governmental activities, each maj or fund and remaining fund information ofnorthwest R-I School District, Missouri, as of and for the year ended June 30, 2011, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Northwest R-I School District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-l33, Audits of States and Local governments. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described in Note I, Northwest R-I School District prepares its financial statements on the basis ofmodified cash receipts and disbursements which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States ofamerica. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position-modified cash basis of the govermnental activities, each major fund, and remaining fund information of the Northwest R-I School District as of June 30, 2011, and the respective changes in financial position-modified cash basis and where applicable, statement of cash flows, thereof for the year then ended in conformity with the basis of accounting described in Note I. In accordance with Government Auditing Standards, we have also issued our repoti dated September 26, 2011 on our consideration ofnorthwest R-I School District's internal control over financial reporting and on our tests of its compliance with celiain 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 ofthat testing, and not to provide an opinion on internal control over financial reporting or on compliance. That repoti is an integral pali of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results ofour audit JEFFCD BOULEVARD SUITE 200 AR... OLD,.IIISSOURI ~ E:!& Ci.. FAX 63S,464 :HI7& 1

55 The management's discussion and analysis on pages 3 through 12 are not a required part ofthe basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. As described in Note XV the District has adopted the provisions of Governmental Accounting Standards Board Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions, " as applicable to the modified cash basis of accounting, as of and for the year ended June 30,2011. The budgetary comparison information on pages 38 through 39 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America as applicable to the modified cash basis of accounting. We applied certain limited procedures, which consisted principally of inquires of management regarding the methods of measurement and presentation of supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Northwest R-I School District's basic financial statements. The accompanying additional supplementary information and state compliance section on pages 45 through 49 are presented for purposes of additional analysis and are not required parts of the basic financial statements. The additional supplementary information and state compliance section have been subjected to the auditing procedures applied in the audit ofthe basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits ofstates and Local Governments and Non-Profit Organizations, and is not a required part of the basic financial statements ofnolihwest R-I School District. The schedule ofexpenditures offederal awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. DANIEL JONES & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS September 26,

56 SCHOOL DISTR MANAGEMENT'S DISCUSSION AND ANALYSIS FYE JUNE 30, 2011 (UNAUDITED) The discussion and analysis of the Northwest R-I School District's financial performance provides a review of the school district's financial activities for the fiscal year ended June 30, The intent ofthis discussion and analysis is to look at the Northwest R-I School District's financial performance as a whole. Readers should also review the basic financial statements and their supporting notes to enhance their understanding of the school district's financial performance. The financial statements ofthe district have been prepared on the modified cash basis ofaccounting, as applied to local governmental units, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Differences in the cash basis of accounting and accounting principles generally accepted in the United States of America arise in the recognition of revenue when received, rather than when earned, and the presentation of expenditures/expenses when paid versus when incurred. The fiscal year was the sixth year ofthe anticipated three years that the district will be the fiscal agent for the Jefferson County Special Services Cooperative. With the Jefferson County Special Services Cooperative discontinuing operations, the Northwest R-I School District will act as the fiscal agent until the final disbursement of all funds and assets of the cooperative. Their financial information is blended in with our financial reporting. The Cooperative began the fiscal year with a fund balance of $366,655, had no revenues, expenditures of$5,439 and an ending fund balance of$361,216. Financial Highlights The beginning fund balance for the Northwest R-I School District was $20,107,118, ofwhich $810,232 was restricted in the Capital Projects Fund, $3,385,901 was restricted in the Debt Service Fund, $43,584 was restricted for Professional Development and $366,655 was the fund balance from the Jefferson County Special Services Cooperative. The ending fund balance for the Northwest R-I School District was $19,943,102, of which $1,013,447 was restricted in the Capital Projects Fund, $3,079,693 was restricted in the Debt Service Fund, $43,584 was restricted for Professional Development and $361,216 was the fund balance from the Jefferson County Special Services Cooperative. The ending unrestricted fund balance was $15,806,379 which represents an ending fund balance percentage in Funds 1 and 2 of 25.0%. (General Fund balance of $ 15,849,963 less funds restricted for Professional Development $43,584). This includes an ending fund balance of the Jefferson County Special Services Cooperative of $361,216. Though the district budgeted a deficit, through exceptional savings on expenditures, the district decreased the General fund balance only by $61,023. The total fund balance decreased by $164,017, due to the projected spending in the Debt Service Fund and the General Funds. During the current year, the district paid $1,765,000 in principal for the payment of General Obligation Bonds and $290,000 in principal for the payment ofcertificates ofparticipation. In the fiscal year, employees were given an equivalent raise of $200 added to the teacher salary scale and those who quality received track advancement salary increases. No step advancement or longevity raises were given. The district paid an increase of 14.9% for employer paid insurance. This was the first cost increase since leaving the CSD Trust and creating our own self-insured fund. In April of 2008 the district passed a $10,000,000 bond issue. This bond issue sold in July 2008 and several large projects including building additions, district asphalt improvements, district technology infrastructure improvements, roofs and air conditioning replacement began. As of June 30, 2011, $117,069 remains to be spent on bond issue projects in coming year. 3

57 NORTHWEST R-l SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED Using this Other Comprehensive Basis of Accounting Report (OCBOA) This annual report consists of a series of fmancial statements and notes to the financial statements. The Statement of Net Assets - Cash Basis and the Statement ofactivities - Cash Basis provide information about the activities ofthe Northwest R-I School District as a whole and present a longer-term view of the district's finances. Fund financial statements start on page 15. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. The statements then proceed to provide an increasingly detailed look at specific financial activities. By showing the change in net assets (cash basis) for the year, the reader may ascertain whether the district's cash basis financial condition has improved or deteriorated. The changes that are discussed in this MD&A may be financial or non-financial in nature. Non-financial factors that may have an impact on the district's financial condition include increases in or erosion of the property tax base within the district, facilities maintenance and condition, mandated educational programs for which little or no funding is provided, or other external factors. To provide more in-depth reporting of the district's cash basis fmancial position and changes in cash basis financial position, fund basis financial information is presented in the "Fund Financial Statements" section beginning on page ]3. The Statements ofrevenues, Expenditures, and Changes in Fund Balance reports should be familiar to those who have read previous governmental financial statements. These statements report governmental activities on a current cash basis, indicating cash basis sources and uses offunds. Fund financial statements also provide more in-depth data on the district's most significant funds, its General Fund, Teacher's Fund, Debt Service Fund, and Capital Project's Fund. These funds are considered "major funds" under GASB statement No. 34. The relationship between governmental activities reported in the government-wide financial statements and the governmental funds reported in the fund fmancial statements are reconciled to the financial statements on page 18. Government-wide Financial Analysis Net assets of the Northwest R-I School District at June 30, 2010 of $20,107,118 reflect the district's total assets of cash and investments. This amount is the final audited Net assets of the district for 2010 and does include the fund balance from the Jefferson County Special Services Cooperative. Net assets of the district as of June 30, 2011, including the Jefferson County Special Services Cooperative, consist ofthe following: Net Assets: Unrestricted Restricted Total Net Assets: $15,806, ,373, $22,180, The restricted net assets are restricted for payment of principal and interest on general obligation bonds, capital projects, payment of certificates of participation, payment of future medical insurance claims, payment ofretiree and COBRA insurance and restricted funds for professional development. Governmental Activities Net assets as presented in the Statement of Activities - Cash Basis in the amount of $22,]80, as of June 30, 2011 reflect an increase of $1,036, over the June 30, 2010 balance of $21,143, Key elements of this decrease consist ofthe following: 4

58 Governmental Activities (Concluded) Revenues collected NORTHWEST R-l SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED Program revenues collected: Charges for services Operating grants and contributions Capital grants and contributions General revenues collected: Propelty taxes Other taxes State and federal grants not restricted to specific programs Interest and Investment earnings Bond issue and bond refunding proceeds Other Total revenues collected: Expenses paid Instruction Student services Instructional staff support Administration and Board ofeducation Building level administration Operation ofplant Transportation Food service Debt service Capital outlay Community services Total expenses paid: Change in net assets Net assets, July 1,2010 Net assets June 30, 2011 Governmental Funds Financial Analysis $2,294, ,624, , ,641, ,522, ,154, , , $68,202, $39,615, ,366, , ,083, ,566, ,867, ,047, ,430, ,493, , , $67,165, ,036, ,143, $22.180, The district uses funds to control and manage money for particular purposes (e.g., dedicated taxes and bond proceeds). The fund basis financial statements allow the reader to obtain more insight into the cash basis fmancial workings ofthe district and assess further the district's cash basis financial health. 5

59 NORTHWEST R-l SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED Governmental Funds Financial Analysis (Concluded) The district completed the fiscal year ended June 30, 20 II with a combined cash basis fund balance for governmental funds [as presented in the Statement ofrevenues, Expenditures and Changes in Fund Balances (Cash Basis) on page 16] of$19,943,102, as compared to a combined fund balance of$20,107,119 from , for a decrease of $164,017. The fund balance ofthe General Fund decreased by $61,023, due in large part to savings on fewer bus route and fuel costs, savings from salaries and benefits from medical and other leave ofabsences, and conservative spending by nearly every department. The amended budget included an estimated deficit ofjust over $2,000,000. The increase of $203,216 in the Capital Projects Fund is due to the spending from the projects from the 2008 bond issue offset by the reserve for the construction costs associated with the Early Childhood Center. The Debt Service Fund decreased by $306,209 due to the payment ofbond principal and interest per the debt schedules and slightly lower than "scheduled" revenue due to the reduction in the assessed valuation partially offset by a slight increase in the debt service tax rate. The balance of$3,079,691 in the Debt Service Fund is legally restricted for payment ofgeneral obligation bond principal, interest and related fees. The balance of$1,130, in the Capital Projects Fund is restricted for building/capital improvements within the district from the balance ofthe 2008 bond issue funds and for the constructions costs associated with the Early Childhood Center. The amount of$43, within the General Fund is restricted for Professional Development use. The following table summarizes the governmental fund revenues collected and expenditures paid for the year ended June 30, 2011: Revenues Collected: Increase (Decrease) Local $32,753, $32,644, $108, County 1,154, ,407, (253,541.66) State 26,048, ,212, (1,163,823.96) Federal 7,965, ,246, (3,281,486.31) Other 280, , , Total Revenues $68,202, $72,679, ($4,477,604.99) Collected: Expenditures Paid: Increase (Decrease) Instruction $40,366, $42,984, ($2,618, I07.68) Support Services 23,348, ,565, (1,217,660.66) Acquisition and 319, ,948, (3,628,997.64) Construction Debt Service 3,493, ,343, , Community Service and 838, , (111,181.63) Other Total Expenditures $68,366, $75,791, ($7,425,943.48) Paid: 6

60 NORTHWEST R-1 SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED The charts below reflect the percentages of the governmental fund revenues collected and expenditures paid as summarized above: I Revenues Il!llLocal II County o State o Federal Other Expenditures support Servi ces % Community Service, 1.20% Acq. & /"~ Construction, 0.50% ~Debt Serv;ce, 5.10% m1lnstruction filii Community Service o Support Services o Acq. & Construction III Debt Service Instructi on, 59.00% 7

61 NORTHWEST R-I SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED Local revenue in the amount of $32,753,539 accounts for 48.0% ofthe total revenues collected for the district. The major source of local revenue for the operations and debt service is the local property taxes. Local property taxes collected for the school year were $23,641,665. This amount is derived from the district's operating levy of $3.8015, Capital Projects levy of $.15 and the debt service levy of $.4895 for a total levy of $ The other significant local revenues are $5,350,473 fi'om sales tax, Proposition C, $541,404 from Earnings on Investments, $1,257,278 from Food Services, breakfasts and lunches served, and $999,256 from Student Activities. County revenue in the amount of $1,154,017 accounts for 1.7% ofthe total revenues collected for the district. The major source of county revenue for the district is fi'om State Assessed Railroad and Utilities in the amount of $950,052. These revenues are used for operations and debt service. The remaining county revenue is from Fines and Forfeitures in the amount of$203,965. State revenue in the amount of $26,048,389 accounts for 38.2% ofthe total revenues collected for the district. The major sources of state revenue for the district are from the Basic Formula Calculation, $20,665,805 and from Classroom Trust Fund, $2,726,567. Other significant state revenues include $1,022, from Transportation, $1,250,247 from Early Childhood Special Education and $100,394 from Parents as Teachers. Other state revenues include State Food Service, Vocational Aid, High Needs Fund, Missouri Preschool Project and Other. Federal revenue in the amount of $7,965,242 accounts for 11.7% ofthe total revenues collected for the district. This past year we received many additional sources offederal funding. This included basic formula stabilization funds in the amount of $1,110,292, Basic Formula Government Services ARRA in the amount of $678,816, Classroom Trust Fund - Jobs Bill ARRA in the amount of$222,776, Basic Fonnula Jobs Bill Federal Stabilization funds in the amount of$1,552,540, Title I ARRA in the amount of$316,298, Title II D ARRA in the amount of $5,123 and IDEA ARRA in the amount of $126,612. The "normal" major sources of federal revenue for the district are from the Federal School Lunch, Breakfast and Milk Program in the amount of $1,251,266 combined, $1,550,980 from Individuals with Disabilities Education Act (IDEA), $156,281 from Early Childhood Special Education, $642,815 from Title I, and $253,136 from Title II. Other sources offederal revenue include Medicaid, Title IV, and Carl Perkins Grant. Other revenue in the amount of $280,834 accounts for 0.4% of the total revenues collected for the district. We received nonnal other income from tuition from other districts $170,682 and contracted educational services of $36,766, Net Insurance Recovery in the amount of $71,683, in addition to transportation from other districts totaling $789 and Sale ofother Property of $915. Overall, the total revenues fi'om the fiscal year decreased by $4,477,605 from the fiscal year. Revenues decreased including state basic formula, transportation, federal ARRA funding, and others as noted in the following paragraphs. Local revenue increased by $108,667. This was mostly due to the increase in the local tax revenue with a decline in our assessed valuation offset by an increase in our tax rate and an improved collection rate for an increase in local tax revenue of $435,930, an increase in Proposition C due to lower WADA (weighted average daily attendance) combined with a higher per WADA distributions of$74,423, an increase ofrental fees and school aged childcare fees of$90,212, offset by a decrease of$265,006 fi'om interest revenue generated from lower interest rates, a decrease of $114,328 in Food Service revenues and a decrease of$76,887 in Student Activity revenues. County revenue decreased by $253,542. This was due to the decrease of State Assessed Railroad and Utilities partially offset by a increase in the Fines and Forfeitures revenues. The decrease in the State Assessed Railroad and Utility revenues were drastically decreased due to the state wide protest oftax values by Ameren DE. State revenues decreased by a total of$1,163,824. This year the Basic Formula and Transportation funding from the state were drastically reduced. The Basic Formula was reduced by $1,074,335 with a portion supported by federal ARRA and Jobs Bill funding. Transportation was reduced by $607,907 and Parents as Teacher funding was reduced by $84,837 as targeted line items reduced by Governor Nixon. Classroom Trust funds were increased by $323,991 based on increased state gaming revenues per WADA. Funding for Early Childhood Special Education was increased by $150,778 which is based on the expenditures of the fiscal year and completely offset by lower Federally Early Childhood Special Education funding. Futiher, in the district received a Vocational 8

62 NORTHWEST R-1 SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED Education grant fi'om the state department and was used to update the computers and information technology in the business department of the high school in addition to $60,000 received from three DNR grants for fall surface for three district elementary playgrounds. Federal revenues decreased by $3,281,486. This was due to the large influx offederal Stimulus money provided to the district. State Formula Stabilization and Jobs Bill Funding amounted to $3,564,424, down fi'om $4,223,251 provided in Transportation ARRA funding fi'om in the amount of $187,992 was not duplicated in IDEA ARRA funding amounted to $126,612, decreased from $1,501,044 in Title I ARRA amounted to $287,827, increased slightly from $243,138 and Title II D ARRA amounted to $5,123, decreased from $11,662. In addition, we received $300,249 less in funding fi'om the federal food service programs, due to the catch up payment received in June of20 10 and not duplicated in June of Otherrevenue had an increase of$112,580 ofwhich is made up ofa Net Insurance Recovery of$71,683 in which was not received in and $80,111 in higher tuition from other districts than from prior year. This was partially offset by revenues from contracted educational services reduced by $25,368 from prior year. The governmental funds expenditures paid were $68,366,039 for the fiscal year. This is a decrease of $7,425,943 from the fiscal year. The largest poltion ofexpenditures was for Instruction, $40,366,310 This accounts for 59.0% ofthe total expenditures. This represents a decrease of$2,618,108 from the fiscal year. Expenditures include salaries and benefits for teachers and classified staff, totaling $37,038,741. The other significant expenditures include tuition for the summer school program, $979,229, student activities $976,719 and other purchased services, supplies and capital outlay of $1,371,620. The major changes are due to the decrease in employees from attrition and the savings from salaries and benefits was $1,705,163. The need for teachers and administrators decreased with the closing of Cedar Hill Intermediate School. The fiscal year included special funding for ARRA/stimulus programs which was one-time money. Most of the money was received and expended in and not duplicated in the fiscal year. In addition, tuition from summer school was reduced by $526,926 from lower student participation. Support Services expenditures of$23,348,377 accounted for 34.2% ofthe total expenditures for the district. This is a decrease of $1,217,661 fi'om last year. Expenditures include salaries and benefits of $12,957,658, food service supplies, equipment and purchased services of $1,233,863, transportation services and supplies of $4,109,714, operation ofplant supplies and other purchased services of $3,966,262, board and administration supplies and other purchased services of $595,089, and other supplies and purchased services in the amount of $485,690. As compared to last fiscal year, the salaries and benefits have decreased by $837,100 and this is due to the reduction in staffing positions, non-recurrence stimulus funding and the reduction in days for classified staff from the calendar reduction and fi'om the excessive snow days. In addition, transportation costs were reduced by $382,988 mainly due to the reduced number of routes that were needed based on the closing of Cedar Hill Intermediate, the reduced days due to the number ofsnow days that did not need to be made up and the consolidation ofthe secondary routes. Acquisition and Construction expenditures of $319,191 accounted for 0.5% ofthe total expenditures for the district. This has decreased from $3,948, fi'om Expenditures included the payment to the contractors for their completion ofthe improvements from the 2008 bond issue. Debt Service expenditures of $3,493,899 accounted for 5.1% of the total expenditures for the district. These expenditures were for the payment of interest, principal and fees relating to the general obligation bonds in the amount of$3,129,268, principal and interest and fees for the energy savings loan in the amount of$364,630. This is a slight increase from last year due to the payment ofinterest only on the certificates ofparticipation for the high school parking lot improvements. Community Service expenditures of $838,362 accounted for 1.2 % of the total expenditures for the district. This is a decrease of $111,182 from last fiscal year. These are the expenditures related to the Parents as Teachers program, the Pre-School program partially funded through the Missouri Pre-School Project (MPP Grant) and for the School Aged Child Care Program (SACC) for the district. Total salaries and benefits paid for these programs totaled $780,459. Supplies, purchased services and capital outlay totaled $57,904. The decrease was mainly due to the reduction in Parents as Teachers program, mostly salaries and benefits, based on revenue reductions from the Governor. 9

63 Budgetary Highlights NORTHWEST R-1 SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 (UNAUDITED In May 2010, the Northwest R-I School District's Board of Education approved a preliminary budget for the fiscal year. The district presented a revised budget to the Board ofeducation in December 2010, an amended budget in March 2011 and a fmal budget to the Board ofeducation in June With the change in the state basic formula calculation and rules for placement of funds for the revenues, the district opted once again to place all of the state basic fonnula revenues, including those for the Classroom Trust Fund into the Teacher's Fund. This included the federally funded stimulus funds including the ARRA funds and the Jobs Bill funding received to support the basic formula funding. With placing most ofthe state revenues in the Teacher's Fund, the district did not allocate any local revenue into the Teacher's Fund. We only placed local taxrevenue income into the General, Debt Service and Capital Project's Funds. During the district received revenues as part of the American Revitalization and Recovery Act, otherwise known as ARRA. These funds included $126,612 from IDEA ARRA, $1,789,108 from Basic Formula Stabilization ARRA, $1,775,316 from Jobs Bill funding, and Federal Title Program ARRA from Title I and Title II totaling $287,827. Without the basic formula federal funding, the school district would have lost additional state formula revenues in the amount of $3,564,424 over and above the 3.02% reduction amounting to $843,142 from the state department applying a proration factor of to the fol1llula calculation. The amounts from IDEA and Title programs had specific additional expenses that related directly to the funding provided. Without the funding, the additional program expenses would not have been expended. Analysis of Significant Budgetary Variances The Statement of Revenues, Expenditures and Changes in the Fund Balance Report illustrates the budget comparisons from the Original Budget, the Final Budget and the end of the year Actual amounts. The variances between the final budget and the end ofthe year actual are discussed in the following comments on revenue and expenditure variances. The total revenues presented in the Final Budget were in the amount of $67,893,087 and the Actual total revenues were in the amount of $68,202,022. The significant variances are explained in the following paragraphs. The local revenues in the Final Budget were $32,366,614 as compared to the actual local revenues received in the amount of$32,753,539 an increase of $386,925. The significant increases in Local Tax collections of $526,796 and an increase in Other Local revenues of $65,139, partially offset by lower Food Service revenues of $86,676, and lower Activity revenues by $116,344. The local revenue increase showed an improved collection rate for the district. The increase in Other Local revenue is from the collection ofrental fees from facilities and from reimbursements for special education services from other districts. The county revenues in the Final Budget were $1,154,137 as compared to the actual county revenues received of$1,154,017. The state revenues in the Final Budget were $25,859,264 as compared to the actual state revenues received in the amount of$26,048,389, an increase of$189,125. The significant increase in state revenues were from the payment received for the Vocational Enhancement Grant in the amount of$68,274, a higher payment for the MPP Grant in the amount of $8,500, and a slightly higher payment for the Basic Formula and Classroom Trust in the amount of$24,327. The federal revenues in the Final Budget were $8,332,642 compared to the actual federal revenues received in the amount of$7,965,242, a decrease of$367,400. This was due in large part by the lower than expected Federal Food Lunch revenue shortfall of $125,984 combined with the lower than expected payments for Title I and Title II totaling $475,749 partially offset by slightly higher payment on IDEA. 10