Rating: Moody s Aaa (State of Utah Guaranty; underlying Aa3 ) See STATE OF UTAH GUARANTY and MISCELLANEOUS Bond Ratings herein.

Transcription

1 NEW ISSUE Rating: Moody s Aaa (State of Utah Guaranty; underlying Aa3 ) See STATE OF UTAH GUARANTY and MISCELLANEOUS Bond Ratings herein. Subject to compliance by the Board with certain covenants, in the opinion of Chapman and Cutler LLP, Bond Counsel, under present law, interest on the 2013 Bonds is excludable from gross income of the owners thereof for federal income tax purpose and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In the opinion of Bond Counsel, under the existing laws of the State of Utah, as presently enacted and construed, interest on the 2013 Bonds is exempt from taxes imposed by the Utah Individual Income Tax Act. See TAX MATTERS Federal Income Taxation Of 2013 Bonds and State Tax Exemption For The 2013 Bonds herein for a more complete discussion. The 2013 Bonds are qualified tax exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See TAX MATTERS Qualified Tax Exempt Obligations herein. $6,350,000 Board of Education of Logan City School District, Utah General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013 The $6,350,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013 are issuable by the Board of Education of Logan City School District, Utah, as fully registered bonds and, when initially issued, will be in book entry only form, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York. DTC will act as securities depository for the 2013 Bonds. Principal of and interest on the 2013 Bonds (interest payable June 15 and December 15 of each year, commencing December 15, 2013) are payable by U.S. Bank National Association, Corporate Trust Services, as Paying Agent, to the registered owners thereof, initially DTC. See THE 2013 BONDS Book Entry System herein. The 2013 Bonds are not subject to optional redemption prior to maturity. See THE 2013 BONDS No Redemption herein. The 2013 Bonds will be general obligations of the Board payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in Logan City School District, Utah, fully sufficient to pay the 2013 Bonds as to both principal and interest. Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State of Utah under the provisions of the Utah School Bond Guaranty Act. See STATE OF UTAH GUARANTY herein. Dated: Date of Delivery 1 Due: June 15, as shown on inside front cover See the inside front cover for the maturity schedule of the 2013 Bonds. The 2013 Bonds were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on June 6, 2013 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated May 30, 2013) to Hutchinson, Shockey, Erley & Co., Chicago, Illinois at a true interest rate of 1.08%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Financial Advisor. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire OFFI- CIAL STATEMENT to obtain information essential to the making of an informed investment decision. This OFFICIAL STATEMENT is dated June 6, 2013, and the information contained herein speaks only as of that date. 1 The anticipated date of delivery is Friday, June 14, 2013.

2 $6,350,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013 Dated: Date of Delivery 1 Due: June 15, as shown below Due CUSIP Principal Interest June Amount Rate Yield HQ0 $ 75, % 0.50% HR8 70, HS6 1,095, HT4 1,120, HU1 1,975, HV9 2,015, The anticipated date of delivery is Friday, June 14, 2013.

3 Table Of Contents Page INTRODUCTION... 1 Public Sale/Electronic Bid... 1 Logan City School District, Utah... 1 The 2013 Bonds... 2 Security... 2 Authority And Purpose... 2 No Redemption... 2 Registration, Denominations, Manner Of Payment... 2 Tax Exempt Status; Qualified Tax Exempt Obligations... 3 Professional Services... 3 Conditions Of Delivery, Anticipated Date, Manner, And Place Of Delivery... 4 Continuing Disclosure Undertaking... 4 Basic Documentation... 4 Contact Persons; Internet Site... 4 CONTINUING DISCLOSURE UNDERTAKING... 5 STATE OF UTAH GUARANTY... 6 Guaranty Provisions... 6 Guaranty Procedures... 6 Purpose Of The Guaranty... 8 State Of Utah Financial And Operating Information... 8 THE 2013 BONDS... 8 General... 8 Plan Of Refunding For The 2013 Bonds... 9 Sources And Uses Of Funds... 9 Security And Sources Of Payment No Redemption Registration And Transfer; Record Date Book Entry System Debt Service On The 2013 Bonds LOGAN CITY SCHOOL DISTRICT, UTAH General Form Of Government Employee Workforce And Retirement System; Post Employment Benefits Risk Management Investment Of Funds Population Employment, Income, Construction And Sales Taxes Within Cache County, The City Of Logan And The State Of Utah Largest Employers Rate Of Unemployment Annual Average DEBT STRUCTURE OF LOGAN CITY SCHOOL DISTRICT, UTAH Outstanding General Obligation Bonded Indebtedness Municipal Building Authority of Logan City School District, Utah Other Financial Considerations Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year Page Debt Schedule Of The Municipal Building Authority of Logan City School District By Fiscal Year Overlapping And Underlying General Obligation Debt Debt Ratios General Obligation Legal Debt Limit And Additional Debt Incurring Capacity No Defaulted Obligations FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Fund Structure; Accounting Basis Budgets And Budgetary Accounting Management s Discussion And Analysis Financial Summaries Tax Levy And Collection Public Hearing On Certain Tax Increases Property Tax Matters Historical Tax Rates Of The District Comparative Total Property Tax Rates Within Cache County Taxable, Fair Market And Market Value Of Property Within The District Historical Summaries Of Taxable Value Of Property Tax Collection Record Some Of The Largest Taxpayers STATE OF UTAH SCHOOL FINANCE Sources Of Funds Local District Funding State Funding Federal Funding Summary Of State And Federal Funding LEGAL MATTERS Absence Of Litigation TAX EXEMPTION Federal Income Taxation Of 2013 Bonds State Tax Exemption For The 2013 Bonds Qualified Tax Exempt Obligations MISCELLANEOUS General Bond Ratings Financial Advisor Independent Auditors Additional Information APPENDIX A BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR A 1 APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL... B 1 APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING... C 1 APPENDIX D BOOK ENTRY SYSTEM... D 1 iii

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5 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 2013 Bonds (as defined herein), by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained herein, and if given or made, such other informational representations must not be relied upon as having been authorized by any of: the Board of Education of Logan City School District, Utah (the Board ); Zions Bank Public Finance, Salt Lake City, Utah (as Financial Advisor); U.S. Bank National Association, Corporate Trust Services (as Paying Agent); the State of Utah; the successful bidder(s); or any other entity. The information contained herein has been obtained from the Board, The Depository Trust Company, New York, New York, the State of Utah, and from other sources which are believed to be reliable. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this OFFICIAL STATEMENT nor the issuance, sale, delivery or exchange of the 2013 Bonds, shall under any circumstance create any implication that there has been no change in the affairs of the Board, since the date hereof. The 2013 Bonds have not been registered under the Securities Act of 1933, as amended, or any state securities laws in reliance upon exemptions contained in such act and laws. Neither the Securities and Exchange Commission nor any state securities commission has passed upon the accuracy or adequacy of this OFFICIAL STATEMENT. Any representation to the contrary is unlawful. The yields at which the 2013 Bonds are offered to the public may vary from the initial reoffering yields on the inside cover page of this OFFICIAL STATEMENT. In addition, the successful bidder(s) may allow concessions or discounts from the initial offering prices of the 2013 Bonds to dealers and others. In connection with the offering of the 2013 Bonds, the successful bidder(s) may engage in transactions that stabilize, maintain, or otherwise affect the price of the 2013 Bonds. Such transactions may include overallotments in connection with the purchase of 2013 Bonds, the purchase of 2013 Bonds to stabilize their market price and the purchase of 2013 Bonds to cover the successful bidder s(s ) short positions. Such transactions, if commenced, may be discontinued at any time. Forward Looking Statements. Certain statements included or incorporated by reference in this OFFICIAL STATEMENT constitute forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used, such as plan, project, forecast, expect, estimate, budget or other similar words. The achievement of certain results or other expectations contained in such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. The Board does not plan to issue any updates or revisions to those forward looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. The CUSIP (the Committee on Uniform Securities Identification Procedures) identification numbers are provided on the inside cover page of this OFFICIAL STATEMENT and are being provided solely for the convenience of bondholders only, and the Board does not make any representation with respect to such numbers or undertake any responsibility for their accuracy. The CUSIP numbers are subject to being changed after the issuance of the 2013 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the 2013 Bonds. The information available at the web or internet sites referenced in this OFFICIAL STATEMENT has not been reviewed for accuracy and completeness. Such information has not been provided in connection with the offering of the 2013 Bonds and is not a part of this OFFICIAL STATEMENT. v

6 Utah Cache County! Cache County Clarkston Cornish Lewiston Trenton Richmond Logan City School District Amalga Newton Hyde Park Smithfield 89 Mendon North Logan Logan River Heights Providence Millville Nibley 89 Hyrum Wellsville Paradise Mantua

7 OFFICIAL STATEMENT RELATED TO $6,350,000 Board of Education of Logan City School District, Utah General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013 INTRODUCTION This introduction is only a brief description of the 2013 Bonds, as hereinafter defined, the security and source of payment for the 2013 Bonds and certain information regarding the Board of Education (the Board ) of Logan City School District, Utah (the District ). The information contained herein is expressly qualified by reference to the entire OFFICIAL STATEMENT, including the appendices. Investors are urged to make a full review of the entire OFFICIAL STATEMENT. See the following appendices that are attached hereto and incorporated herein by reference: APPENDIX A BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012; APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL; APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING; and AP- PENDIX D BOOK ENTRY SYSTEM. When used herein the terms Fiscal Year[s] 20YY or Fiscal Year[s] End[ed][ing] June 30, 20YY shall refer to the year ended or ending on June 30 of the year indicated and beginning on July 1 of the preceding calendar year. Capitalized terms used but not otherwise defined herein have the same meaning as given to them in the Resolution, as hereinafter defined. Public Sale/Electronic Bid The 2013 Bonds were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on June 6, 2013 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated May 30, 2013) to Hutchinson, Shockey, Erley & Co., Chicago, Illinois at a true interest rate of 1.08%. The 2013 Bonds may be offered and sold to certain dealers (including dealers depositing the 2013 Bonds into investment trusts) at prices lower than the initial public offering prices set forth on the inside cover page of the OFFICIAL STATEMENT and such public offering prices may be changed from time to time. Logan City School District, Utah The District, established in 1872, is located approximately 90 miles north of Salt Lake City, and 20 miles south of the Utah Idaho border. The District shares approximately the same boundaries with those of the City of Logan, Utah (the City ). The City, incorporated in 1866, covers an area of approximately 13.5 square miles and is the county seat of Cache County, Utah (the County ). The City had 49,010 residents according to the 2011 Bureau of the Census estimate and ranked as the 12 th largest city 1

8 (out of approximately 245 municipal entities) in the State of Utah (the State ). The City is home to Utah State University ( USU ), which university has an estimated enrollment of approximately 28,775 students. The 2013 Bonds This OFFICIAL STATEMENT, including the cover page, introduction and appendices, provides information in connection with the issuance and sale by the Board of its $6,350,000 General Obligation Refunding Bonds (Utah School Bond Guaranty Program), Series 2013 (the 2013 Bonds or 2013 Bond, initially issued in book entry form only. Security The 2013 Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the District, fully sufficient to pay the 2013 Bonds as to both principal and interest. See THE 2013 BONDS Security And Sources Of Payment and FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Tax Levy And Collection below. Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited taxing power of the State under the provisions of the Utah School Bond Guaranty Act, Title 53A, Chapter 28 (the Guaranty Act ), Utah Code Annotated 1953, as amended (the Utah Code ). See STATE OF UTAH GUARANTY below. Authority And Purpose The 2013 Bonds are being issued pursuant to the Utah Refunding Bond Act, Title 11, Chapter 27 and a Resolution of the Board adopted on April 30, 2013 (the Resolution ), which provide for the issuance of the 2013 Bonds, and other applicable provisions of law. The 2013 Bonds are being issued for the purpose of refunding in advance of their maturity $6,485,000 of the Board s currently outstanding General Obligation School Building and Refunding Bonds (Utah School Bond Guaranty Program), Series 2003, dated February 15, 2003, which mature on June 15, 2014 through June 15, The 2013 Bonds are also being issued to pay certain costs of issuance. See THE 2013 BONDS Plan Of Refunding For the 2013 Bonds below. No Redemption The 2013 Bonds are not subject to optional redemption prior to maturity. See THE 2013 BONDS No Redemption below. Registration, Denominations, Manner Of Payment The 2013 Bonds are issuable only as fully registered bonds and, when initially issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the 2013 Bonds. Purchases of 2013 Bonds will be made in book entry form only, in the principal amount of $5,000 or any whole multiple thereof, through brokers and dealers who are, or who act through, DTC s Direct Participants (as defined herein). Beneficial Owners (as defined herein) of the 2013 Bonds will not be entitled to receive physical delivery of bond certificates so long as DTC or a successor securities depository acts as the securities depository with respect to the 2013 Bonds. Direct Participants, Indirect Participants and Beneficial Owners are defined under APPENDIX D BOOK ENTRY SYSTEM. 2

9 Principal of and interest on the 2013 Bonds (interest payable June 15 and December 15 of each year, commencing December 15, 2013) are payable by U.S. Bank, Corporate Trust Services ( U.S. Bank ), as paying agent (the Paying Agent ) to the registered owners of the 2013 Bonds. So long as Cede & Co. is the registered owner of the 2013 Bonds, DTC will, in turn, remit such principal and interest to its Direct Participants, for subsequent disbursements to the Beneficial Owners of the 2013 Bonds, as described in APPENDIX D BOOK ENTRY SYSTEM. So long as DTC or its nominee is the registered owner of the 2013 Bonds, neither the Board nor the Paying Agent will have any responsibility or obligation to any Direct or Indirect Participants of DTC, or the persons for whom they act as nominees, with respect to the payments to or the providing of notice for the Direct Participants, Indirect Participants or the Beneficial Owners of the 2013 Bonds. Under these same circumstances, references herein and in the Resolution to the Bondowners or Registered Owners of the 2013 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2013 Bonds. Tax Exempt Status; Qualified Tax Exempt Obligations Tax Exempt Status. Subject to compliance by the Board with certain covenants, in the opinion of Chapman and Cutler LLP, Bond Counsel, under present law, interest on the 2013 Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In the opinion of Bond Counsel, under the existing laws of the State of Utah, as presently enacted and construed, interest on the 2013 Bonds is exempt from taxes imposed by the Utah Individual Income Tax Act. See TAX MATTERS Federal Income Taxation Of 2013 Bonds and State Tax Exemption For The 2013 Bonds below for a more complete discussion. Qualified Tax Exempt Obligations. The 2013 Bonds are qualified tax exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See TAX MATTERS Qualified Tax Exempt Obligations below. Professional Services In connection with the issuance of the 2013 Bonds, the following have served the Board in the capacity indicated. Bond Counsel Attorneys for the Board Chapman and Cutler LLP Burbidge & White LLC 201 S Main St Ste Gateway Tower West Salt Lake City UT W S Temple f Salt Lake City UT bjerke@chapman.com f bburbidge@burbidgewhite.com Bond Registrar and Paying Agent Financial Advisor U.S. Bank National Association Zions Bank Public Finance Corporate Trust Services Zions Bank Building 170 S Main St Ste 200 One S Main St 18 th Fl Salt Lake City UT Salt Lake City UT f f brandon.elzinga@usbank.com alex.buxton@zionsbank.com 3

10 Conditions Of Delivery, Anticipated Date, Manner, And Place Of Delivery The 2013 Bonds are offered, subject to prior sale, when, as and if issued and received by the successful bidder(s), subject to the approval of legality of the 2013 Bonds by Chapman and Cutler LLP, Bond Counsel, and certain other conditions. Certain legal matters will be passed on for the Board by attorney for the Board, Burbidge & White LLC, Salt Lake City, Utah. It is expected that the 2013 Bonds, in book entry form only, will be available for delivery in Salt Lake City, Utah for deposit with U.S. Bank, a fast agent of DTC, on or about Friday, June 14, Continuing Disclosure Undertaking The Board will enter into a continuing disclosure undertaking for the benefit of the Beneficial Owners of the 2013 Bonds. For a detailed discussion of this disclosure undertaking, previous undertakings and timing of submissions see CONTINUING DISCLOSURE UNDERTAKING below and APPEN- DIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING. Basic Documentation This OFFICIAL STATEMENT speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Board, the District, the 2013 Bonds, and the Resolution are included in this OFFICIAL STATEMENT. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Resolution are qualified in their entirety by reference to such document, and references herein to the 2013 Bonds are qualified in their entirety by reference to the form thereof included in the Resolution. The basic documentation which includes the Resolution, the closing documents and other documentation, authorizing the issuance of the 2013 Bonds and establishing the rights and responsibilities of the Board and other parties to the transaction, may be obtained from the contact persons as indicated below. Contact Persons; Internet Site As of the date of this OFFICIAL STATEMENT, the chief contact person for the Board concerning the 2013 Bonds is: Zane Woolstenhulme, Business Administrator zane.woolstenhulme@loganschools.org Logan City School District 101 W Center St Logan UT f The Board maintains an internet site that may be accessed at loganschools.org. The information available at this internet site is provided by the Board in the course of its normal operations and has not necessarily been reviewed for accuracy or completeness. Such information is not a part of this OFFICIAL STATEMENT. As of the date of this OFFICIAL STATEMENT, the chief contact person for the State concerning the State guaranty for the 2013 Bonds is: 4

11 Richard K. Ellis, Utah State Treasurer, Utah State Treasurer s Office 350 N State St Ste C 180 (PO Box ) Salt Lake City UT f treasurer.state.ut.us As of the date of this OFFICIAL STATEMENT, additional requests for information may be directed to Zions Bank Public Finance, Salt Lake City, Utah (the Financial Advisor ) to the Board: Alex Buxton, Vice President, alex.buxton@zionsbank.com Eric John Pehrson, Vice President, eric.pehrson@zionsbank.com Cara Bertot, Financial Analyst, cara.bertot@zionsbank.com Zions Bank Public Finance Zions Bank Building One S Main St 18 th Fl Salt Lake City UT f CONTINUING DISCLOSURE UNDERTAKING The Board will enter into a Continuing Disclosure Undertaking (the Disclosure Undertaking ) for the benefit of the Beneficial Owners of the 2013 Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board ( MSRB ) through its Electronic Municipal Market Access ( EMMA ) pursuant to the requirements of paragraph (b)(5) of Rule 15c2 12 (the Rule ) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and other terms of the Disclosure Undertaking, including termination, amendment and remedies, are set forth in the proposed form of Disclosure Undertaking in AP- PENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING. The Board has complied in all material respects with each and every undertaking previously entered into by it pursuant to the Rule. Based on prior disclosure undertakings the Board submits its annual financial report for Fiscal Year Ending June 30 (the Financial Report ) and other operating and financial information on or before December 27 (on or before 180 days from the end of the Fiscal Year). The Board will submit the Fiscal Year 2013 Financial Report and other required operating and financial information for the 2013 Bonds on or before December 27, 2013, and annually thereafter on or before each December 27. A failure by the Board to comply with the Undertaking will not constitute a default under the Resolution and beneficial owners of the 2013 Bonds are limited to the remedies described in the Undertaking. See APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING A failure by the Board to comply with the Undertaking must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the 2013 Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the 2013 Bonds and their market price. The State has entered into a Master Continuing Disclosure Agreement (the Master Agreement ) for the benefit of the beneficial owners of the bonds, including the 2013 Bonds, guaranteed by the State pur- 5

12 suant to the Guaranty Act. See STATE OF UTAH GUARANTY below. In the Master Agreement, the State has undertaken to send certain information annually and to provide notice of certain events to MSRB through EMMA pursuant to the Rule, but solely as to its responsibilities under its guaranty. See STATE OF UTAH GUARANTY State Of Utah Financial And Operating Information below. The State has complied in all material respects with the Master Agreement previously entered into by it pursuant to the Rule. Based on prior disclosure undertakings the State submits its annual comprehensive annual financial report ( CAFR ) (Fiscal Year Ending June 30) and other operating and financial information on or before January 15 (on or before 199 days from the end of the Fiscal Year). The State has agreed to submit the State s CAFR for Fiscal Year 2013 and other operating and financial information on or before January 15, 2014, and annually thereafter on or before each January 15. The Board is responsible for continuing disclosure under the Rule for all other matters relating to the 2013 Bonds. Bond Counsel expresses no opinion as to whether the Disclosure Undertaking or the Master Agreement complies with the requirements of the Rule. Guaranty Provisions STATE OF UTAH GUARANTY Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. The Guaranty Act establishes the Utah School Bond Default Avoidance Program (the Program or the Utah School Bond Guaranty Program ). The State s guaranty is contained in Section 53A (2)(a) of the Guaranty Act, which provides as follows: The full faith and credit and unlimited taxing power of the state is pledged to guarantee full and timely payment of the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, bonds as such payments shall become due (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration). In addition, the Guaranty Act provides that the State pledges to and agrees with the holders of bonds guaranteed under the Guaranty Act that the State will not alter, impair, or limit the rights vested by the Program with respect to said bonds until said bonds, together with applicable interest, are fully paid and discharged. However, this pledge does not preclude an alteration, impairment, or limitation if adequate provision is made by law for the protection of the holders of the bonds. The Guaranty Act further provides that (i) the guaranty of the State does not extend to the payment of any redemption premium due on any bonds guaranteed under the Guaranty Act and (ii) bonds which are guaranteed by the State for which payment is provided by the deposit of direct obligations of the United States government under the provisions of the Refunding Bond Act, Title 11, Chapter 27, Utah Code, will no longer be secured by the State s guaranty subsequent to such provision for payment. This is likely to occur only if such bonds are refunded in advance of their maturity. In such an event, such bonds would then be secured solely by the obligations pledged for their payment and not by the State s guaranty. Guaranty Procedures Under the Guaranty Act, the Business Administrator of the Board (the Business Administrator ) is required to transfer moneys sufficient for scheduled debt service payments on the 2013 Bonds to the Pay- 6

13 ing Agent at least 15 days before any principal or interest payment date for the 2013 Bonds. If the Business Administrator is unable to transfer the scheduled debt service payment to the Paying Agent at least 15 days before the payment date, the Business Administrator must immediately notify the Paying Agent and the Utah State Treasurer (the State Treasurer ) by (i) telephone and (ii) a writing sent by (a) facsimile transmission and (b) first class United States mail. In addition, if the Paying Agent has not received the scheduled debt service payment at least 15 days prior to the scheduled debt service payment date for the 2013 Bonds, then the Paying Agent must at least 10 days before the scheduled debt service payment notify the State Treasurer of that failure by (i) telephone and (ii) a writing sent by (a) facsimile transmission and (b) first class United States mail. The Guaranty Act further provides that if sufficient moneys to pay the scheduled debt service payment have not been transferred to the Paying Agent, then the State Treasurer shall, on or before the scheduled payment date, transfer sufficient moneys to the Paying Agent to make the scheduled debt service payment. Payment by the State of a debt service payment on the 2013 Bonds discharges the obligation of the Board to the bondholders for that payment, to the extent of the State s payment, and transfers the Board s obligation for that payment to the State. In the event the State is called upon to make payment of principal of or interest on the 2013 Bonds on behalf of the Board, the State will use cash on hand (or from other legally available moneys) to make the payment. Under the Guaranty Act, the State Treasurer is required to immediately intercept any payments from the Uniform School Fund or from any other source of operating moneys provided by the State to the Board. The intercepted payments will be used to reimburse the State until all obligations of the Board to the State, including interest and penalties, are paid in full. The State does not currently expect to have to advance moneys to the Board pursuant to its guaranty. If, however, at the time the State is required to make a debt service payment under its guaranty on behalf of the Board, sufficient moneys are not on hand and available for that purpose, then the Guaranty Act provides that the State may seek a short term loan from the Permanent School Fund sufficient to make the required payment (the Permanent School Fund is not required to make such a loan) or issue short term State debt in the form of general obligation notes as provided in the Guaranty Act. The provisions of the Guaranty Act relating to short term debt provide that such debt will carry the full faith and credit of the State and will be issued with a maturity of not more than 18 months so that the State could, if necessary, obtain liquidity financing on short notice. Under the State Constitution, debt incurred for this purpose does not count toward the constitutional debt limit of the State. As of the date of this OFFICIAL STATEMENT, the State has guaranteed the following (statistics include this issuer but not this bond issue) under the Guaranty Act: Number of school districts (out of 41 school districts in the State) Number of bond issues Aggregate total principal amount outstanding within the State s Fiscal Year $2,821,999,722 The approximate aggregate total annual principal and interest payments (interest payments include anticipated federal interest subsidies on Build America Bonds and Qualified School Construction Bonds ) due on bonds guaranteed by the State under the Program during Fiscal Years 2013 through 2018, inclusive, is as follows (currently, the Program s annual principal and interest payments extend to Fiscal Year 2033): Fiscal Year $330,301,495 Fiscal Year ,889,322 Fiscal Year ,107,719 Fiscal Year ,979,595 Fiscal Year ,791,396 Fiscal Year ,384,766 (Source: Zions Bank Public Finance.) 7

14 Purpose Of The Guaranty The Guaranty Act is for the protection of the bondholders. Ultimate liability for the payment of the 2013 Bonds remains with the Board. Accordingly, the Guaranty Act contains provisions, including interception of State aid to the Board, possible action to compel levy of a tax sufficient to reimburse the State for any payments made to bondholders pursuant to its guaranty and various oversight provisions to assure that the Board, and not the State, will ultimately be responsible for debt service on the 2013 Bonds. The Guaranty Act also charges the State Superintendent of Public Instruction with the responsibility to monitor and evaluate the fiscal solvency of each school board under the Program. He or she must immediately report to the Governor and the State Treasurer any circumstances suggesting that a school district will be unable to timely meet its debt service obligations and recommend a course of remedial action. Since the Guaranty Act s inception in January 1997, the State has not been called upon to pay the principal of and interest on any bonds guaranteed under the Guaranty Act. State Of Utah Financial And Operating Information The Comprehensive Annual Financial Report of the State for Fiscal Year 2012 (the State CAFR ), its most recent official statements and continuing disclosure information for its general obligation and lease revenue bond debt, and the Master Agreement, are currently on file with EMMA. The financial and operating information with respect to the State contained in the State CAFR, such official statements and continuing disclosure information, and the Master Agreement are hereby included by reference in this OFFICIAL STATEMENT; provided, however, the Board has not reviewed or approved and taken the responsibility for such financial and operating information incorporated herein by reference. The State CAFR and the most current continuing disclosure information may be obtained on the internet at the State Division of Finance s home page and on EMMA. Additionally, the State s most recent official statements for its general obligation and lease revenue bonds may be found on EMMA. Such information contained on EMMA shall not be considered to be a part of this OFFICIAL STATEMENT and is not provided in connection with the offering of the 2013 Bonds. As of the date of this OFFICIAL STATEMENT, the outstanding general obligation bonds of the State are rated AAA by Fitch Ratings ( Fitch ), Aaa by Moody s Investors Service, Inc. ( Moody s ), and AAA by Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ). General THE 2013 BONDS The 2013 Bonds will be dated the Dated Date and will mature on June 15 of the years and in the amounts as set forth on the inside cover page of this OFFICIAL STATEMENT. The 2013 Bonds will bear interest from their Dated Date at the rates set forth on the inside cover page of this OFFICIAL STATEMENT. Interest on the 2013 Bonds is payable semiannually on each June 15 and December 15, commencing December 15, Interest on the 2013 Bonds will be computed on the basis of a 360 day year comprised of 12, 30 day months. U.S. Bank is the Bond Registrar (the initial Bond Registrar ) and Paying Agent for the 2013 Bonds under the Resolution. The 2013 Bonds will be issued as fully registered bonds, initially in book entry form, in the denomination of $5,000 or any whole multiple thereof, not exceeding the amount of each maturity. 8

15 The 2013 Bonds are being issued within the constitutional debt limit imposed on boards of education of school districts in the State. See DEBT STRUCTURE OF LOGAN CITY SCHOOL DISTRICT, UTAH General Obligation Legal Debt Limit And Additional Debt Incurring Capacity below. Plan Of Refunding For The 2013 Bonds The Board has previously issued its $9,105,000 (original principal amount) General Obligation School Building and Refunding Bonds (Utah School Bond Guaranty Program), Series 2003, dated February 15, 2003, currently outstanding in the aggregate principal amount of $6,535,000 (the 2003 Bonds ) the original proceeds were used by the Board for the acquisition, construction, and renovation of school buildings within the District and the refunding of prior general obligation bonds issued by the Board. Proceeds from the 2013 Bonds, together with other legally available moneys, in the aggregate amount of $6,612, will be used to pay principal of and interest on all of the callable portion of the 2003 Bonds maturing on and after June 15, 2014 (the 2003 Refunded Bonds ), at a redemption price of 100% of the principal amount thereof, on June 15, 2013 (the 2003 Redemption Date ). The 2003 Refunded Bonds mature on the dates and in the amounts, and bear interest at the rates, as follows: Scheduled Maturity Redemption CUSIP Principal Interest Redemption (June 15) Date Amount Rate Price June 15, 2013 GV0 $ 70, % 100% June 15, 2013 GW8 70, June 15, 2013 GX6 1,095, June 15, 2013 GY4 1,140, June 15, 2013 GZ1 2,015, June 15, 2013 HA5 2,095, Totals... $6,485,000 Sources And Uses Of Funds The proceeds from the sale of the 2013 Bonds, together with other legally available moneys, are estimated to be applied as set forth below: Sources: Uses: Par amount of 2013 Bonds... $6,350, Original issue premium , Equity contribution from District... 55, Total... $6,713, Refunding of the 2003 Refunded Bonds... $6,612, Costs of Issuance (1)... 58, Underwriter s discount... 42, Total... $6,713, (1) Includes legal fees, Financial Advisor fees, rating agency fees, Bond Registrar and Paying Agent fees, rounding amounts and other miscellaneous costs of issuance. 9

16 Security And Sources Of Payment The 2013 Bonds will be general obligations of the Board, payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the District, fully sufficient to pay the 2013 Bonds as to both principal and interest. See FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Property Tax Matters and STATE OF UTAH SCHOOL FINANCE below. Payment of the principal of and interest on the 2013 Bonds when due is guaranteed by the full faith and credit and unlimited ad valorem taxing power of the State under the provisions of the Guaranty Act. See STATE OF UTAH GUARANTY above. No Redemption The 2013 Bonds are not subject to optional redemption prior to maturity. Registration And Transfer; Record Date In the event the book entry system is discontinued, any 2013 Bond may, in accordance with its terms, be transferred, upon the registration books kept by the Bond Registrar, by the person in whose name it is registered, in person or by such owner s duly authorized attorney, upon surrender of such 2013 Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Bond Registrar. No transfer will be effective until entered on the registration books kept by the Bond Registrar. Whenever any 2013 Bond is surrendered for transfer, the Bond Registrar will authenticate and deliver a new fully registered 2013 Bond or 2013 Bonds of the same series, designation, maturity and interest rate and of authorized denominations duly executed by the Board, for a like aggregate principal amount. The 2013 Bonds may be exchanged at the office of the Bond Registrar for a like aggregate principal amount of fully registered 2013 Bonds of the same series, designation, maturity and interest rate of other authorized denominations. For every such exchange or transfer of the 2013 Bonds, the Bond Registrar must make a charge sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or transfer of the 2013 Bonds. The term Record Date means with respect to each interest payment date, the day that is 15 days preceding such interest payment date, or if such day is not a business day for the Bond Registrar, the next preceding day that is a business day for the Bond Registrar. The Bond Registrar will not be required to transfer or exchange any 2013 Bond after the Record Date with respect to any interest payment date to and including such interest payment date. The Board, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each 2013 Bond is registered in the registration books kept by the Bond Registrar as the holder and absolute owner thereof for the purpose of receiving payment of, or on account of, the principal and interest due thereon and for all other purposes whatsoever. Book Entry System DTC will act as securities depository for the 2013 Bonds. The 2013 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 2013 Bond certificate will be issued for each maturity of the 2013 Bonds, each in the aggregate principal amount of such 10

17 maturity, and will be deposited with DTC. See APPENDIX D BOOK ENTRY SYSTEM for a more detailed discussion of the book entry system and DTC. In the event the book entry system is discontinued, interest on the 2013 Bonds will be payable by check or draft of the Paying Agent, mailed to the registered owners thereof at the addresses shown on the registration books of the Board kept for that purpose by the Bond Registrar. The principal of all 2013 Bonds will be payable at the principal office of the Paying Agent. Debt Service On The 2013 Bonds The 2013 Bonds The 2013 Bonds Payment Date Principal Interest Period Total Fiscal Total December 15, $ 0.00 $ 63, $ 63, June 15, , , , $ 202, December 15, , , June 15, , , , , December 15, , , June 15, ,095, , ,157, ,219, December 15, , , June 15, ,120, , ,171, ,222, December 15, , , June 15, ,975, , ,014, ,054, December 15, , , June 15, ,015, , ,035, ,055, Totals... $6,350, $599, $6,949, General LOGAN CITY SCHOOL DISTRICT, UTAH The District, established in 1872, is located approximately 90 miles north of Salt Lake City, Utah and 20 miles south of the Utah Idaho border. The District shares approximately the same boundaries with those of the City. The City, incorporated in 1866, covers an area of approximately 13.5 square miles and is the county seat of the County. The City had 49,010 residents according to the U. S. Census Bureau 2011 estimate and ranked as the 12 th largest city (out of approximately 245 municipal entities) in the State. The City is home to USU which university has an estimated enrollment of approximately 28,775 students (students are not counted in population estimates). The County, incorporated in 1857, is located in the northeastern corner of the State, with Idaho to the north and Wyoming to the east, covers an area of 1,175 square miles. The 2011 estimated by the U. S. Census Bureau indicated that 114,699 people resided in the County (ranking the County as the 5 th largest county in the State out of 29 counties). Cache County School District, established in 1908, encompasses the remaining incorporated and unincorporated areas of the County. The District and Cache County School District are the only school districts serving the County. The District operates one high school, one satellite campus, one middle school, six elementary schools and special education one pre school (in partnership with USU). The October 1 enrollment of the District is as follows: 11

18 % Increase (Decrease) October 1 Total Over Prior Year 2013 (1)... 6, % ,063 (0.9) ,120 (0.2) , , , , ,641 (1.7) ,737 (1.4) ,821 (0.9) , (1) Projected. (Source: State Office of Education.) Form Of Government Board of Education. The determination of policies for the management of the District is the responsibility of the Board, the members of which are elected by the qualified electors within the District. The District is divided into five representative precincts, and a member of the Board is elected from each of the five precincts. Members serve four year terms, which are staggered to provide continuity. The Board is empowered, among other things, to: (i) implement core curriculum; (ii) administer tests which measure the progress of each student, and create plans to improve the student s progress; (iii) implement training programs for school administrators; (iv) purchase, sell and improve school sites, buildings and equipment; (v) construct and furnish school buildings; (vi) establish, locate and maintain elementary, secondary and applied technology schools; (vii) maintain school libraries; (viii) make and enforce all necessary rules and regulations for the control and management of the public schools in the District; (ix) adopt bylaws and rules for its own procedure; and (x) appoint a superintendent of schools, business administrator, and such officers or employees as are deemed necessary for the promotion of the interests of the schools. Superintendent. The Superintendent of Schools (the Superintendent ) is appointed by the Board and is responsible for the actual administration of the schools in the District. The powers and duties of the Superintendent are prescribed by the Board. Pursuant to State law, the Superintendent is required to prepare and submit to the Board an annual budget itemizing anticipated revenues and expenditures for the next school year. The Superintendent is appointed by the Board for a two year term and until a successor is appointed. Business Administrator. The Business Administrator is appointed by the Board and reports to the Superintendent. The duties of the Business Administrator, among others, are to (i) attend all meetings of the Board and keep a journal of the proceedings, (ii) countersign all warrants drawn upon the District treasury, (iii) keep an account and prepare and publish an annual statement of moneys received by the District and amounts paid out of the treasury, and (iv) have custody of the records and papers of the Board. The Business Administrator is the custodian of all moneys belonging to the District and is required to prepare and submit to the Board a monthly report of the receipts and disbursements of the Business Administrator s office. The Business Administrator is appointed by the Board for a two year term and until a successor is appointed. 12

19 Current members of the Board, the Superintendent, the Business Administrator, and other administrators and their respective terms in office are as follows: Years Expiration Office Person in Position of Current Term President... Kristie Cooley 6 January 2015 Vice President... Dr. James Blair 6 January 2015 Member... Lynn Hobbs 16 January 2017 Member... Ann T. Geary 16 January 2017 Member... Connie Morgan 1 January 2017 Superintendent... Marshal R. Garrett 7 Appointed/July 2015 Business Administrator... Zane Woolstenhulme 5 Appointed/July 2014 Employee Workforce And Retirement System; Post Employment Benefits Employee Workforce and Retirement System. As of Fiscal Year 2012 the District employs approximately 650 full time equivalent employees. The District is a member of the Utah State Retirement System. The District also participates in two defined contribution plans and two deferred compensation plans. For a detailed discussion regarding the District s retirement procedures see APPENDIX A BASIC FI- NANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012 Notes to Financial Statements Note 11. Retirement Plans. Post Employment Benefits. The District provides benefits in the form of early retirement and associated health insurance costs. As a result, early retirement costs and associated health benefits are accounted for as termination benefits. For Fiscal Year 2012, 41 employees participated in the early retirement program. For a discussion regarding the District s early retirement benefits and the projected calculations of these benefits see APPENDIX A BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012 Notes to Financial Statements Note 7. Long Term Obligations Post Retirement Benefits. These early retirement benefits have been accrued in government wide financial statements in accordance with GASB No. 47, Accounting for Termination Benefits. These benefits have been measured at the estimated present value of expected future benefit payments, discounted at 4%. The District s obligation for these early retirement benefits for Fiscal Year 2012 was approximately $2,431,947 and estimates its early retirement benefits for Fiscal Year 2013 to be approximately $510,000. The estimated net present value of early retirement benefits for Fiscal Year 2012 was $1,367,504. As of the date of this OFFICIAL STATEMENT, the Board currently does not expect its current or future policies regarding post employment benefits to have a negative financial impact on the District. Risk Management The District is a member of a risk pool where the State self insures portions of certain property and liability claims and purchases commercial insurance for claims above the self-insured retention amounts. This is done through the State s Administrative Services Risk Management Fund. The fund is maintained via premiums charged to its members State agencies, institutions of higher education, school districts and charter schools. As of Fiscal Year 2012, the Administrative Services Risk Management Fund contained $44.7 million in reserve available to pay for claims incurred. In the opinion of the State s Risk Manager, the available balance will be adequate to cover claims through Fiscal Year

20 For a general discussion of coverage claims see APPENDIX A BASIC FINANCIAL STATE- MENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012 Notes to Financial Statements Note 12. Public Entity Risk Pool. Investment Of Funds The State Money Management Act. The State Money Management Act, Title 51, Chapter 7 of the Utah Code (the Money Management Act ), governs and establishes criteria for the investment of all public funds held by public treasurers in the State. The Money Management Act provides a limited list of approved investments, including qualified in state and permitted out of state financial institutions, obligations of the State and political subdivisions of the State, U.S. Treasury and approved federal government agency and instrumentality securities, certain investment agreements and repurchase agreements and investments in corporate securities meeting certain ratings requirements. The Money Management Act establishes the State Money Management Council (the Money Management Council ) to exercise oversight of public deposits and investments. The Money Management Council is comprised of five members appointed by the Governor of the State for terms of four years, after consultation with the State Treasurer and with the advice and consent of the State Senate. The Board is currently complying with all of the provisions of the Money Management Act for all Board operating funds. The Utah Public Treasurers Investment Fund. A significant portion of Board funds may be invested in the Utah Public Treasurers Investment Fund ( PTIF ). The PTIF is a local government investment fund, established in 1981, and managed by the State Treasurer. All investments in the PTIF must comply with the Money Management Act and rules of the Money Management Council. The PTIF invests primarily in money market securities. Securities in the PTIF include certificates of deposit, commercial paper, short term corporate notes, obligations of the U.S. Treasury and securities of certain agencies of the federal government. By policy, the maximum weighted average adjusted life of the portfolio is not to exceed 90 days and the maximum final maturity of any security purchased by the PTIF is limited to five years. Safekeeping and audit controls for all investments owned by the PTIF must comply with the Money Management Act. All securities purchased are delivered versus payment to the custody of the State Treasurer or the State Treasurer s safekeeping bank, assuring a perfected interest in the securities. Securities owned by the PTIF are completely segregated from securities owned by the State. The State has no claim on assets owned by the PTIF except for any investment of State moneys in the PTIF. Deposits are not insured or otherwise guaranteed by the State. Investment activity of the State Treasurer in the management of the PTIF is reviewed monthly by the Money Management Council and is audited by the State Auditor. The PTIF is not rated. See APPENDIX A BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DIS- TRICT FOR FISCAL YEAR 2012 Notes to Financial Statements Note 2. Deposits and Investments. (The remainder of this page has been intentionally left blank.) 14

21 Population The following population information is provided for the City and the County. % % Change From Change From City Prior Period County Prior Period 2011 Estimate (1)... 49, % 114, % 2010 Census... 48, , Census... 42, , Census... 32, , Census... 26, , Census... 22, , Census... 18, , Census... 16, , Census... 11, , Census... 9, , Census... 9, , Census... 7, , (1) U.S. Bureau of the Census estimates for July 1, Percentage change is calculated from the 2010 Census. (Source: U.S. Department of Commerce, Bureau of the Census.) (The remainder of this page has been intentionally left blank.) 15

22 Employment, Income, Construction, And Sales Taxes Within Cache County; The City Of Logan And The State Of Utah Labor Force, Nonfarm Jobs and Wages within Cache County Calendar Year (1) % change from prior year 2012 (2) Civilian labor force 60,614 60,980 62,017 62,761 61,955 60,439 (0.6) (1.7) (1.2) Employed persons 57,933 58,036 58,469 59,175 60,293 59,110 (0.2) (0.7) (1.2) (1.9) 2.0 Unemployed persons 2,681 2,944 3,549 3,586 1,662 1,329 (8.9) (17.0) (1.0) Total nonfarm jobs 49,876 50,376 49,656 49,032 50,710 49,936 (1.0) (3.3) 1.5 Mining (22.2) Construction 2,148 2,068 2,350 2,289 2,797 3, (12.0) 2.7 (18.2) (7.6) Manufacturing 10,769 10,558 10,283 10,105 10,866 10, (7.0) 1.3 Trade/transportation/utilities 7,347 7,418 7,248 7,363 7,624 7,528 (1.0) 2.3 (1.6) (3.4) 1.3 Information , (47.7) Financial activities 1,458 1,415 1,470 1,561 1,652 1, (3.7) (5.8) (5.5) 11.8 Professional/business services 5,428 5,296 5,381 5,143 5,497 5, (1.6) 4.6 (6.4) 9.0 Education/health services 5,835 5,728 5,399 5,327 5,298 4, Leisure/hospitality 4,073 3,845 3,833 3,701 3,594 3, Other services. 1,290 1,020 1,027-1,079 1, (0.7) - - (2.9) Government 11,122 12,353 12,048 11,880 11,719 11,382 (10.0) Total payroll (in $1,000 s).. $ 372,551 $ 1,531,301 $ 1,482,885 $ 1,414,431 $ 1,448,912 $ 1,348,528 (75.7) (2.4) 7.4 Average monthly wage $ 2,490 $ 2,533 $ 2,488 $ 2,404 $ 2,381 $ 2,250 (1.7) Average employment 49,876 50,369 49,666 49,031 50,709 49,936 (1.0) (3.3) 1.5 Establishments 3,198 3,205 3,181 3,220 3,262 3,209 (0.2) 0.8 (1.2) (1.3) 1.7 Personal Income; Per Capital Personal Income; Median Household Income within Cache County and the State of Utah Calendar Year (3) % change from prior year Total Personal Income (in $1,000 s): Cache County na $ 3,169,251 $ 3,042,447 $ 2,923,011 $ 2,993,410 $ 2,708, (2.4) 10.5 State of Utah... $ 98,797,168 94,401,070 89,152,008 86,544,337 90,610,323 85,105, (4.5) 6.5 Total Per Capita Personal Income (in $): Cache County na 27,631 26,847 26,503 28,022 26, (5.4) 7.2 State of Utah... 34,601 33,509 32,121 31,778 34,025 32, (6.6) 3.9 Median Household Income (in $): Cache County na 47,589 47,367 47,064 50,023 46, (5.9) 6.7 State of Utah... na 55,802 54,740 55,183 56,820 55, (0.8) (2.9) 2.9 (1) Utah Department of Workforce Services. (2) Preliminary and subject to change. Information is from Third Quarter; July through September Civilian labor force information is the annual average for (3) U.S. Department of Commerce; Bureau of Economic Analysis and U.S. Census Bureau. (Source: Utah State Tax Commission.) 16

23 Employment, Income, Construction, And Sales Taxes Within Cache County; The City Of Logan And The State Of Utah continued Construction within the City of Logan (1) Calendar Year % change from prior year Number new dwelling units (70.8) 99.3 (27.1) (33.7) New (in $1,000 s): Residential value $ 18,473.8 $ 11,567.2 $ 22,549.5 $ 18,745.1 $ 22,784.2 $ 35, (48.7) 20.3 (17.7) (36.7) Non residential value 25, , , , , , (40.8) (66.5) (57.1) Additions, alterations, repairs (in $1,000 s): Residential value 1, , , , , ,751.3 (26.9) (36.6) 65.3 (30.9) 21.9 Non residential value 15, , , , , ,747.9 (4.1) 85.2 (36.8) 8.6 (7.4) Total construction value (in $1,000 s) $ 60,850.1 $ 37,143.9 $ 47,003.6 $ 40,265.5 $ 56,245.1 $ 94, (21.0) 16.7 (28.4) (40.7) Sales Taxes Within Cache County, the City of Logan and the State of Utah (2) Calendar Year % change from prior year Gross Taxable Sales (in $1,000 s): City of Logan $ 835,742 $ 818,855 $ 927,866 $ 969,118 $ 782,353 $ 736, (11.7) (4.3) Cache County 1,338,548 1,324,010 1,409,836 1,520,983 1,375,410 1,275, (6.1) (7.3) State of Utah.. 44,335,559 41,907,568 41,924,222 47,383,203 47,690,034 44,795, (0.0) (11.5) (0.6) 6.5 Fiscal Year % change from prior year Local Sales and Use Tax Distribution: City of Logan $ 7,900,193 $ 7,549,571 $ 7,217,540 $ 7,691,554 $ 8,369,057 $ 8,222, (6.2) (8.1) 1.8 Cache County (and all cities) 15,424,435 14,834,556 14,073,704 15,067,625 16,031,644 15,208, (6.6) (6.0) 5.4 (1) University of Utah Bureau of Economic and Business Research, Utah Construction Report. (2) Utah State Tax Commission. 17

24 Largest Employers The following is a list of the largest employers in the City and County with employment over 250 individuals. Firm/Location Business Employees Utah State University (Logan)... Education services 6,000 8,000 Icon Main Plant (Logan)... Manufacturing 1,000 2,000 Intermountain Health Care (Logan)... Health Care and social assistance 1,000 2,000 Utah State University (Logan)... Public administration 750 1,500 Logan City School District (Logan)... Education services 555 1,210 Intermountain Employment Service (Logan)... Admin., support, waste management, remediation 500 1,000 Schreiber Foods (Logan)... Manufacturing 500 1,000 Wal Mart Associates, Inc. (Logan)... Professional, scientific and technical services 500 1,000 Bridgerland Applied Tech Center (Logan)... Education services Cache Valley Specialty Hospital (Logan)... Health Care and social assistance Campbell Scientific (Logan)... Manufacturing Convergys Customer Management (Logan)... Admin., support, waste management, remediation Gossner Foods, Inc. (Logan)... Manufacturing Hyclone Laboratories (Logan)... Manufacturing Information Alliance (Logan)... Professional, scientific and technical services Inovar Holdings (Logan)... Manufacturing Moore Wallace North American (Logan)... Manufacturing North Eastern Services (Logan)... Health Care and social assistance Space Dynamics Laboratory (Logan)... Professional, scientific and technical services Sunshine Terrace Foundation (Logan)... Health Care and social assistance Survey Sampling International (Logan)... Professional, scientific and technical services TTM Printed Circuit Group (Logan)... Professional, scientific and technical services Yesco Electronics LLC (Logan)... Manufacturing Cache County School District (North Logan).. Education services 1,775 3,950 Swift Beef Company (Hyrum)... Manufacturing 1,000 2,000 Schreiber Foods (Smithfield)... Manufacturing Pepperidge Farm Incorporated (Richmond)... Manufacturing (Source: Utah Department of Workforce Services. Updated April 2012, reflecting information as of September 2011.) (The remainder of this page has been intentionally left blank.) 18

25 Rate Of Unemployment Annual Average Cache State United Year County of Utah States 2013 (1) % 4.7% 7.6% (1) Preliminary, subject to change. As of April 2013 seasonally adjusted. (Source: Utah Department of Workforce Services.) (The remainder of this page has been intentionally left blank.) 19

26 DEBT STRUCTURE OF LOGAN CITY SCHOOL DISTRICT, UTAH Outstanding General Obligation Bonded Indebtedness Original Current Principal Final Principal Series (1) Purpose Amount Maturity Date Outstanding 2013 (a)... Refunding $ 6,350,000 June 15, 2019 $ 6,350, Refunding 12,050,000 June 15, ,445, (2)... Building and refunding 9,105,000 June 15, 2013 (3) 50,000 Total direct general obligation debt (4)... $12,845,000 (a) For purposes of this OFFICIAL STATEMENT, the 2013 Bonds will be considered issued and outstanding. (1) All outstanding bonds rated Aaa (State of Utah Guaranty; underlying Aa3 ) by Moody s, as of the date of this OFFICIAL STATMENT. (2) Portions of this bond were refunded by the 2013 Bonds. (3) Final maturity date after portions of these bonds were refunded by the 2013 Bonds. (4) For accounting purposes, the outstanding general obligation debt as shown above is increased by the premium associated with debt issued and reduced by deferred amounts on refundings that are reported in the long term debt notes of the Board s financial statements. The total unamortized premium was $150,300 and the total deferred amount was $234,763 (as of June 30, 2012), and together with current outstanding direct debt of $12,845,000, results in total outstanding net debt of $12,760,537. Municipal Building Authority of Logan City School District, Utah The Board created the Municipal Building Authority of Logan City School District, Utah (the Authority ) as a nonprofit corporation currently operating pursuant to the provisions of the Utah Revised Nonprofit Corporation Act, Title 16, Chapter 6a, Utah Code (the Nonprofit Corporation Act ) and the Local Building Authority Act, Title 17D, Chapter 2, Utah Code. The Authority is to be of perpetual duration as set forth in its Articles of Incorporation. The Authority at the present time has no full time employees or other personnel other than its governing board as described below. The Authority has no property, money or other assets, except for the projects that are or have been constructed by the Authority. The principal place of business of the Authority is at the Board offices. Corporate And Statutory Powers. The Authority has been incorporated for the purpose of acquiring, improving or extending one or more projects and financing their costs on behalf of the Board in accordance with the procedures and subject to the limitations of State law, in order to accomplish the public purposes for which the Board exists. Organization. According to the By Laws of the Authority, the affairs of the Authority are managed by a Board of Trustees (the Board of Trustees ). The Board of Trustees consists of five members of the Board, as may from time to time serve. Each Trustee serves on the Board of Trustees until death, incapacity or removal from the Board. Whenever a Trustee shall cease to be a member of the Board, the successor, upon the election and qualifying for office, thereupon becomes a Trustee of the Authority. Trustees may be removed and replaced by the Board at any time at its discretion. Debt Issuance. The Authority s debt does not constitute debt within the meaning of any constitutional provision or statutory limitation which is applicable to the Board. In 2008, the Authority issued $6,906,000, Lease Revenue Bonds, Series 2008 (the 2008 MBA Bonds ), which bonds were issued for the purpose of financing the costs of acquiring, constructing and 20

27 equipping a new elementary school and related improvements (the 2008 Project ); paying capitalized interest on the 2008 MBA Bonds during construction of the 2008 Project; and paying the costs associated with the issuance of the 2008 MBA Bonds. Original Current Principal Final Principal Series Purpose Amount Maturity Date Outstanding 2008 (1)... Building (elementary) $6,906,000 April 1, 2025 (2) $4,342,000 (1) Not rated. No rating applied for. Private placement. (2) The Authority has been calling and retiring certain principal amounts each year. The original maturity final maturity date was April 1, Lease Rental Payments and Agreements with the Board. The land on which the 2008 Project is constructed (the School Site ) in owned by the Board and the Board has leased the School Site to the Authority pursuant to a ground lease agreement. Under a master lease agreement, the Board has agreed to make payments in stated amounts which are sufficient to pay interest on, and the principal amount of, the 2008 MBA Bonds coming due in each year (collectively, the Base Rentals ) to the Authority, but only if and to the extent that the Board annually appropriates funds sufficient to pay the Base Rentals coming due during each succeeding renewal term (as defined under the master lease) plus such additional amounts (the Additional Rentals ) as are necessary to operate and maintain the 2008 Project and pay certain other amounts during such period. The master lease specifically provides that the Board shall not be required to appropriate any money to pay any Base Rentals or Additional Rentals (collectively, the Rentals ) and that the Board shall not be obligated to pay such Rentals except to the extent appropriated. Other Financial Considerations Other than the Board s general obligation bonds (and the Authority s outstanding lease revenue bonds) the Board has no other financial debt obligations. (The remainder of this page has been intentionally left blank.) 21

28 Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year Fiscal Year Series 2013 Series 2004 Series 2003 Total Ending $6,350,000 $12,050,000 $9,105,000 Total Total Total Debt June 30 Principal Interest Principal Interest Principal Interest Principal Interest Service 2012 $ 0 $ 0 $ 1,530,000 $ 311,350 $ 55,000 $ 259,455 $ 1,585,000 $ 570,805 $ 2,155, ,590, ,800 50, ,650 1,640, ,450 2,027, , ,353 1,635, , (1) 1,710, ,553 2,031, , ,500 1,700, , (1) 1,770, ,300 2,024, ,095, , ,000 60, (1) 1,840, ,900 2,024, ,120, , ,000 31, (1) 1,895, ,200 2,028, ,975,000 79, (1) 1,975,000 79,800 2,054, ,015,000 40, (1) 2,015,000 40,300 2,055,300 Totals $ 6,350,000 $ 599,253 $ 7,975,000 $ 983,950 $ 105,000 $ 389,105 $ 14,430,000 $ 1,972,308 $ 16,402,308 (1) Principal and interest will be refunded by the 2013 Bonds. 22

29 Debt Service Schedule Of The Municipal Building Authority Of Logan City School District By Fiscal Year Fiscal Year Series 2008 Total Ending $6,906,000 Debt June 30 Principal Interest Service 2012 $ 262,000 $ 219,948 $ 481, , , , , , , , , , , , , , , , , , , , , , , , , ,000 88, , ,000 71, , ,000 54, , ,000 36, , ,000 17, ,846 Totals $ 4,877,000 $ 1,725,266 $ 6,602,266 23

30 Overlapping And Underlying General Obligation Debt Entity s 2012 Board s Board s General Board s Taxable Portion of Tax- Per- Obligation Portion of Taxing Entity Value (1) able Value centage Debt G.O. Debt Overlapping: State of Utah... $191,276,334,459 $2,110,748, % $3,225,435,000 $35,479,785 Logan City... 2,200,400,267 2,110,748, ,920,000 3,759,280 Total overlapping... 39,239,065 Underlying: Total underlying... 0 Total overlapping and underlying general obligation debt... $39,239,065 Total overlapping general obligation debt (excluding the State) (2)... $ 3,759,280 Total direct general obligation bonded indebtedness... 12,845,000 Total direct and overlapping general obligation debt (excluding the State) (2)... $16,604,280 This table excludes any additional principal amounts attributable to unamortized original issue bond premium and deferred amount on refunding. (1) Preliminary and subject to change. Taxable value used in this table excludes the taxable value used to determine uniform fees on tangible personal property. (2) The State s general obligation debt is not included in overlapping debt because the State currently levies no property tax for payment of general obligation bonds. Debt Ratios The following table sets forth the ratios of general obligation debt (excluding any additional principal amounts attributable to unamortized original issue bond premium) that is expected to be paid from taxes levied specifically for such debt and not from other revenues over the taxable value of property within the District, the estimated market value of such property and the population of the District. The State s general obligation debt is not included in the debt ratios because the State currently levies no property tax for payment of general obligation debt. To 2012 To 2012 To 2011 Estimated Estimated Population Taxable Market Estimate Per Value (1) Value (2) Capita (3) Direct General Obligation Debt % 0.44% $262 Direct and Overlapping General Obligation Debt (1) Based on an estimated 2012 Taxable Value of $2,110,748,536, which value excludes the taxable value used to determine uniform fees on tangible personal property. (2) Based on an estimated 2012 Market Value of $2,891,744,570, which value excludes the taxable value used to determine uniform fees on tangible personal property. (3) Based on 2011 population estimate of 49,010 by the U.S. Census Bureau. 24

31 See FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Property Tax Matters Uniform Fees and Taxable, Fair Market And Market Value Of Property Within The District. General Obligation Legal Debt Limit And Additional Debt Incurring Capacity The general obligation indebtedness of the Board is limited by State law to 4% of the fair market value of taxable property in the District. The legal debt limit and additional debt incurring capacity of the Board (after the issuance of the 2013 Bonds and including the refunding of the 2003 Refunded Bonds) are based on the estimated fair market value for 2012 and the calculated valuation value from 2011 uniform fees, and are calculated as follows: Estimated 2012 Fair Market Value... $2,891,744, Valuation from Uniform Fees (1)... 77,739,687 Estimated 2012 Fair Market Value for Debt Incurring Capacity... $2,969,484,257 Fair Market Value for Debt Incurring Capacity times 4% (the Debt Limit )... $118,779,370 Less: current outstanding general obligation debt (2)... (12,760,537) Estimated additional debt incurring capacity... $106,018,833 (1) Final 2012 information for uniform fees is not available. For debt incurring capacity only, in computing the fair market value of taxable property in the District, the value of all motor vehicles and state assessed commercial vehicles (which value is determined by dividing the uniform fee revenue by 1.5%) will be included as a part of the fair market value of the taxable property in the District. (2) For legal debt limit purposes, the outstanding general obligation debt as shown above is increased by the premium associated with debt issued and reduced by deferred amounts on refundings that are reported in the long term debt notes of the Board s financial statements. The total unamortized premium was $150,300 and the total deferred amount was $234,763 (as of June 30, 2012), and together with current outstanding debt of $12,845,000, results in total outstanding net debt of $12,760,537. No Defaulted Obligations The Board has never failed to pay principal of and interest on its financial obligations when due. FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Fund Structure; Accounting Basis The accounting policies of the District conform to all generally accepted accounting principles for governmental units in general and the State s school districts in particular. The accounts of the District are organized on the basis of funds or groups of accounts, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self balancing accounts which comprise its assets, liabilities, fund balances, revenues and expenditures. District resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped by type in the combined financial statements. See BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies. 25

32 Budgets And Budgetary Accounting The District operates within the budget requirements for school districts as specified by State law and as interpreted by the State Superintendent of Public Instruction. The Superintendent of each school district is the budget officer of each respective district. For the fiscal year beginning July 1, the Business Administrator under the supervision of the Superintendent prepares a tentative budget for all funds which is presented to the Board by the Superintendent on or before June 1. State law requires budgets for all governmental fund types and the Board has adopted budgets for those funds. After a public hearing has been held, the Board, by resolution, legally adopts the final budget prior to June 22. If the tax rate in the proposed budget exceeds the certified tax rate, the Board shall, if required by State law, comply with the notice and hearing requirements contained in the Property Tax Act, Chapter 2, Title 59, Utah Code (the Property Tax Act ) in adopting the budget. See in this section Tax Levy And Collection and Public Hearing On Certain Tax Increases below. Once adopted, the budget can be amended by subsequent Board action. Reductions in appropriations can be approved by the Board upon recommendation of the Superintendent; however, increased appropriations require a public hearing prior to amending the budget. Adjustments in estimated revenue and revisions of appropriations due to operational changes in categorical program funding are integrated into the amended budget approved by the Board. A final amended budget is legally approved by the Board prior to the end of the fiscal year. The total budgeted expenditures of a given fund may not exceed the revenues expected to be received for the fiscal year plus the fund balance. Control of the budget is exercised at the program level. The General Fund, the Capital Projects Fund, the Non K 12 Programs, and the Food Service budgets are prepared using the modified accrual basis of accounting, adjusted for encumbrances. Unencumbered appropriations lapse at year end. Undistributed Reserve in School Board Budget. A local school board may adopt a budget with an undistributed reserve. The reserve may not exceed 5% of the maintenance and operation budget adopted by each local board in accordance with a scale developed by the State Board of Education. The scale is based on the size of the school district s budget. Each local board may appropriate all or a part of the undistributed reserve made to any expenditure classification in the maintenance and operation budget by written resolution adopted by majority vote of such board setting forth the reasons for the appropriation. The board may not use undistributed reserves in the negotiation or settlement of contract salaries for school district employees. Limits on Appropriations Estimated Expendable Revenue. A local school board may not make any appropriation in excess of its estimated expendable revenue, including undistributed reserves, for the following fiscal year. In determining the estimated expendable revenue, any existing deficits arising through excessive expenditures from former years are deducted from the estimated revenue for the ensuing year to the extent of at least 10% of the entire tax revenue of the school district for the previous year. 26

33 In the event of financial hardships, a local board may deduct from the estimated expendable revenue for the ensuing year, by fund, at least 25% of the deficit amount. All estimated balances available for appropriations at the end of the fiscal year shall revert to the funds from which they were appropriated and shall be fund balances available for appropriation in the budget of the following year. A local school board may reduce a budget appropriation at its regular meeting if notice of the proposed action is given to all board members and the district superintendent at least one week prior to the meeting. An increase in an appropriation may not be made by a local school board unless the following steps are taken: (a) the local school board receives a written request from the district superintendent that sets forth the reasons for the proposed increase; (b) notice of the request is published in a newspaper of general circulation within the school district at least one week prior to a local school board meeting at which the request will be considered; and (c) the local school board holds a public hearing on the request prior to the board s acting on the request. School District Interfund Transfers. The State Board of Education may authorize school district interfund transfers for financially distressed districts if the State Board of Education determines the following: (a) the school district has a significant deficit in its maintenance and operations fund which has resulted from circumstances not subject to the administrative decisions of the school district and which cannot be reasonably reduced under Section 53A of the Utah Code; and (b) without the transfer, the school district will not be capable of meeting statewide educational standards adopted by the State Board of Education. Adoption of Ad Valorem Tax Levy. The governing body of each taxing entity shall, before June 22 of each year, adopt a proposed or, if the tax rate is not more than the certified tax rate, a final tax rate for the taxing entity. The governing body shall report the rate and levy, and any other information prescribed by rules of the county commission for the preparation, review, and certification of the rate, to the county auditor of the county in which the taxing entity is located. Management s Discussion And Analysis The administration of the District prepared a narrative discussion, overview, and analysis of the financial activities of the District for Fiscal Year For the complete discussion see APPENDIX A BASIC FINANCIAL REPORT OF LOGAN CITY SCHOOL DISTRICT, UTAH FOR FISCAL YEAR 2012 Management s Discussion and Analysis (after the Independent Auditor s Report). The Management s Discussion and Analysis for Fiscal Year 2013 is not available. Under State law the Board must complete its annual financial report for Fiscal Year 2013 by November 30, Financial Summaries The summaries contained herein were extracted from the District s financial statements. The summaries have not been audited. See APPENDIX A BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR

34 Logan City School District Statement of Net Assets Primary Government (This summary has not been audited) June Assets: Equity in pooled cash and investments $ 9,992,825 $ 6,592,277 $ 9,668,324 $ 8,720,203 $ 10,805,806 Restricted cash and cash equivalents 536, ,694 5,167,123 Receivables: Taxes 16,470,878 16,573,909 14,910,603 15,171,019 12,813,018 Intergovernmental 2,718,918 4,100,878 3,626,477 3,487,089 1,531,749 Prepaid expenses 270, , , , ,384 Inventories 73,414 88,130 42, ,183 84,648 Bond issuance costs, net 135, , , , ,656 Capital assets: Land 3,936,238 3,936,238 Construction in progress 317,963 Other capital assets, net of depreciation 43,776,154 45,435,150 46,936,805 48,414,456 45,165,153 Land and construction in progress 3,936,238 3,905,094 6,169,558 Total assets $ 77,374,659 $ 77,564,240 $ 80,199,086 $ 80,893,012 $ 82,251,095 Liabilities: Accounts payable and accrued expenses $ 3,722,369 $ 4,495,786 $ 3,647,142 $ 3,161,526 $ 3,264,627 Deferred revenue 14,547,847 14,073,268 13,377,179 13,249,171 12,312,255 Noncurrent liabilities: Due within one year 2,423,000 2,897,000 2,962,000 3,182,590 1,988,579 Due in more than one year 16,705,041 20,515,389 23,055,054 25,900,599 24,861,460 Total liabilities $ 37,398,257 $ 41,981,443 $ 43,041,375 $ 45,493,886 $ 42,426,921 Net Assets: Invested in capital assets, net of related debt $ 30,087,627 $ 30,036,840 $ 28,720,785 $ 28,093,361 $ 24,670,328 Restricted for: Debt service 697, , , , ,997 Program expenditures 1,679,120 1,215,760 1,498,392 1,344, ,834 Transportation 859, ,952 Tort liability 27,091 80,827 Capital projects. 5,120,310 5,457,908 2,734,460 Unspent bond proceeds 5,167,123 Unrestricted... 6,624,900 3,062,973 1,290,353 (306,190) 5,305,462 Total net assets $ 39,976,402 $ 35,582,797 $ 37,157,711 $ 35,399,126 $ 39,824,204 (Source: Information taken from the District s basic financial statements. This summary itself has not been audited.) 28

35 Logan City School District Statement of Activities (1) Primary Government Governmental Activities (This summary has not been audited) Net (Expense) Revenue and Changes in Net Assets Fiscal Year Ended June Primary government activities: Instruction.. $ (22,014,403) $ (25,752,902) $ (23,360,035) $ (30,484,701) $ (29,001,229) Supporting services: Students (1,051,891) (1,425,070) (1,218,502) (332,529) (169,299) Instructional staff (1,773,626) (2,063,298) (1,705,965) (1,415,389) (1,332,590) District administration (515,812) (424,567) (507,789) (481,048) (437,643) School administration.. (1,958,560) (2,071,354) (2,268,321) (2,088,126) (1,916,658) Central services (1,133,752) (1,188,176) (1,476,419) (1,509,371) (854,139) Operation and maintenance of facilities (4,495,007) (5,027,971) (4,853,322) (4,432,082) (4,015,861) Student transportation (1,232,187) (1,161,493) (1,208,563) (1,163,039) (1,195,913) Non instructional (818,612) (895,031) (794,492) (928,269) (735,082) Community services (305,180) (342,204) (327,791) (271,736) (298,482) Food services (334,588) (176,959) 100, ,490 (39,852) Interest and fiscal charges... (873,732) (973,455) (1,046,126) (1,082,436) (862,635) Total school district (36,507,350) (41,502,480) (38,666,861) (44,025,236) (40,859,383) General revenues: Taxes 16,263,635 15,426,832 15,210,851 14,024,167 13,845,400 Federal and state revenues and contributions not restricted to specific purposes 23,755,669 23,445,613 24,104,553 24,932,437 26,175,638 Earnings on investments 218, , , , ,577 Miscellaneous 663, , , , ,305 Total general revenues 40,900,955 39,927,566 40,425,446 40,309,374 41,167,920 Change in net assets 4,393,605 (1,574,914) 1,758,585 (3,715,862) 308,537 Net assets previously reported 35,582,797 37,157,711 35,399,126 39,824,204 36,954,650 Prior period adjustment (709,216) 2,561,017 Net assets beginning, restated... 35,582,797 37,157,711 35,399,126 39,114,988 39,515,667 Net assets ending.. $ 39,976,402 $ 35,582,797 $ 37,157,711 $ 35,399,126 $ 39,824,204 (1) This report is presented is summary format concerning the single item of Net (Expense) Revenue and Changes in Net Assets and is not intended to be complete. For a detailed itemized report see LOGAN CITY SCHOOL DISTRICT FISCAL YEAR 2012 FINANCIAL REPORT Statement Of Activities Fiscal Year Ended June 30, 2012 below. (Source: Information taken from the District s basic financial statements. This summary itself has not been audited.) 29

36 Logan City School District Balance Sheet General (Maintenance and Operation) Fund (This summary has not been audited) Fiscal Year Ended June Assets: Equity in pooled cash and investments $ 5,234,921 $ 2,522,358 $ 2,551,918 $ 1,577,112 $ 3,601,745 Receivables: Taxes 9,920,389 9,153,334 8,300,982 6,476,679 5,232,465 Intergovernmental 2,549,856 3,823,815 3,331,048 3,322,663 1,422,421 Prepaid expenses 270, , , , ,384 Total assets $ 17,975,626 $ 15,870,959 $ 14,565,135 $ 11,737,543 $ 10,585,015 Liabilities: Accounts payable $ 3,443,928 $ 4,406,996 $ 3,524,218 $ 2,847,112 $ 2,036,098 Deferred revenue 9,399,308 8,322,083 7,995,423 5,909,180 5,147,740 Total liabilities 12,843,236 12,729,079 11,519,641 8,756,292 7,183,838 Fund balances: Nonspendable 270, ,452 Reserved for: Program expenditures 1,554,470 1,184,191 1,498,392 1,344, ,834 Transportation 859, , , , ,778 Tort liability 27,091 80,827 82, , ,074 Committed for: Undistributed reserve. 800, , , , ,000 Unreserved designated for programs 785,000 Unreserved designated for death benefit insurance. 100,000 Assigned. 1,385,310 Unassigned.. 235,116 19,458 27, , ,491 Total fund balance 5,132,390 3,141,880 3,045,494 2,981,251 3,401,177 Total liabilities and fund balances $ 17,975,626 $ 15,870,959 $ 14,565,135 $ 11,737,543 $ 10,585,015 (Source: Information taken from the District s basic financial statements. This summary itself has not been audited.) 30

37 Logan City School District Statement of Revenues, Expenditures and Changes in Fund Balances General (Maintenance and Operation) Fund (This summary has not been audited) Fiscal Year Ended June Revenues: Local sources: Taxes $ 8,930,758 $ 8,637,780 $ 6,392,217 $ 5,688,765 $ 5,742,847 Tuitions 51,144 78, , , ,309 Earnings on investments 214, , , , ,422 Local government units 12, , , ,658 Other local revenue 284, , ,986 10,937 54,063 State grants in aid 22,846,077 22,226,139 22,846,295 24,088,192 25,334,450 Federal revenues 5,066,728 5,678,881 5,950,857 6,297,744 3,929,617 Total revenues 37,407,337 37,312,530 36,168,635 36,977,981 36,040,708 Expenditures: Instruction 26,080,420 27,878,530 27,273,267 28,721,609 28,933,675 Support services: Students 1,765,397 1,956,585 1,757, , ,321 Instructional staff 1,677,174 1,964,834 1,607,525 1,232,689 1,265,913 District administration 491, , , , ,417 School administration 1,862,107 1,972,890 2,145,419 1,990,565 1,827,755 Central services 1,060,683 1,138,945 1,402,678 1,410, ,687 Operation and maintenance of facilities 2,474,653 2,662,000 2,754,570 1,684,188 1,999,855 Student transportation 1,232,187 1,161,493 1,208,563 1,188,476 1,320,300 Total expenditures 36,644,320 39,135,228 38,632,883 37,449,300 37,185,923 Revenues over (under) expenditures 763,017 (1,822,698) (2,464,248) (471,319) (1,145,215) Other financing sources (uses): Transfers in 1,269,585 1,962,756 2,528,491 51,393 Transfers out (42,092) (43,672) Total other financing sources (uses) 1,227,493 1,919,084 2,528,491 51,393 Net change in fund balances 1,990,510 96,386 64,243 (419,926) (1,145,215) Fund balances previously reported 3,141,880 3,045,494 2,981,251 3,401,177 3,642,021 Prior period adjustment 904,371 Fund balance, beginning of year, as restated 5,132,390 3,141,880 2,981,251 3,401,177 4,546,392 Fund balance, end of year $ 5,132,390 $ 3,141,880 $ 3,045,494 $ 2,981,251 $ 3,401,177 (Source: Information taken from the District s basic financial statements. This summary itself has not been audited.) 31

38 Tax Levy And Collection The Utah State Tax Commission (the State Tax Commission ) must assess all centrally assessed property (as defined under Property Tax Matters below) by May 1 of each year. County assessors must assess all locally assessed property (as defined under Property Tax Matters below) before May 22 of each year. The State Tax Commission apportions the value of centrally assessed property to the various taxing entities within each county and reports such values to county auditors before June 8. The governing body of each taxing entity must adopt a proposed tax rate or, if the tax rate is not more than the certified tax rate, a final tax rate before June 22. County auditors must forward to the State Tax Commission a statement prepared by the legislative body of each taxing entity showing the amount and purpose of each levy. Upon determination by the State Tax Commission that the tax levies comply with applicable law and do not exceed maximum permitted rates, the State Tax Commission notifies county auditors to implement the levies. If the State Tax Commission determines that a tax levy established by a taxing entity exceeds the maximum levy permitted by law, the State Tax Commission must lower the levy to the maximum levy permitted by law, notify the taxing entity that the rate has been lowered and notify the county auditor (of the county in which the taxing entity is located) to implement the rate established by the State Tax Commission. On or before July 22 of each year, the county auditors must mail to all owners of real estate shown on their assessment rolls notice of, among other things, the value of the property, itemized tax information for all taxing entities and the date their respective county boards of equalization will meet to hear complaints. Taxpayers owning property assessed by a county assessor may file an application within statutorily defined time limits based on the nature of the contest with the appropriate county board of equalization for the purpose of contesting the assessed valuation of their property. The county board of equalization must render a decision on each appeal in the time frame prescribed by the Property Tax Act. Under certain circumstances, the county board of equalization must hold a hearing regarding the application, at which the taxpayer has the burden of proving that the property sustained a decrease in fair market value. Decisions of the county board of equalization may be appealed to the State Tax Commission, which must decide all appeals relating to real property by March 1 of the following year. Owners of centrally assessed property, or any county with a showing of reasonable cause, may, on or before the later of June 1 or a day within 30 days of the date the notice of assessment is mailed by the State Tax Commission, apply to the State Tax Commission for a hearing to contest the assessment of centrally assessed property. The State Tax Commission must render a written decision within 120 days after the hearing is completed and all post hearing briefs are submitted. The county auditor makes a record of all changes, corrections and orders, and delivers before November 1 the corrected assessment rolls to the county treasurers. By November 1, each county treasurer furnishes each taxpayer a notice containing the kind and value of the property assessed to the taxpayer, the street address of the property, where applicable, the amount of the tax levied on the property and the year the property is subject to a detailed review. Taxes are due November 30 (and if a Saturday, Sunday or holiday, the next business day). Each county treasurer is responsible for collecting all taxes levied on real property within that county. There are no prior claims to such taxes. As taxes are collected, each county treasurer must pay to the State and each taxing entity within the county its proportionate share of the taxes, on or before the tenth day of each month. Delinquent taxes are subject to a penalty of 2.5% of the amount of the taxes or $10 whichever is greater. Unless the delinquent taxes and penalty are paid before January 31 of the following year, the amount of delinquent taxes and penalty bears interest at the federal funds rate target established by the Federal Open Market Committee plus 6% from the January 1 following the delinquency date until paid (provided that said interest may not be less than 7% nor more than 10%). If delinquent taxes have not been paid by March 15 following the lapse of four years from the delinquency date, the affected county advertises and sells the property at a final tax sale held in May or June of the fifth year after assessment. The process described above changes if a county or other taxing entity proposes a tax rate in excess of the certified tax rate (as described under Public Hearing On Certain Tax Increases below). If such an increase is proposed, the taxing entity must adopt a proposed tax rate before June 22. In addition, the 32

39 county auditor must include certain information in the notices to be mailed by July 22, as described in the second preceding paragraph, including information concerning the tax impact of the proposed increase on the property and the time and place of the public hearing described in Public Hearing On Certain Tax Increases below. In most cases, notice of the public hearing must also be advertised by publication. After the public hearing is held, the taxing entity may adopt a resolution levying a tax in excess of the certified tax rate. A resolution levying a tax in excess of the certified tax rate must be forwarded to the county auditor by August 17. The final tax notice is then mailed by November 1. Public Hearing On Certain Tax Increases Each taxing entity that proposes to levy a tax rate that exceeds the certified tax rate may do so, by resolution, only after holding a properly noticed public hearing. Generally, the certified tax rate is the rate necessary to generate the same property tax revenue that the taxing entity collected for the prior year, with certain exclusions. For purposes of calculating the certified tax rate, county auditors are to use the taxable value of property on the assessment rolls, exclusive of new growth. New growth is any increase in taxable value of the taxing entity from the previous calendar year to the current year less the amount of increase to locally assessed real property taxable values resulting from factoring, reappraisal, other adjustments, or changes in the method of apportioning taxable value. With certain exceptions, the certified tax rate for the minimum school levy, debt service voted on by the public and certain state and county assessing and collecting levies are the actual levies imposed for such purposes and no hearing is required for these levies. Among other requirements, on or before July 22 of the year in which such an increase is proposed, the county auditor must mail to all property owners a notice of the public hearing. In most cases, the taxing entity must advertise the notice of public hearing by publication in a newspaper. Such notices must state, among other things, the value of the property, the time and place of the public hearing, and the tax impact of the proposed increase. Property Tax Matters The Property Tax Act provides that all taxable property is required to be assessed and taxed at a uniform and equal rate on the basis of its fair market value as of January 1 of each year, unless otherwise provided by law. Fair market value is defined in the Property Tax Act as the amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Pursuant to an exemption for residential property provided for under the Property Tax Act and Article XIII of the State Constitution, the fair market value of residential property is reduced by 45%. The residential exemption is limited to one acre of land per residential unit and to one primary residence per household, except that an owner of multiple residential properties may exempt his or her primary residence and each residential property that is the primary residence of a tenant. The Property Tax Act provides that the State Tax Commission shall assess certain types of property ( centrally assessed property ), including (i) properties that operate as a unit across county lines that must be apportioned among more than one county or state, (ii) public utility (including railroad) properties, (iii) airline operating properties, (iv) geothermal resources and (v) mines, mining claims and appurtenant machinery, facilities and improvements. All other taxable property ( locally assessed property ) is required to be assessed by the county assessor of the county in which such locally assessed property is located. Each county assessor must update property values annually based upon a systematic review of current market data and must also complete a detailed review of property characteristics for each parcel of property at least once every five years. The Property Tax Act requires that the State Tax Commission conduct an annual investigation in each county to determine whether all property subject to taxation is on the assessment rolls and whether the property is being assessed at its fair market value. 33

40 The State Tax Commission and the county assessors utilize various valuation methods, as determined by statute, administrative regulation or accepted practice, to determine the fair market value of taxable property. Uniform Fees. An annual statewide uniform fee is levied on tangible personal property in lieu of the ad valorem tax. The uniform fee is based on the value of motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. The current uniform fee is established at 1.5% of the fair market value of motor vehicles that weigh 12,001 pounds or more, watercraft, recreational vehicles and all other tangible personal property required to be registered with the State, excluding exempt property such as aircraft and property subject to a fixed age based fee. Motor vehicles weighing 12,000 pounds or less and certain other vehicles are subject to an age based fee that is due each time the vehicle is registered. The revenues collected from the various uniform fees are distributed by the county to the taxing entity in which the property is located in the same proportion in which revenue collected from ad valorem real property is distributed. Historical Tax Rates Of The District Tax Rate (Fiscal Year) Maximum (a) Tax Rate (1) General Fund: Board Local Leeway Basic Program (2)... formula Voted Local Leeway (3) Recreation Special Transportation Government Immunity K 3 Reading Program Totals Capital Outlay: Capital Local (4) % of additional other Totals Debt Service (general obligation bonds): Debt Service (5)... none Judgment Recovery Levy (6)... none Total all funds (a) The State changed its accounting/funding classifications for school districts beginning in Fiscal Year (1) Maximum tax rate where applicable under current State law. (2) Set by law for the District s portion of the State Minimum School Program. (3) General maintenance and operation revenue. In the late 1970 s, District residents approved a Voted Leeway Program of not to exceed a tax rate. In November 1997, District residents approved an additional tax rate to the Voted Leeway Program (with a maximum total tax rate of ). The maximum tax rate may be exceeded in certain years based upon Utah State Tax Commission calculations. (4) Construction remodeling projects and purchase of school sites/equipment, etc. (5) This maximum limitation is not applicable to levies made to provide for payment of the principal of and interest on general obligation bonds authorized by vote of school district electors. (6) A judgment levy is levied for the purpose of collecting additional revenues. The Board has the legal right to levy a judgment levy in the succeeding tax year to make up for any tax revenue shortfall due to tax or revaluation judgment circumstances that the Board had no control over. (Source: Utah State Tax Commission.) 34

41 See STATE OF UTAH SCHOOL FINANCE below. Comparative Total Property Tax Rates Within Cache County Total Tax Rate Within Taxing Area (1) Tax Levying Entity Cache County School District: Amalga Town Clarkston Town Cornish Town Hyde Park City Hyrum City Lewiston City City of Logan Mendon City Millville City Newton Town Nibley City North Logan City Paradise Town Providence City Richmond City River Heights City Smithfield City Trenton Town Wellsville City Unincorporated Areas (2) Logan City School District: City of Logan (1) These tax rates represent a taxing district within the city or town with the highest combined total tax rates of all overlapping taxing districts. (2) These tax rates represent a taxing district within the unincorporated municipalities within the County with the highest combined total tax rates of all overlapping taxing districts. (Source: Utah State Tax Commission.) (The remainder of this page has been intentionally left blank.) 35

42 Taxable, Fair Market And Market Value Of Property Within The District % Change Fair Market/ % Change Taxable Over Market Over Year Value (1) Prior Year Value (2) Prior Year 2012 (3)... $2,110,748, % $2,891,744, % ,050,418,711 (0.1) 2,831,603,821 (0.7) ,052,483,462 (3.4) 2,852,978,319 (4.0) ,124,996, ,972,049, ,972,087, ,726,990, ,820,792, ,529,983, (1) Taxable valuation includes redevelopment agency valuation. The estimated redevelopment agency valuation for Calendar Year 2012 was approximately $250.7 million; Calendar Year 2011 was approximately $268.5 million; for Calendar Year 2010 was approximately $269.3 million; for Calendar Year 2009 was approximately $244.1 million; for Calendar Year 2008 was approximately $214.2 million; and for Calendar Year 2007 was approximately $176.6 million. (Source: Reports from the State Tax Commission.) (2) Estimated fair market values were calculated by dividing the taxable value of primary residential property by 55%, which eliminates the 45% exemption on primary residential property granted under the Property Tax Act. See Property Tax Matters above. (3) Preliminary; subject to change. (Source: Property Tax Division, Utah State Tax Commission (as to Taxable Value only.) See Historical Summaries Of Taxable Value Of Property below. (The remainder of this page has been intentionally left blank.) 36

43 Historical Summaries Of Taxable Values Of Property Taxable % of Taxable Taxable Taxable Taxable Set by State Tax Commission Value (1) T.V. Value Value Value Value (Centrally Assessed) Total centrally assessed $ 31,402, % $ 31,822,330 $ 31,821,125 $ 31,748,887 $ 32,165,369 Set by County Assessor (Locally Assessed) Real property: Primary residential 950,672, ,716, ,208,165 1,030,991, ,508,930 Other residential 9,610, ,998,490 7,165,745 6,208,240 5,573,565 Commercial and industrial 781,704, ,373, ,327, ,279, ,474,585 FAA 404, , , , ,615 Unimproved non FAA 77,551, ,342,345 72,044,700 82,081,190 77,173,325 Agricultural 653, , , , ,200 Total real property 1,820,597, ,768,463,625 1,763,765,730 1,831,576,070 1,663,942,220 Personal property (2): Primary mobile homes 3,877, ,065,736 4,174,438 4,294,927 4,149,775 Secondary mobile homes Other business personal 254,870, ,067, ,722, ,377, ,830,096 Total personal property 258,748, ,132, ,896, ,671, ,979,871 Total locally assessed 2,079,345, ,018,596,381 2,020,662,337 2,093,248,024 1,939,922,091 Total taxable value $ 2,110,748, % $ 2,050,418,711 $ 2,052,483,462 $ 2,124,996,911 $ 1,972,087,460 (1) Preliminary; subject to change. (2) Does not include taxable valuation associated with SCME (semi-conductor manfacturing equipment). (Source: Property Tax Division, Utah State Tax Commission.) 37

44 Tax Collection Record (4) Deliq., % of % of (1) Personal Current Total Tax (2) (3) Property Collec- Collec- Year Total Trea- Current and Miscel- Total tions to tions to End Taxes surer s Net Taxes Col- leous Col- Col- Net Taxes Net Taxes 12/31 Levied Relief Assessed lections lections lections Assessed Assessed 2012 * $15,197,193 $96,879 $15,100,314 $14,502,078 $796,609 $15,298, % 101.3% ,922, ,131 14,817,990 14,153, ,988 14,736, ,114,136 94,842 14,019,294 13,342, ,530 13,947, ,834,276 91,597 13,742,679 13,008, ,485 13,494, ,902,299 77,644 12,824,655 12,091, ,141 12,455, ,023,923 67,729 11,956,194 11,508, ,565 11,914, Ad valorem property taxes are due on November 30 th of each year. * Preliminary; subject to change. (1) In addition to the Total Collections indicated above, the District also collected Uniform Fees (fees in lieu payments) for tax year 2012 of $1,166,095; for tax year 2011 of $1,200,304; for tax year 2010 of $1,251,011; for tax year 2009 of $1,316,200; for tax year 2008 of $1,423,160; and for tax year 2007 of $1,369,725; from tax equivalent property associated with motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. (2) Excludes redevelopment agencies valuation. (3) Treasurer s Relief includes abatements established by statue to low income, elderly and for hardship situations. These Treasurer s Relief items are levied against the property, but are never collected and paid to the entity. (4) Delinquent Collections include interest; sales of real and personal property; and miscellaneous delinquent collections. (Source: Information taken from reports of the Utah State Tax Commission.) Some Of The Largest Taxpayers These taxpayers are within the City s boundaries (a small portion of the City s taxable valuation (approximately 4.1%) lies within Cache County School District). (The remainder of this page has been intentionally left blank.) 38

45 % of the 2011 District s 2011 Taxable Taxable Taxpayer Type of Business Value (1) Value Schreiber s Cheese... Manufacturing $ 69,046, % ICON Health and Fitness... Manufacturing 41,401, Cache Valley LLC... Real estate/buildings 32,351, Moore Business Communications... Printing 32,275, IHC Health Services/Women s Clinic... Health care 30,887, Thermo Fischer Scientific... Manufacturing 28,229, Wal Mart... Retail 19,873, Gossner Foods... Manufacturing 19,765, Riverwoods HRC LLC... Hotel 15,843, Wasatch Conservice Development... Management services 13,041, Totals... $302,716, % (1) Taxable Value used in this table excludes all tax equivalent property associated with motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. See in this section Taxable, Fair Market And Market Value Of Property above. (Source: City of Logan, Utah s 2012 CAFR.) Sources Of Funds STATE OF UTAH SCHOOL FINANCE Funding for schools in the State is provided from local school district sources consisting of property taxes imposed by the local school district ( Local District Funding ), State sources that are funded primarily by State imposed personal income taxes and corporate franchise taxes ( State Funding ) and federal sources ( Federal Funding ). For Fiscal Year 2012, approximately 48% of the District s funding was provided by State Funding, approximately 38% from Local District Funding and approximately 14% from Federal Funding. See APPENDIX A BASIC FINANCIAL REPORT OF LOGAN CITY SCHOOL DISTRICT, UTAH FOR FISCAL YEAR Local District Funding School districts are authorized by State law to levy taxes, certain of which require voter approval, on real property for various purposes. Funding for operation and maintenance is derived primarily through a minimum tax levy (the Minimum Tax Levy ) by each school district at a rate established each year by the State. Imposition of this Minimum Tax Levy is required for a school district to qualify for receipt of contributions by the State for such purposes. Additional tax levies for, among other things, educational programs and capital outlay and debt service to finance capital outlays may be made at the option of a school district. Certain of such levies will entitle a school district to State guaranteed levels of funding or receipt of specific additional contributions from the State. The Board has received all voter approval necessary for the taxes it currently levies. See FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Historical Tax Rates Of The District above. State Funding Under its school funding program, the State guarantees that in connection with the Minimum Tax Levy and certain of a school district s additional tax levies each school district will receive certain amounts based primarily on the number of students attending schools in such district. To the extent that 39

46 such levies do not generate receipts at least equal to such guaranteed amounts, the State contributes funds to the school district in the amount of the shortfall. If a school district s receipts from such levies reach such prescribed levels, there is no State contribution to such district. Further, school district receipts from the Minimum Tax Levy in excess of the guaranteed amounts are required to be paid over to the State for distribution to other school districts. In addition to any contributions relating to shortfalls described above, the State annually appropriates fixed amounts to fund certain programs and services statewide. Funds for contributions to school districts and for other programs and services are appropriated from the State Uniform School Fund and the Education Fund, which are funded primarily from personal income taxes and corporate franchise taxes. State Funding is also available, under certain circumstances, to school districts for payment of a portion of capital costs. Federal Funding Federal funding is provided for various school programs including child nutrition, vocational education and special education. Summary Of State And Federal Funding During the past years the District received the following in State and federal funding: State Funds Fiscal Year General... $22,846,077 $22,226,139 $22,846,295 $24,088,192 $25,334,450 Other Governmental , , , , ,842 Capital Projects... 36,196 24, , ,948 Total... $23,707,470 $23,024,170 $23,618,416 $24,871,784 $26,020,292 % change over prior year % (2.5)% (5.0)% (4.4)% 15.9% Federal Funds General... $5,066,728 $5,678,881 $5,950,857 $6,297,744 $3,929,617 Other Governmental... 1,922,183 1,850,723 1,816,598 1,601,237 1,452,702 Total... $6,988,911 $7,529,604 $7,767,455 $7,898,981 $5,382,319 % change over prior year... (7.2)% (3.1)% (1.7)% 46.8% 1.9% (Source: Information taken from the District s audited basic financial statements for the indicated years. This summary has not been audited.) See FINANCIAL INFORMATION REGARDING LOGAN CITY SCHOOL DISTRICT, UTAH Financial Summaries above. Absence Of Litigation LEGAL MATTERS The attorneys for the Board, Burbidge & White LLC, Salt Lake City, Utah, has advised that, to the best of their knowledge after due inquiry, there is no pending or threatened litigation that would legally stop, enjoin, or prohibit the issuance, sale or delivery of the 2013 Bonds. 40

47 Federal Income Taxation Of 2013 Bonds TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the 2013 Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The Board has covenanted to comply with all requirements that must be satisfied in order for the interest on the 2013 Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the 2013 Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the 2013 Bonds. Subject to the Board s compliance with the above referenced covenants, under present law, in the opinion of Bond Counsel, interest on the 2013 Bonds is excludable from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the 2013 Bonds is taken into account, however, in computing an adjustment in determining the federal alternative minimum tax for certain corporations. In rendering its opinion, Bond Counsel will rely upon certifications of the Board with respect to certain material facts within the Board s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. The Internal Revenue Code of 1986, as amended (the Code ), includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include certain tax exempt interest, including interest on the 2013 Bonds. Ownership of the 2013 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax exempt obligations. Prospective purchasers of the 2013 Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for each maturity of the 2013 Bonds is the price at which a substantial amount of such maturity of the 2013 Bonds is first sold to the public. The Issue Price of a maturity of the 2013 Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof. Owners of 2013 Bonds who dispose of 2013 Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase 2013 Bonds in the initial public offering, but at a price different from the Issue Price or purchase 2013 Bonds subsequent to the initial public offering should consult their own tax advisors. If a 2013 Bond is purchased at any time for a price that is less than the 2013 Bond s stated redemption price at maturity, the purchaser will be treated as having purchased a 2013 Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a 2013 Bond is dis- 41

48 posed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such 2013 Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the 2013 Bonds. An investor may purchase a 2013 Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized by an investor on a constant yield basis over the remaining term of the 2013 Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax exempt bond. The amortized bond premium is treated as a reduction in the tax exempt interest received. As bond premium is amortized, it reduces the investor s basis in the 2013 Bond. Investors who purchase a 2013 Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the 2013 Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the 2013 Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the 2013 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the 2013 Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The Internal Revenue Service (the Service ) has an ongoing program of auditing tax exempt obligations to determine whether, in the view of the Service, interest on such tax exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the 2013 Bonds. If an audit is commenced, under current procedures the Service may treat the Board as a taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the 2013 Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax exempt obligations, including the 2013 Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any 2013 Bond owner who fails to provide an accurate Form W 9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any 2013 Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. State Tax Exemption For The 2013 Bonds In the opinion of Bond Counsel, under the existing laws of the State, as presently enacted and construed, interest on the 2013 Bonds is exempt from taxes imposed by the Utah Individual Income Tax Act. Bond Counsel expresses no opinion with respect to any other taxes imposed by the State or any political subdivision thereof. Ownership of the 2013 Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the 2013 Bonds. Prospective purchasers of the 2013 Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. Qualified Tax Exempt Obligations Subject to the Board s compliance with certain covenants, in the opinion of Bond Counsel, the 2013 Bonds are qualified tax exempt obligations under the small issuer exception provided under Section 265(b)(3) of the Code, which affords banks and certain other financial institutions more favorable 42

49 treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. General MISCELLANEOUS The authorization and issuance of the 2013 Bonds are subject to the approval of Chapman and Cutler LLP, Bond Counsel to the Board. Certain legal matters will be passed upon for the Board by the attorney for the Board, Burbidge & White LLC, Salt Lake City, Utah. The approving opinion of Bond Counsel will be delivered with the 2013 Bonds. A copy of the opinion of Bond Counsel in substantially the form set forth in APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL will be made available upon request from the contact persons as indicated under INTRODUCTION Contact Persons above. Bond Counsel has not been retained or consulted on disclosure matters and has not undertaken to review or verify the accuracy, completeness, or sufficiency of the OFFICIAL STATEMENT or other offering material relating to the 2013 Bonds and assumes no responsibility for the statements or information contained in or incorporated by reference in this OFFICIAL STATEMENT. The various legal opinions to be delivered concurrently with the delivery of the 2013 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 transaction opined upon, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Bond Ratings As of the date of this OFFICIAL STATEMENT, the 2013 Bonds have been rated Aaa by Moody s based upon the State s guaranty under the Guaranty Act. An explanation of the above rating may be obtained from Moody s. The Board has not directly applied to Fitch or S&P for a rating on the 2013 Bonds. Additionally, as of the date of this OFFICIAL STATEMENT, Moody s has given the 2013 Bonds an underlying rating of Aa3. Any explanation of the significance of these outstanding ratings may only be obtained from the rating service furnishing the same. There is no assurance that the ratings given the outstanding general obligation bonds will continue for any given period of time or that the ratings will not be revised downward or withdrawn entirely by the rating agencies if, in their judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2013 Bonds. Financial Advisor The Board has entered into an agreement with the Financial Advisor whereunder the Financial Advisor provides financial recommendations and guidance to the Board with respect to preparation for sale of the 2013 Bonds, timing of sale, tax exempt bond market conditions, costs of issuance and other factors related to the sale of the 2013 Bonds. The Financial Advisor has read and participated in the drafting of certain portions of this OFFICIAL STATEMENT and has supervised the completion and editing thereof. The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in the OFFICIAL STATEMENT, or any other related information available to the Board, with respect to accuracy and completeness of disclosure of such information, and the Financial Advisor makes no guaranty, 43

50 warranty or other representation respecting accuracy and completeness of the OFFICIAL STATEMENT or any other matter related to the OFFICIAL STATEMENT. Independent Auditors The financial statements of the Board as of June 30, 2012 and for the year then ended, included in this OFFICIAL STATEMENT, have been audited by Jones Simkins, P.C., Certified Public Accountants, Logan, Utah ( Jones Simkins ) as stated in their report in APPENDIX A BASIC FINANCIAL STATE- MENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012 to this OFFICIAL STATEMENT. Jones Simkins has not participated in the preparation or review of this OFFICIAL STATEMENT. Based upon their non participation, they have not consented to the use of their name in this OFFICIAL STATEMENT. Additional Information All quotations contained herein from and summaries and explanations of the State Constitution, statutes, programs and laws of the State, court decisions and the Resolution, do not purport to be complete, and reference is made to said State Constitution, statutes, programs, laws, court decisions and the Resolution for full and complete statements of their respective provisions. Any statements in this OFFICIAL STATEMENT involving matters of opinion, whether or not expressly so stated, are intended as such and not as representation of fact. The appendices attached hereto are an integral part of this OFFICIAL STATEMENT and should be read in conjunction with the foregoing material. This OFFICIAL STATEMENT and its distribution and use have been duly authorized by the Board. Board of Education of Logan City School District, Utah By: /s/ Kristie Cooley Kristie Cooley, President 44

51 APPENDIX A BASIC FINANCIAL STATEMENTS OF LOGAN CITY SCHOOL DISTRICT FOR FISCAL YEAR 2012 The basic financial statements for Fiscal Year 2012 are contained herein. Copies of current and prior financial statements are available upon request from the contact persons as indicated under INTRO- DUCTION Contact Persons above. The District s basic financial statements for Fiscal Year 2013 must be completed under State law by November 30, (The remainder of this page has been intentionally left blank.) A 1

52 PARTNERS: Michael C. Kidman, CPA Brent S. Sandberg, CPA Mark E. Low, CPA H. Paul Gibbons, CPA Robert D. Thomas, CPA Paul R. Campbell, CPA 1011 West 400 North, Suite 100 Shawn R. Anderson, CPA P.O. Box 747 Scott L. Burton, CPA Logan, UT Phone: (435) (877) Fax: (435) INDEPENDENT AUDITORS REPORT To the Board of Education Logan City School District Logan, Utah We have audited the accompanying financial statements of the governmental activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the Logan City School District (the District) as of and for the year ended June 30, 2012, which collectively comprise the District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each discretely presented component unit, each major fund and the aggregate remaining fund information of the District as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2012, on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. -1- Member of the American Institute of Certified Public Accountants

53 Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in the appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s response to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s financial statements as a whole. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of financial statements. 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 of States, Local Governments, and Non-profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. JONES SIMKINS, P.C. Logan, Utah December 10,

54 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 As Management of the Logan City School District (the District), we offer readers of the District s financial statements this narrative discussion, overview, and analysis of the financial activities of the District for the fiscal year ending June 30, Financial Highlights The District reports $5,132,390 in total General Fund balance, which is an increase of $1,990,510. Total General Fund balance includes $1,554,470 restricted for program expenditures, $859,943 restricted for transportation, $27,091 restricted for tort liability, $800,000 committed for undistributed reserve, and $235,116 of unassigned fund balance. Unassigned fund balance increased $215,658. The District total General Fund balance was 14.1% of budgeted expenditures, up from 7.8% for the prior fiscal year. While Management feels fund balances and reserves are sufficient to maintain a sound financial position, the fact that unrestricted fund balances are less than 1% (0.64%) of budgeted expenditures is cause for concern and continued managerial vigilance. The District has been successfully aggressive and proactive in dealing with economic challenges that face all Utah school districts as evidenced by the increase in fund balance in this past year. The Board and Management remain committed to a conservative fiscal philosophy that maintains as its primary focus the students of Logan City School District. Average Daily Student Membership (ADM) for fiscal year 2012 was 5,878, a remarkable decrease of 214 students from the previous fiscal year ADM of 6,092. ADM for fiscal year 2012 was also 242 students less than the October 1, 2011 enrollment count of 6,120. These dramatic changes in enrollment reflect an increasingly migratory student population. Great fluctuations in student populations make it increasingly difficult to budget financial and human resources to meet changing needs. Interestingly, the October 1 st enrollment was down only by 9 students from the previous fiscal year. If the aforementioned enrollment changes are indicative of a new enrollment trend, the Board and Management may need to reassess long term goals and plans with regards to curriculum and facilities. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. A comparative presentation of government-wide information is also included in this discussion and analysis. The purpose of this narrative is to simplify and clarify the following financial statements. -4-

55 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Government-wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of the District s financial condition, in a manner similar to a private-sector business. The statement of net assets presents information on all the assets and liabilities of the District, with the difference between the two reported as net assets. In future years, increases or decreases in net assets may serve as one indicator of whether the overall financial position of the District is improving or deteriorating. The statement of activities presents information showing how the net assets of the District changed during this fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, the financial statements are presented using the accrual method of accounting and revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected and delinquent property taxes and employees earned, but unused, paid leave). The District s government-wide financial statements also present the net assets and a statement of activities for the Logan City School District Foundation (the Foundation). The Foundation is being presented as a discrete component unit in accordance with GASB Statement No. 39 Determining Whether Certain Organizations Are Component Units. Fund financial statements: A fund is a group of related accounts that is used to maintain control over resources that have been designated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District are governmental funds. Governmental funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains six individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, debt service fund, and the capital projects fund, all of which are considered to be major funds. Data from the remaining -5-

56 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 three governmental funds, the Non K-12, Food Service and Student Activity Funds, are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements later in this report. The District adopts an annual budget, as legally required, for each governmental fund. Budgetary comparison statements have been provided as supplementary information to demonstrate compliance with these budgets. Notes to the financial statements: The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. Other information: The combining and individual fund statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the notes to the financial statements located later in this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as one useful indicator of a government entity s financial condition. The District s assets exceeded liabilities by $39,976,402 at the close of the fiscal year. This amounts to an increase of $4,393,605 in the District s overall financial condition when compared to the prior year. -6-

57 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 LOGAN CITY SCHOOL DISTRICT S NET ASSETS Governmental Activities Current and other assets $ 29,662,267 27,874,889 Capital assets 47,712,392 49,689,351 Total assets 77,374,659 77,564,240 Other liabilities 18,270,216 18,569,054 Long-term liabilities outstanding 19,128,041 23,412,389 Total liabilities 37,398,257 41,981,443 Net assets: Invested in capital assets, net of related debt 30,087,627 30,036,840 Restricted 3,263,875 2,482,984 Unrestricted 6,624,900 3,062,973 Total net assets $ 39,976,402 35,582,797 The largest portion of the District s net assets (75%) reflects its investment in capital assets (e.g., land, buildings and improvements, and furniture and equipment), less any related debt (general obligation bonds payable) used to acquire those assets that are still outstanding. The District uses these capital assets to provide services to students; consequently, these assets are not available for liquidation and future operations. Since the capital assets themselves cannot be used to satisfy these liabilities, the District must obtain these resources from the annual voter-approved property taxes assessed solely for the purpose of meeting the requirements previously established in the outstanding bond repayment schedule. An additional portion of the District s net assets (8%) represents resources that are subject to restrictions agreed upon when grant funds were applied for and received. The remaining balance of unrestricted net assets (17%) may be used to meet the District s ongoing obligations to students, employees, and all other operational expenditures. A portion of the unrestricted net asset amount is nonspendable, committed as an undistributed reserve, or assigned for programs, capital projects, and student activities. At the end of the current fiscal year, the District is able to report positive balances in all three categories of net assets, both for the District as a whole, as well as for its separate governmental activities. -7-

58 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 LOGAN CITY SCHOOL DISTRICT S CHANGES IN NET ASSETS Governmental Activities Revenues: Program revenues: Charges for services $ 1,627,383 1,458,277 Operating grants and contributions 6,988,911 7,143,567 General revenues: Property taxes 16,263,635 15,426,832 Federal and state aid not restricted to specific purposes 23,755,669 23,445,613 Earnings on investments 218, ,487 Miscellaneous 663, ,634 Total revenues 49,517,249 48,529,410 Expenses: Instruction 26,765,311 30,746,108 Supporting services: Students 1,931,172 2,144,549 Instructional support 1,773,626 2,063,298 District administration 515, ,567 School administration 1,958,560 2,071,354 Central Services 1,133,752 1,188,176 Operation and maintenance of facilities 4,495,007 5,027,971 Student transportation 1,232,187 1,161,493 Non-instructional 821, ,031 Community services 342, ,217 Food services 3,280,832 3,053,105 Interest and fiscal charges 873, ,455 Total expenses 45,123,644 50,104,324 Increase in net assets 4,393,605 (1,574,914) Net assets beginning 35,582,797 37,157,711 Net assets ending $ 39,976,402 35,582,797-8-

59 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Distribution of Expenses Community services 1% Non-instructional 2% Interest and fiscal charge Food services 2% 7% Supporting services - indirect 21% Instructional services 59% Supporting services - direct 8% The largest source of operational revenue continues to bee from annual legislativee appropriations for the state minimumm school program whichh is administered by the Utah State Board of Education. This revenue source is based on WPU s (weighted pupil units) distributed to districts based on annual student enrollments and the amount established by the State legislature each year. There are currently two WPU values, $2,816 (for the majority of WPU s) and $2,577 (for some Special Education WPU s and WPU s associated with Career and Technical Ed programs). Instructional servicess represent the largest dollar expenditure for District operations. Instruction and its direct support services represent 67% of the District s total expenditures. -9-

60 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Financial Analysis of the District s Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with all legal requirements. Governmental funds: The focus of the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District s financial position. Fund balances are divided between nonspendable, restricted, committed, assigned, and unassigned balances. The District s committed and assigned fund balances are as follows: Committed for undistributed reserve of $800,000: Utah law allows districts to establish an undistributed reserve within the general fund. The law limits this reserve to an amount not to exceed 5% of the general fund budget, or approximately $1,826,000 at present. This reserve of $800,000 represents an estimated 44% of the legal limit. These funds require specific Board authorization to spend and are set aside for future contingencies and programs. By law, the Board may not use undistributed reserves in the negotiation or settlement of contract salaries for District employees. Assigned for capital projects and facility improvements of $1,910,613: From the fund balance of the Capital Projects Fund, the District has assigned $1,500,000 for facility improvements and $410,613 for other capital projects. Assigned for non K-12 programs and facility improvements of $1,044,327: From the fund balance of the Non K-12 Fund, the District has assigned $400,000 for recreation center improvements and $652,897 for operation expenses associated primarily with recreation center programs. Assigned for school food service of $781,298: The District has assigned the fund balance of the School Food Service Fund for as a reserve for anticipated future operational costs of administering school lunch programs. Assigned for students of $583,513: The District has assigned the fund balance of the Student Activity Fund, which represents unspent fees and other monies collected at the school level for student activities. Unassigned fund balances are appropriated in the following year s budget. Fund balances of the Capital Projects, Debt Service, and other Governmental Funds are assigned by State law to be expended as allowed by law. -10-

61 LOGAN CITY SCHOOL DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 The District operates six governmental type funds. A description of each fund and its significant activities follows. The General Fund: The General Fund is the chieff operating fund of the District. At the end of the current fiscal year, the unassigned fundd balance was $235,116. This is an increase of $215,658 from the prior year. Total fund balance was $5,132,,390. Management is not comfortable with the level of unassigned fund balance and is working to increase it so that reserves can be maintained sufficient to offset unexpected budget shortfalls which could compromise District instructional programs. For perspective, it is noteworthy that operating expense in the Generall Fund for one month is approximately $ 3 million. General Fund Revenue Sources Federal funds 14% Property taxes 24% Other revenues 1% State funds 61% Debt Service Fund: The Debt Servicee Fund balance is $557,432. By law these funds are restricted for payment of principal and interest onn the District s outstanding general obligation bonds. This fund increased $170,386 in fiscal yearr