MATURITY SCHEDULE (See inside cover)

Size: px
Start display at page:

Download "MATURITY SCHEDULE (See inside cover)"

Transcription

1 NEW ISSUE - FULL BOOK-ENTRY SERIES B BONDS INSURED RATING: S&P: AA SERIES B BONDS UNDERLYING RATING: Moody s: A1 NOTES RATING: Moody s: A3 See BOND INSURANCE and RATINGS herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Series B Bonds and the Notes is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "TAX MATTERS." $6,000,000 MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) General Obligation Bonds Election of 2012, Series B $4,998, MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) 2014 Bond Anticipation Notes Dated: Date of Delivery Due: August 1, as shown on inside front cover Authority and Purpose. The captioned bonds (the Series B Bonds ) are being issued by the Mendota Unified School District (the District ) pursuant to certain provisions of the California Government Code and a resolution of the Board of Trustees of the District (the Board ) adopted on November 27, 2013 (the Bond Resolution ). The captioned notes (the Notes ) are being issued pursuant to the Education Code of the State of California and a resolution of the Board adopted on November 27, 2013 (the Note Resolution ). The Series B Bonds and the Notes are being issued to finance the acquisition and construction of educational facilities and projects which were described in the ballot measure approved by the electors of the District on November 6, 2012, which authorized the issuance of general obligation bonds (the General Obligation Bonds ) in the aggregate principal amount of $19,000,000. The Notes are being issued in anticipation of the issuance of a future series of General Obligation Bonds. See THE SERIES B BONDS Authority for Issuance, THE NOTES Authority for Issuance and THE FINANCING PLAN herein. Security for the Series B Bonds. The Series B Bonds are general obligations of the District, payable solely from ad valorem property taxes levied and collected by Fresno County (the County ). The County Board of Supervisors is empowered and is obligated to annually levy ad valorem taxes for the payment of principal of and interest on the Series B Bonds upon all property subject to taxation by the District, without limitation of rate or amount (except certain personal property which is taxable at limited rates). See SECURITY FOR THE SERIES B BONDS. Security for the Notes. The Accreted Value (defined herein) of the Notes is payable from the proceeds of General Obligation Bonds issued for that purpose or of any renewal of notes or from other funds of the District lawfully available for the purpose of repaying the Notes, including state grants, and from amounts held in the funds and accounts established under the Note Resolution. See SECURITY FOR THE NOTES herein Book-Entry Only. The Series B Bonds and the Notes will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers will not receive physical certificates representing their interests in the Series B Bonds or the Notes. See APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM. Payments of Series B Bonds. The Series B Bonds are dated the date of delivery, and are being issued as current interest term bonds. The Series B Bonds accrue interest at the rates set forth on the inside cover page hereof, payable semiannually on each February 1 and August 1 until maturity, commencing August 1, Payments of Notes. The Notes are being issued as capital appreciation notes. The Notes are dated their date of delivery and accrete interest from such date, compounded semiannually on August 1 and February 1 of each year, commencing August 1, The Notes will be issued in denominations of $5,000 Maturity Value or any integral multiple thereof. Paying Agent. Payments of principal of and interest on the Series B Bonds and Accreted Value of the Notes will be paid by Wells Fargo Bank, National Association, Los Angeles, California, as the designated paying agent, registrar and transfer agent (the Paying Agent ), to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Series B Bonds and the Notes. Redemption. The Series B Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as described herein. See THE SERIES B BONDS Optional Redemption and Mandatory Sinking Fund Redemption. The Notes are subject to optional redemption prior to maturity. See THE NOTES Redemption. Municipal Bond Insurance. The scheduled payment of principal of and interest on the Series B Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Series B Bonds by BUILD AMERICA MUTUAL ASSURANCE COMPANY. The Notes will not be insured under a municipal insurance policy. MATURITY SCHEDULE (See inside cover) Cover Page. This cover page contains certain information for general reference only. It is not a summary of all the provisions of the Series B Bonds and the Notes. Prospective investors must read the entire Official Statement to obtain information essential to making an informed investment decision. The Series B Bonds and the Notes will be offered when, as and if issued and accepted by the Underwriter, subject to the approval as to legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel to the District, and subject to certain other conditions. Jones Hall is also serving as Disclosure Counsel to the District. Stradling Yocca Carlson & Rauth, A Professional Corporation, San Francisco, California, is serving as Underwriter s Counsel. It is anticipated that the Series B Bonds and the Notes, in book-entry form, will be available for delivery through the facilities of DTC in New York, New York, on or about January 28, The date of this Official Statement is January 16, 2014.

2 MATURITY SCHEDULE MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) Base CUSIP : General Obligation Bonds, Election of 2012, Series B $6,000, % Term Bonds due August 1, 2048; Yield: 4.690% C ; CUSIP: AZ0 C: Yield to first par call on August 1, Bond Anticipation Notes Denominational Accretion Maturity Yield to Maturity Date Amount Rate Value Maturity CUSIP August 1, 2018 $4,998, % $5,755, % BA4 Copyright 2014, American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the District nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data.

3 MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) BOARD OF TRUSTEES OF THE DISTRICT Araceli Perez, President Jesus Zavala, Vice President Diana Toscano, Clerk Jose Zavala, Member Ismael Herrera, Member Lupe Flores, Member Isabel Maldonado, Member DISTRICT ADMINISTRATION Mike Crass, Superintendent Jose Alcaide, Chief Financial Officer PROFESSIONAL SERVICES FINANCIAL ADVISOR Isom Advisors, A Division of Urban Futures Walnut Creek, California BOND AND DISCLOSURE COUNSEL Jones Hall, A Professional Law Corporation San Francisco, California UNDERWRITER S COUNSEL Stradling Yocca Carlson & Rauth, A Professional Corporation San Francisco, California BOND REGISTRAR, TRANSFER AGENT AND PAYING AGENT Wells Fargo Bank, National Association Los Angeles, California

4 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the Series B Bonds and the Notes referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract between any bond owner and the District or the Underwriter. No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the District or the Underwriter to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the District or the Underwriter. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of the Series B Bonds and the Notes by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Information in Official Statement. The information set forth in this Official Statement has been furnished by the District and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the District in any press release and in any oral statement made with the approval of an authorized officer of the District or any other entity described or referenced herein, the words or phrases will likely result, are expected to, will continue, is anticipated, estimate, project, forecast, expect, intend and similar expressions identify forward looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forwardlooking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the District or any other entity described or referenced herein since the date hereof. Involvement of Underwriter. The Underwriter has provided the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Insurer s Disclaimer. Build America Mutual Assurance Company ( BAM ) makes no representation regarding the Series B Bonds or the advisability of investing in the Series B Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading BOND INSURANCE and APPENDIX I - Specimen Municipal Bond Insurance Policy for the Series B Bonds. Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that stabilize or maintain the market prices of the Series B Bonds and the Notes at levels above that which might otherwise prevail in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The Underwriter may offer and sell the Series B Bonds and the Notes to certain securities dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter. Document Summaries. All summaries of the Bond Resolution or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions. No Securities Laws Registration. The Series B Bonds and the Notes have not been registered under the Securities Act of 1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Series B Bonds and the Notes have not been registered or qualified under the securities laws of any state. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Series B Bonds and the Notes will, under any circumstances, give rise to any implication that there has been no change in the affairs of the District, the County, the other parties described in this Official Statement, or the condition of the property within the District since the date of this Official Statement. Website. The District maintains a website. However, the information presented on the website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Series B Bonds and the Notes.

5 TABLE OF CONTENTS Page INTRODUCTION... 1 THE FINANCING PLAN... 4 SOURCES AND USES OF FUNDS... 4 THE SERIES B BONDS... 5 Authority for Issuance... 5 Description of the Series B Bonds... 5 Book-Entry Only System... 5 Optional Redemption... 6 Mandatory Sinking Fund Redemption... 6 Notice of Redemption... 7 Partial Redemption of Bonds... 7 Right to Rescind Notice of Redemption... 7 Registration, Transfer and Exchange of Bonds... 7 Defeasance... 8 THE NOTES Authority for Issuance Description of the Notes Accreted Values Paying Agent Redemption of Notes Registration, Transfer and Exchange of Notes Satisfaction and Discharge of Notes DEBT SERVICE SCHEDULES SECURITY FOR THE SERIES B BONDS Ad Valorem Taxes Debt Service Fund Not a County Obligation BOND INSURANCE SECURITY FOR THE NOTES Pledge of General Obligation Bond Proceeds Covenant to Issue General Obligation Bonds Note Repayment Fund Investment of District Funds and Bond Proceeds PROPERTY TAXATION Property Tax Collection Procedures Taxation of State-Assessed Utility Property Assessed Valuation Per Parcel Assessed Valuation of Single-Family Homes Appeals of Assessed Value Tax Rates Tax Levies and Delinquencies Major Taxpayers Direct and Overlapping Debt THE NOTES- RISK FACTORS No Assurances on Issuance of General Obligation Bonds Reduction in Assessed Valuation Reduction in Inflationary Rate and Changes in Legislation; Further Initiatives Loss of Tax Exemption TAX MATTERS Tax Exemption CERTAIN LEGAL MATTERS Legality for Investment Absence of Litigation Compensation of Certain Professionals i-

6 CONTINUING DISCLOSURE RATINGS UNDERWRITING ADDITIONAL INFORMATION APPENDIX B... B-1 GENERAL DISTRICT INFORMATION... B-1 General Information... B-1 Administration... B-1 Recent Enrollment Trends... B-2 Employee Relations... B-2 District Retirement Systems... B-2 Other Post-Employment Retirement Benefits... B-4 Insurance Joint Powers Agreements... B-5 DISTRICT FINANCIAL INFORMATION... B-6 Accounting Practices... B-6 Financial Statements... B-6 District Budget and Interim Financial Reporting... B-9 Revenue Sources... B-12 Long-Term Debt... B-13 Capital Leases... B-13 Investment of District Funds... B-13 Effect of State Budget on Revenues... B-14 State Funding of Education and Recent State Budgets... B-14 Recent State Budgets... B State Budget... B-16 Legal Challenges to State Funding of Education... B-19 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS... B-20 Article XIIIA of the California Constitution... B-20 Unitary Property... B-21 Constitutional Appropriations Limitation... B-21 Article XIIIC and Article XIIID of the California Constitution... B-22 Proposition B-23 Proposition B-24 Proposition B-24 Proposition 1A and Proposition B-25 Application of Constitutional and Statutory Provisions; Legal Challenges... B-26 Future Initiatives... B-26 APPENDIX A - District Audited Financial Statements for Fiscal Year A-1 APPENDIX B - General and Financial Information for the Mendota Unified School District... B-1 APPENDIX C - Economic and Demographic Information for Fresno County... C-1 APPENDIX D - Proposed Forms of Opinions of Bond Counsel... D-1 APPENDIX E - Form of Continuing Disclosure Certificate... E-1 APPENDIX F - DTC and the Book-Entry Only System... F-1 APPENDIX G - Fresno County Investment Policy... G-1 APPENDIX H - Table of Accreted Values For the Notes... H-1 APPENDIX I Specimen Municipal Bond Insurance Policy For the Series B Bonds... I-1 -ii-

7 $6,000,000 MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) General Obligation Bonds Election of 2012, Series B $4,998, MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) 2014 Bond Anticipation Notes The purpose of this Official Statement, which includes the cover page, inside cover page and attached appendices, is to set forth certain information concerning the sale and delivery by the Mendota Unified School District (the District ) of: $6,000,000 General Obligation Bonds, Election of 2012, Series B (the Series B Bonds ) and $4,998, Bond Anticipation Notes (the Notes ). INTRODUCTION This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of Series B Bonds and the Notes to potential investors is made only by means of the entire Official Statement. The District. The District is located in Fresno County (the County ), and encompasses approximately 360 square miles. The District currently operates two elementary schools, one intermediate school, one high school and a continuation high school. The District s current enrollment is estimated to be 3,043 students for For more information regarding the District and its finances, see Appendix B attached hereto. See also Appendix C hereto for demographic and other statistical information regarding the County. Purpose. The net proceeds of the Series B Bonds and the Notes will be used to finance school construction and improvements to the school facilities as approved by the voters at an election held in the District on November 6, 2012 (the Bond Election ). See THE FINANCING PLAN herein. Authority for Issuance of Series B Bonds. Issuance of the Series B Bonds was approved by the requisite 55% of the voters of the District voting at the Bond Election and will be issued pursuant to certain provisions of the Government Code of the State, commencing with Section thereof, and pursuant to a resolution adopted by the Board of Trustees of the District on November 27, 2013 (the Bond Resolution ). See THE SERIES B BONDS - Authority for Issuance herein. Authority for Issuance of Notes. The Notes will be issued pursuant to certain provisions of Section of the Education Code of the State of California and pursuant to a resolution adopted by the Board of Trustees of the District on November 27, 2013 (the Note Resolution ). See THE NOTES - Authority for Issuance herein. -1-

8 Certain Definitions with respect to the Notes. The Note Resolution set forth the following definitions: Accreted Value means, with respect to any Note, the total amount of principal thereof and interest payable thereon as of any Compounding Date determined solely by reference to the Table of Accreted Values set forth on such Note. The Accreted Value of any Note, as of any date other than a Compounding Date will be the sum of (a) the Accreted Value as of the Compounding Date immediately preceding the date as of which the calculation is being made plus (b) interest on the Accreted Value determined under the preceding clause (a), computed to the date as of which the calculation is being made at the Accretion Rate set forth on such Note (computed on the basis of a 360-day year of twelve 30-day months). Accretion Rate means the rate which, when applied to the Denominational Amount of any Note, and compounded semiannually on each Compounding Date, produces the Maturity Value of such Note. Compounding Date means, with respect to the Notes, each February 1 and August 1, commencing on August 1, 2014, to and including the date of maturity or redemption of such Notes. Denominational Amount means, with respect to any Note, the initial principal amount of such Note. Maturity Value means, with respect to any Note, the Accreted Value of such Note to be paid at maturity. Payment of the Series B Bonds. The Series B Bonds are being issued as current interest term bonds. The Series B Bonds mature in the year and in the amount as set forth on the inside cover page hereof (subject to mandatory sinking fund payments, as discussed herein). The Series B Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Purchasers will not receive physical certificates representing their interest in the Bonds. See THE SERIES B BONDS and APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM. Payment of the Notes. The Notes are being issued as capital appreciation notes. The Notes are dated their date of delivery and accrete interest from such date, compounded semiannually on August 1 and February 1 of each year, commencing August 1, The Notes will be issued in denominations of $5,000 Maturity Value or any integral multiple thereof. See THE NOTES. Registration of the Series B Bonds and the Notes. The Series B Bonds and the Notes will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Purchasers will not receive physical certificates representing their interest in the Bonds. See APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM. Redemption of Series B Bonds. The Series B Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as described herein. See THE SERIES B BONDS Optional Redemption and Mandatory Sinking Fund Redemption. -2-

9 Redemption of the Notes. The Notes are subject to optional redemption prior to maturity as described herein. See THE NOTES Redemption of Notes. Security and Sources of Payment for the Series B Bonds. The Series B Bonds are general obligation bonds of the District payable solely from ad valorem property taxes levied and collected by the County. The County is empowered and is obligated to annually levy ad valorem taxes for the payment of principal of and interest on the Series B Bonds upon all property subject to taxation by the District, without limitation of rate or amount (except with respect to certain personal property which is taxable at limited rates). See SECURITY FOR THE SERIES B BONDS. Municipal Bond Insurance. Concurrently with the issuance of the Series B Bonds, Build America Mutual Assurance Company ( BAM ) will issue its Municipal Bond Insurance Policy for the Series B Bonds (the Policy ). The Policy guarantees the scheduled payment of principal of and interest on the Series B Bonds when due as set forth in the form of the Policy included as APPENDIX I to this Official Statement. See BOND INSURANCE. The Notes will not be insured under a municipal insurance policy. Security and Sources of Payment for the Notes. The Accreted Value of the Notes is payable from the proceeds of General Obligation Bonds issued for that purpose or of any renewal of notes or from other funds of the District lawfully available for the purpose of repaying the Notes, including state grants, and from amounts held in the funds and accounts established under the Note Resolution. See SECURITY FOR THE NOTES. Other Information. This Official Statement speaks only as of its date, and the information contained in this Official Statement is subject to change. Copies of documents referred to in this Official Statement and information concerning the Series B Bonds and the Notes are available from the District from the Superintendent s Office at 115 McCabe Ave, Mendota, California 93640; telephone (559) The District may impose a charge for copying, mailing and handling. -3-

10 THE FINANCING PLAN The proceeds of the Series B Bonds and the Notes will be used to finance projects approved by the voters at the Bond Election, which was approved by 73.92% of voters. The abbreviated form of the ballot measure is as follows: To modernize, renovate, and construct classrooms, restrooms and school facilities at local Mendota schools, improve energy efficiency by replacing outdated windows, lighting, and heating ventilation and air-conditioning systems, improve student access to computers and modern technology; and replace leaky roofs and inadequate electrical systems; shall the Mendota Unified School District issue $19,000,000 of bonds at legal interest rates, have an independent citizens' oversight committee and have NO money taken by the State or used for salaries? SOURCES AND USES OF FUNDS The estimated sources and uses of funds with respect to the Series B Bonds and the Notes are as follows: Sources of Funds Series B Bonds Notes Principal Amount $6,000, $4,998, Net Original Issue Premium 483, Total Sources $6,483, $4,998, Uses of Funds Deposit to Building Fund $5,721, $4,862, Deposit to Debt Service Fund 531, Costs of Issuance (1) 230, , Total Uses $6,483, $4,998, (1) All estimated costs of issuance including, but not limited to, Underwriter s discount, printing costs, and fees of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Paying Agent, bond insurance premium with respect to the Series B Bonds, and the rating agency. -4-

11 THE SERIES B BONDS Authority for Issuance The Series B Bonds will be issued under the Bond Law and the Bond Resolution. The Series B Bonds were authorized at the Bond Election, which authorized the issuance of $19,000,000 principal amount of general obligation bonds (the 2012 Authorization ) for the purpose of financing the renovation, construction and improvement of school facilities. The Series B Bonds will be the second series of bonds issued under the 2012 Authorization. On March 27, 2013 the District issued $8,000,000 General Obligation Bonds, Election of 2012, Series A under the 2012 Authorization. Description of the Series B Bonds The Series B Bonds are being issued as current interest term bonds. The Series B Bonds mature in the year and in the amount as set forth on the inside cover page hereof. The Series B Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Purchasers will not receive physical certificates representing their interest in the Series B Bonds. See Book-Entry Only System below and APPENDIX F DTC and the Book-Entry Only System. The Series B Bonds shall be issued in the denomination of $5,000 principal amount each or any integral multiple thereof. Interest on the Series B Bonds is payable semiannually on each February 1 and August 1, commencing August 1, 2014 (each, an Interest Payment Date ). Each Series B Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (i) it is authenticated as of an Interest Payment Date, in which event it will bear interest from such date, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the fifteenth (15 th ) day of the month preceding the Interest Payment Date (the Record Date ), in which event it will bear interest from such Interest Payment Date, or (iii) it is authenticated prior to July 15, 2014, in which event it will bear interest from the Closing Date identified on the cover page hereof. Notwithstanding the foregoing, if interest on any Series B Bond is in default at the time of authentication thereof, such Series B Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Payments of principal of and interest on the Series B Bonds will be paid by the Paying Agent to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Series B Bonds. See the maturity schedule on the inside cover page of this Official Statement and DEBT SERVICE SCHEDULES herein. Book-Entry Only System The Series B Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers of the Series B Bonds (the Beneficial Owners ) will not receive physical certificates representing their interest in the Series B Bonds. Payments of principal of and interest on the Series B Bonds will be paid by Wells Fargo Bank, National Association, Los Angeles, California (the Paying Agent ) to DTC for subsequent disbursement to DTC Participants which will remit such payments to the Beneficial Owners of the Series B Bonds. -5-

12 As long as DTC s book-entry method is used for the Series B Bonds, the Paying Agent will send any notice of redemption or other notices to owners only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the Series B Bonds called for redemption or of any other action premised on such notice. See APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM. The Paying Agent, the District, and the Underwriter of the Series B Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Series B Bonds. Optional Redemption The Series B Bonds maturing on or after August 1, 2024 are subject to redemption prior to maturity, at the option of the District, in whole or in part among maturities on such basis as shall be designated by the District and by lot within a maturity, from any available source of funds, on August 1, 2023, or on any date thereafter, at a price equal to 100% of the principal amount thereof, without premium, together with accrued interest thereon to the redemption date. Selection of Bonds for Purpose of Redemption. For the purpose of selection for optional redemption, Series B Bonds will be deemed to consist of $5,000 principal amounts, and any such portion may be separately redeemed. Whenever less than all of the outstanding Series B Bonds of any one maturity are designated for redemption, the Paying Agent shall select the outstanding Series B Bonds of such maturity to be redeemed by lot in any manner deemed fair by the Paying Agent. Mandatory Sinking Fund Redemption The Series B Bonds are subject to mandatory sinking fund redemption on August 1 of each year in accordance with the schedule set forth below. The Series B Bonds so called for mandatory sinking fund redemption shall be redeemed in the sinking fund payments amounts and on the dates set forth below, without premium. $6,000,000 Series B Bonds Maturing August 1, 2048 Redemption Date (August 1) Sinking Fund Redemption 2043 $ 755, , , ,040, ,150, (Maturity) 1,270,000 If any such Series B Bonds are redeemed pursuant to optional redemption, the total amount of all future sinking fund payments with respect to such Series B Bonds shall be reduced by the aggregate principal amount of such Series B Bonds so redeemed, to be allocated among such payments on a pro rata basis in integral multiples of $5,000 principal -6-

13 amount (or on such other basis as the District may determined) as set forth in written notice given by the District to the Paying Agent. Notice of Redemption The Paying Agent will cause notice of any redemption to be mailed, first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the respective owners of any Series B Bonds designated for redemption, at their addresses appearing on the registration books. Such notice may be a conditional notice of redemption and subject to rescission as described below. Such mailing is not a condition precedent to such redemption and the failure to mail or to receive any such notice will not affect the validity of the proceedings for the redemption of such Series B Bonds. In addition, the Paying Agent will give notice of redemption by telecopy or certified, registered or overnight mail to the Municipal Securities Rulemaking Board and each of the Securities Depositories (as such terms are defined in the Bond Resolution) at least two days prior to such mailing to the Series B Bond owners. Such notice shall state the redemption date and the redemption price and, if less than all of the then outstanding Series B Bonds are to be called for redemption, shall designate the serial numbers of the Series B Bonds to be redeemed by giving the individual number of each Series B Bond or by stating that all Series B Bonds between two stated numbers, both inclusive, or by stating that all of the Series B Bonds of one or more maturities have been called for redemption, and shall require that such Series B Bonds be then surrendered at the office of the Paying Agent for redemption at the said redemption price, giving notice also that further interest on such Series B Bonds will not accrue from and after the redemption date. Partial Redemption of Bonds Upon the surrender of any Series B Bond redeemed in part only, the Paying Agent shall execute and deliver to the Owner thereof a new Series B Bond or Bonds of like tenor and maturity and of authorized denominations equal in transfer amounts to the unredeemed portion of the Series B Bond surrendered. Such partial redemption shall be valid upon payment of the amount required to be paid to such Owner, and the County and the District shall be released and discharged thereupon from all liability to the extent of such payment. Right to Rescind Notice of Redemption The District has the right to rescind any notice of the optional redemption of Series B Bonds by written notice to the Paying Agent on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Series B Bonds then called for redemption. The District and the Paying Agent have no liability to the Bond owners or any other party related to or arising from such rescission of redemption. The Paying Agent shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Bond Resolution. Registration, Transfer and Exchange of Bonds If the book entry system is discontinued, the District shall cause the Paying Agent to maintain and keep at its principal office all books and records necessary for the registration, exchange and transfer of the Series B Bonds. -7-

14 If the book entry system is discontinued, the person in whose name a Series B Bond is registered on the Bond Register shall be regarded as the absolute owner of that Bond. Payment of the principal of and interest on any Series B Bond shall be made only to or upon the order of that person; neither the District, the County nor the Paying Agent shall be affected by any notice to the contrary, but the registration may be changed as provided the Bond Resolution. Bonds may be exchanged at the principal office of the Paying Agent in Los Angeles, California for a like aggregate principal amount of Series B Bonds of authorized denominations and of the same maturity. Any Series B Bond may, in accordance with its terms, but only if (i) the District determines to no longer maintain the book entry only status of the Series B Bonds, (ii) DTC determines to discontinue providing such services and no successor securities depository is named or (iii) DTC requests the District to deliver Series B Bond certificates to particular DTC Participants, be transferred, upon the books required to be kept pursuant to the provisions of the Bond Resolution, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Series B Bond for cancellation at the office of the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. No exchanges of Series B Bonds shall be required to be made (a) fifteen days prior to an Interest Payment Date or the date established by the Paying Agent for selection of Series B Bonds for redemption until the close of business on the Interest Payment Date or day on which the applicable notice of redemption is given or (b) with respect to a Series B Bond after such Series B Bond has been selected or called for redemption in whole or in part. Defeasance The Series B Bonds may be paid by the District, in whole or in part, in any one or more of the following ways: (a) (b) (c) by paying or causing to be paid the principal or redemption price of and interest on such Series B Bonds, as and when the same become due and payable; by irrevocably depositing, in trust, at or before maturity, money or securities in the necessary amount (as provided in the Bond Resolution) to pay or redeem such Series B Bonds; or by delivering such Series B Bonds to the Paying Agent for cancellation by it. Whenever in the Bond Resolution it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series B Bonds, the money or securities so to be deposited or held may be held by the Paying Agent or by any other fiduciary. Such money or securities may include money or securities held by the Paying Agent in the funds and accounts established under the Bond Resolution and will be: (i) lawful money of the United States of America in an amount equal to the principal amount of such Series B Bonds and all unpaid interest thereon -8-

15 to maturity, except that, in the case of Series B Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption is given as provided in the Bond Resolution or provision satisfactory to the Paying Agent is made for the giving of such notice, the amount to be deposited or held will be the principal amount or redemption price of such Series B Bonds and all unpaid interest thereon to the redemption date; or (ii) Federal Securities (not callable by the issuer thereof prior to maturity) the principal of and interest on which when due, in the opinion of a certified public accountant delivered to District, will provide money sufficient to pay the principal or redemption price of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Series B Bonds to be paid or redeemed, as such principal or redemption price and interest become due, provided that, in the case of Series B Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption is given as provided in the Bond Resolution or provision satisfactory to the Paying Agent is made for the giving of such notice. Upon the deposit, in trust, at or before maturity, of money or securities in the necessary amount (as described above) to pay or redeem any outstanding Series B Bond (whether upon or prior to its maturity or the redemption date of such Bond), then all liability of the District in respect of such Series B Bond will cease and be completely discharged, except only that thereafter the owner thereof will be entitled only to payment of the principal of and interest on such Series B Bond by the District, and the District will remain liable for such payment, but only out of such money or securities deposited with the Paying Agent for such payment. Federal Securities means United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations issued by any agency or department of the United States which are secured, directly or indirectly, by the full faith and credit of the United States. -9-

16 THE NOTES Authority for Issuance The Notes are being issued pursuant to the provisions of Section of the Education Code of the State of California and pursuant to the Note Resolution. The Notes are being issued for the purpose of financing the acquisition and construction of educational facilities and projects which were described in the ballot measure approved by the qualified electors of the District on November 6, 2012, which authorized the issuance of general obligation bonds in the maximum aggregate principal amount of $19,000,000, of which $5,000,000 principal amount remains unissued (after the issuance of the Series B Bonds) (the General Obligation Bonds ). The Notes are being issued in anticipation of the issuance of General Obligation Bonds. See DISTRICT FINANCIAL INFORMATION Long-Term Debt General Obligation Bonds. Description of the Notes The Notes will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Purchasers of beneficial ownership interests in the Notes from participants in the DTC system will not receive certificates representing their interest in the Notes. The Notes shall be issued as Capital Appreciation Notes and shall be dated and mature as set forth on the cover hereof. The Notes shall be issued as fully registered Notes, without coupons, in the Maturity Value of $5,000 each or any integral multiple thereof. Interest on the Notes compounds on each Compounding Date (being each February 1 and August 1, commencing August 1, 2014), to and including the date of maturity of the Notes. Interest on each Note will accrete from the Compounding Date next preceding the date of authentication thereof unless (i) it is authenticated as of a Compounding Date, in which event interest will accrete from such Compounding Date, or (ii) it is authenticated prior to a Compounding Date and after the close of business on the 1 st calendar day of the preceding month, in which event interest will accrete from such Compounding Date, or (iii) it is authenticated on or before July 15, 2014, in which event interest will accrete from the dated date of the Notes. The Accreted Value (as defined below) on the Notes is payable only upon surrender of the Notes at maturity at the office of the Paying Agent. Accreted Values Appendix H contains a table of the principal component plus interest accrued thereon (the Accreted Value ) on each February 1 and August 1 for the Notes. Any Accreted Value, however, determined by the District and Paying Agent by computing interest in accordance with the provisions of the Note Resolution, shall control over any different Accreted Value determined by reference to Appendix H. -10-

17 Paying Agent Payments of the Accreted Value of the Notes will be made by the Paying Agent to DTC for subsequent disbursement through DTC Participants (defined herein) to the beneficial owners of the Notes. See APPENDIX F Book-Entry Only System herein. As provided in the Note Resolution, if at any time the Paying Agent shall resign or be removed, the District shall promptly appoint a successor Paying Agent. Redemption of Notes The Notes are subject to redemption prior to maturity, at the option of the District, in whole or in part among maturities on such basis as designated by the District and by lot within a maturity, from any available source of funds, on any date on or after August 1, 2015, at a redemption price equal to the Accreted Value to be redeemed on the date fixed for redemption, without premium. Registration, Transfer and Exchange of Notes If the book entry system is discontinued (see APPENDIX F Book-Entry Only System ), the District shall cause the Paying Agent to maintain and keep at its principal corporate trust office all books and records necessary for the registration, exchange and transfer of the Notes. If the book entry system is discontinued, any Note may, in accordance with its terms, be transferred, upon the registration books, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Note for cancellation at the office at the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. The District may charge a reasonable sum for each new Note issued upon any transfer. Whenever any Note or Notes shall be surrendered for transfer, the District shall execute and the Paying Agent shall authenticate and deliver a new Note or Notes, for like aggregate principal amount. Notes may be exchanged at the office of the Paying Agent for a like aggregate principal amount of Notes of authorized denominations. The District may charge a reasonable sum for each new Note issued upon any exchange (except in the case of any exchange of temporary Notes for definitive Notes). Satisfaction and Discharge of Notes If the District pays and discharges any or all of the outstanding Notes in any one or more of the following ways: by well and truly paying or causing to be paid the Accreted Value of any Notes, as and when the same become due and payable; by irrevocably depositing with the Paying Agent, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the District under the Note Resolution, is fully sufficient to pay such Notes, including all of the Accreted Value; or -11-

18 by irrevocably depositing with the Paying Agent, in trust, Federal Securities (as defined in the Note Resolution) in such amount as an Independent Accountant (as defined in the Note Resolution) shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the District under the Note Resolution, be fully sufficient to pay and discharge the indebtedness on such Notes (including all Accreted Value) at maturity; then, notwithstanding that any of such Notes not have been surrendered for payment, the pledge of the General Obligation Bond proceeds and other funds provided for in the Note Resolution with respect to such Notes, and all other pecuniary obligations of the District under the Note Resolution with respect to all such Notes, shall cease and terminate, except only the obligation of the District to pay or cause to be paid to the owners of such Notes not so surrendered and paid all sums due thereon from amounts set aside for such purpose. -12-

19 DEBT SERVICE SCHEDULES Debt Service Schedule- Series B Bonds. The following table shows the debt service schedule with respect to the Series B Bonds, assuming no optional redemptions. The District also has outstanding its Series A Bonds currently outstanding in the aggregate principal amount of $8,000,000, and its 2010 General Obligation Refunding Bonds currently outstanding in the amount of $2,285,000. See Debt Service Schedule- All Outstanding District Bonds below, and DISTRICT FINANCIAL INFORMATION General Obligation Bonds in Appendix B. MENDOTA UNIFIED SCHOOL DISTRICT Series B Bonds Debt Service Schedule Bond Year Ending August 1 Principal (1) Interest Total Debt Service $175, $175, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , $ 755, , ,100, , , ,146, , , ,193, ,040, , ,238, ,150, , ,289, ,270,000 73, ,343, Total $6,000,000 $11,146, $17,146, (1) Represents mandatory sinking fund payments. -13-

20 Debt Service Schedule- the Notes. The following is the debt service on the Notes. MENDOTA UNIFIED SCHOOL DISTRICT Notes Debt Service Schedule Bond Year Ending Accreted Total August 1 Principal Interest Debt Service 2018 $4,998, $756, $5,755, Debt Service Schedule- All Outstanding District Bonds. The following table shows the debt service schedule with respect to the Series A Bonds, the Series B Bonds, and the 2010 General Obligation Refunding Bonds, assuming no optional redemptions. MENDOTA UNIFIED SCHOOL DISTRICT Debt Service Schedule- All Outstanding General Obligation Bonds Bond Year Ending August General Obligation Refunding Bonds Series A Bonds Series B Bonds Aggregate Debt Service 2014 $798, $ 575, $ 175, $ 1,549, , , , ,737, , , , ,496, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,001, , , ,022, , , ,048, , , ,076, , , ,101, , , ,123, , , ,153, ,100, ,100, ,146, ,146, ,193, ,193, ,238, ,238, ,289, ,289, ,343, ,343, Total $2,428, $15,617, $17,146, $35,191,

21 SECURITY FOR THE SERIES B BONDS Ad Valorem Taxes Bonds Payable from Ad Valorem Property Taxes. The Series B Bonds are general obligations of the District, payable solely from ad valorem property taxes levied and collected by the County. The County is empowered and is obligated to annually levy ad valorem taxes for the payment of the Series B Bonds and the interest thereon upon all property within the District subject to taxation by the District, without limitation of rate or amount (except certain personal property which is taxable at limited rates). Other Bonds Payable from Ad Valorem Property Taxes. In addition to the Series B Bonds being issued by the District, there is other debt issued by entities with jurisdiction in the District, which is payable from ad valorem taxes levied on parcels in the District. See PROPERTY TAXATION Tax Rates and - Direct and Overlapping Debt below. Levy and Collection. The County will levy and collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service. Such taxes, when collected, will be deposited into a debt service fund for the Series B Bonds, which is maintained by the County and which is irrevocably pledged for the payment of principal of and interest on the Series B Bonds when due. District property taxes are assessed and collected by the County in the same manner and at the same time, and in the same installments as other ad valorem taxes on real property, and will have the same priority, become delinquent at the same times and in the same proportionate amounts, and bear the same proportionate penalties and interest after delinquency, as do the other ad valorem taxes on real property. Annual Tax Rates. The amount of the annual ad valorem tax levied by the County to repay the Series B Bonds will be determined by the relationship between the assessed valuation of taxable property in the District and the amount of debt service due on the Series B Bonds. Fluctuations in the annual debt service on the Series B Bonds and the assessed value of taxable property in the District may cause the annual tax rate to fluctuate. Economic and other factors beyond the District s control, such as economic recession, deflation of land values, a relocation out of the District or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed value within the District and necessitate a corresponding increase in the annual tax rate. Debt Service Fund The County will establish a Debt Service Fund (the Debt Service Fund ) for the Series B Bonds, which will be established as a separate fund to be maintained distinct from all other funds of the County. All taxes levied by the County for the payment of the principal of or interest and premium (if any) on the Series B Bonds will be deposited in the Debt Service Fund by the County promptly upon the receipt. The Debt Service Fund is pledged for the payment of the principal of or interest and premium (if any) on the Series B Bonds when and as the same become due. Pursuant to the Bond Resolution, the County will transfer amounts in the Debt -15-

22 Service Fund to the Paying Agent to the extent necessary to pay the principal of or interest and premium (if any) on the Series B Bonds as the same becomes due and payable. Investment of District Funds and Series B Bond Proceeds All moneys held in any of the funds or accounts established with the County under the Bond Resolution shall be invested in any one or more investments generally permitted to school districts under the laws of the State of California, consistent with the County investment policy. Such investments shall be made under the direction and at the discretion of the County Treasurer. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account. All interest or gain derived from the investment of amounts in any of the funds or accounts established under the Bond Resolution shall be deposited in the fund or account from which such investment was made, and shall be expended for the purposes thereof. Not a County Obligation The Series B Bonds are payable solely from the proceeds of an ad valorem tax levied and collected by the County, for the payment of principal and interest on the Series B Bonds. Although the County is obligated to collect the ad valorem tax for the payment of the Series B Bonds, the Series B Bonds are not a debt of the County. -16-

23 BOND INSURANCE Bond Insurance Policy Concurrently with the issuance of the Series B Bonds, Build America Mutual Assurance Company ( BAM ) will issue its Municipal Bond Insurance Policy for the Series B Bonds (the Policy ). The Policy guarantees the scheduled payment of principal of and interest on the Series B Bonds when due as set forth in the form of the Policy included as APPENDIX I to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Build America Mutual Insurance Company BAM is a New York domiciled mutual insurance corporation. BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM. The address of the principal executive offices of BAM is: 1 World Financial Center, 27th Floor, 200 Liberty Street, New York, New York 10281; its telephone number is: , and its website is located at: BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law. BAM s financial strength is rated AA/Stable by Standard and Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ). An explanation of the significance of the rating and current reports may be obtained from S&P at The rating of BAM should be evaluated independently. The rating reflects the S&P s current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Series B Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Series B Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the issuer of the Series B Bonds on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the Policy), and BAM does not guarantee the market price or liquidity of the Series B Bonds, nor does it guarantee that the rating on the Series B Bonds will not be revised or withdrawn. Capitalization of BAM. BAM s total admitted assets, total liabilities, and total capital and surplus, as of September 30, 2013 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $482.7 million, $12.1 million and $470.6 million, respectively. -17-

24 BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions. BAM s most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM s website at is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published. BAM makes no representation regarding the Series B Bonds or the advisability of investing in the Series B Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading BOND INSURANCE. Additional Information Available from BAM. Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM s analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM's website at buildamerica.com/creditinsights/. Obligor Disclosure Briefs. Subsequent to closing, BAM posts an Obligor Disclosure Brief on every issue insured by BAM, including the Bonds. BAM Obligor Disclosure Briefs provide information about the gross par insured by CUSIP, maturity and coupon; sector designation (e.g. general obligation, sales tax); a summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. The Obligor Disclosure Briefs are also easily accessible on BAM's website at buildamerica.com/obligor/. Disclaimers. The Obligor Disclosure Briefs and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-related and other analyses and statements in the Obligor Disclosure Briefs and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Obligor Disclosure Briefs and Credit Insight videos are prepared by BAM and have not been reviewed or approved by the issuer of or the underwriter for the Bonds, and they assume no responsibility for their content. BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Bonds, whether at the initial offering or otherwise. -18-

25 SECURITY FOR THE NOTES Pledge of General Obligation Bond Proceeds Pursuant to Section of the Education Code of the State of California, the Accreted Value of the Notes is payable from the proceeds of General Obligation Bonds issued for that purpose or of any renewal of notes or from other funds of the District lawfully available for the purpose of repaying the Notes, including state grants, and from amounts held in the funds and accounts established under the Note Resolution. The proceeds of the General Obligation Bonds will be paid to the County Treasurer when collected and deposited in the Note Repayment Fund established pursuant to the Note Resolution. The Notes are special obligations of the District, payable exclusively from the sources and funds identified in the preceding paragraph. Covenant to Refinance the Notes In order to provide for the payment of the Accreted Value of the Notes at maturity, the District has covenanted not later than three months preceding the final maturity of the Notes to institute proceedings for the issuance and sale of General Obligation Bonds, an additional series of bond anticipation notes or other obligations, or any combination of the foregoing, or utilize other funds of the District lawfully available for the purpose of repaying the Notes, including state grants, in an amount sufficient to pay the Maturity Value of the Notes coming due and payable at maturity, taking into account original issue premium received on the sale of the General Obligation Bonds. Upon the issuance of such General Obligation Bonds, bond anticipation notes issued in renewal of the Notes, or other obligations by the District, the proceeds thereof or other funds of the District lawfully available for the purpose of repaying the Notes, including state grants, will be paid to the County Treasurer and deposited in the Note Repayment Fund. See THE NOTES- RISK FACTORS herein. Note Repayment Fund Establishment of the Fund. Pursuant to the Note Resolution, the County Treasurer shall create and maintain while the Notes are outstanding an interest and sinking fund for the Notes, designated the Note Repayment Fund. The Note Repayment Fund shall be maintained by the County Treasurer as a separate account, distinct from all other funds of the District, into which shall be paid on receipt thereof, (i) the proceeds of any General Obligation Bonds issued to pay the Accreted Value of the Notes, (ii) the proceeds of any additional bond anticipation notes issued to pay the Accreted Value of the Notes and (iii) other funds of the District lawfully available for the purpose of repaying the Notes, including state grants. If the District has not issued General Obligation Bonds and deposited the proceeds thereof with the County Treasurer in the Note Repayment Fund by one month prior to the maturity date of the Notes under the preceding paragraph, the District shall promptly institute proceedings for the issuance and sale of its renewal bond anticipation notes in an amount sufficient to pay the full amount of Accreted Value of the Notes coming due and payable at maturity, taking into account original issue premium received on the sale of such bond anticipation notes; provided that such a renewal note shall not mature later than five years from the date of the original issuance of the Notes. Such renewal bond anticipation notes shall be secured by a pledge of and lien upon the proceeds of the General Obligation Bonds, and shall -19-

26 contain such provisions for the security thereof as the District deems advisable and necessary to ensure the successful issuance and sale thereof. See THE NOTES- RISK FACTORS. Disbursements From the Fund. Amounts on deposit in the Note Repayment Fund, to the extent necessary to pay the Accreted Value of the Notes as the same become due and payable, shall be transferred by the County Treasurer to the Paying Agent which, in turn, shall pay such moneys to DTC to pay the Accreted Value of the Notes. DTC will thereupon make payments of the Accreted Value of the Notes to the DTC Participants who will thereupon make payments of Accreted Value to the beneficial owners of the Notes. Any moneys remaining in the Note Repayment Fund after the Notes and the interest thereon have been paid, or provision for such payment has been made, will be transferred to the General Fund of the District. Investment of District Funds and Note Proceeds All moneys held in any of the funds or accounts established with the County under the Note Resolution shall be invested in any one or more investments generally permitted to school districts under the laws of the State of California, consistent with the County investment policy. Such investments shall be made under the direction and at the discretion of the County Treasurer. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account. All interest or gain derived from the investment of amounts in any of the funds or accounts established under the Note Resolution shall be deposited in the fund or account from which such investment was made, and shall be expended for the purposes thereof. -20-

27 Property Tax Collection Procedures PROPERTY TAXATION In California, property which is subject to ad valorem taxes is classified as secured or unsecured. The secured roll is that part of the assessment roll containing state assessed public utilities property and real property, the taxes on which create a lien on such property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County. Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value. Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. -21-

28 Taxation of State-Assessed Utility Property The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization ( SBE ) and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as unitary property, a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and operating nonunitary property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year. Assessed Valuation Assessed Valuation History. In order for the District to issue a series of General Obligation Bonds under the 2012 Authorization in the principal amount of $5,000,000 to pay the Notes coming due at maturity, assessed valuation growth in the District would have to be 4.5% in fiscal years through , and 4.0% thereafter through See THE NOTES- RISK FACTORS. As discussed in SECURITY FOR THE NOTES, the District may also pay the Notes at maturity from any bond anticipation notes issued in renewal of the Notes or other funds of the District lawfully available for the purpose of repaying the Notes, including state grants. The table below shows a recent history of the District s assessed valuation. MENDOTA UNIFIED SCHOOL DISTRICT Assessed Valuations of All Taxable Property Fiscal Years to Annual Fiscal Year Local Secured Utility Unsecured Total % Change $ 366,344,561 $ 1,984,213 $ 82,052,551 $ 450,381, ,782,095 1,907,569 52,178, ,868, % ,261,321 1,641,957 70,711, ,615, ,365,780 1,637,888 30,533, ,536, ,703, ,730,265 (1) 66,641, ,075, ,131, ,058,428 72,792, ,982, ,689, ,809,190 76,514,674 1,005,013, ,551, ,786,955 70,212,110 1,017,550, ,549, ,207,017 74,493,765 1,033,249, (1) Two new power plants started operating within the District in Source: California Municipal Statistics, Inc. -22-

29 Assessed Valuation by Land Use. The following table shows the land use of property in the District, as measured by assessed valuation and the number of parcels for fiscal year As shown, the majority of the District s assessed valuation is represented by nonresidential property, primarily power plants (on the utility roll) and agricultural uses. MENDOTA UNIFIED SCHOOL DISTRICT Assessed Valuation and Parcels by Land Use Fiscal Year % of No. of % of Non-Residential: Assessed Valuation (1) Total Parcels Total Agricultural $329,738, % 1, % Commercial 36,114, Vacant Commercial 2,622, Industrial 71,924, Vacant Industrial 844, Power Plant/Utility Roll 363,207, Government/Social/Institutional 462, Subtotal Non-Residential $804,914, % 1, % Residential: Single Family Residence $116,852, % 1, % Condominium/Townhouse 7,243, Mobile Home 1,671, Residential Units 7,646, Residential Units/Apartments 13,673, Vacant Residential 6,754, Subtotal Residential $153,841, % 1, % Total $958,756, % 3, % (1) Local secured assessed valuation; excluding tax-exempt property. Source: California Municipal Statistics, Inc. -23-

30 Per Parcel Assessed Valuation of Single-Family Homes The following table sets forth the per parcel assessed valuation of single-family homes in fiscal year MENDOTA UNIFIED SCHOOL DISTRICT Per Parcel Assessed Valuation of Single-Family Homes Fiscal Year No. of Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 1,366 $116,852,282 $85,543 $83, No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total $0 - $24, % 3.148% $ 690, % 0.591% $25,000 - $49, ,663, $50,000 - $74, ,086, $75,000 - $99, ,857, $100,000 - $124, ,441, $125,000 - $149, ,721, $150,000 - $174, ,024, $175,000 - $199, , $200,000 - $224, $225,000 - $249, $250,000 - $274, $275,000 - $299, $300,000 - $324, $325,000 - $349, $350,000 - $374, $375,000 - $399, $400,000 - $424, $425,000 - $449, $450,000 - $474, $475,000 - $499, $500,000 and greater Total 1, % $116,852, % (1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc. Appeals of Assessed Value There are two types of appeals of assessed values that could adversely impact property tax revenues within the District. Appeals may be based on Proposition 8 of November 1978, which requires that for each January 1 lien date, the taxable value of real property must be the lesser of its base year value, annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. See CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Article XIIIA of the California Constitution in Appendix B. Under California law, property owners may apply for a Proposition 8 reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the County board of equalization or assessment appeals board. In most -24-

31 cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. Proposition 8 reductions may also be unilaterally applied by the County Assessor. Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. These reductions are subject to yearly reappraisals and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. A second type of assessment appeal involves a challenge to the base year value of an assessed property. Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date. The District cannot predict the changes in assessed values that might result from pending or future appeals by taxpayers. Any reduction in aggregate District assessed valuation due to appeals, as with any reduction in assessed valuation due to other causes, will cause the tax rate levied to repay the Series B Bonds to increase accordingly, so that the fixed debt service on the Series B Bonds (and other outstanding general obligation bonds, if any) may be paid. Tax Rates The table below summarizes the total ad valorem tax rates levied by all taxing entities in a representative tax rate area in the District during fiscal years through MENDOTA UNIFIED SCHOOL DISTRICT Typical Tax Rates- (TRA ) Dollars per $100 of Assessed Valuation Fiscal Years through General Tax Rate % % % % % Mendota Unified School District West Hills Community College District West Hills Community College Dist. SFID No Westlands Water District ( ) ( ) ( ) ( ) ( ) Total Tax Rate % % % % % Source: California Municipal Statistics, Inc. Tax Levies and Delinquencies The Board of Supervisors of the County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the Teeter Plan ), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, each entity levying property taxes in the County may draw on the amount of uncollected secured taxes credited to its fund, in the same manner as if the amount credited had been collected. The District participates in the Teeter Plan, and thus receives 100% of -25-

32 secured property taxes levied in exchange for foregoing any interest and penalties collected on delinquent taxes. Currently, the County includes the District s general obligation bond levies in its Teeter Plan. So long as the Teeter Plan remains in effect and the County continues to include the District in the Teeter Plan, the District s receipt of revenues with respect to the levy of ad valorem property taxes will not be dependent upon actual collections of the ad valorem property taxes by the County. However, under the statute creating the Teeter Plan, the Board of Supervisors could under certain circumstances terminate the Teeter Plan in its entirety and, in addition, the Board of Supervisors could terminate the Teeter Plan with respect to the District if the delinquency rate for all ad valorem property taxes levied within the District in any year exceeds 3%. In the event that the Teeter Plan were terminated with regard to the secured tax roll, the amount of the levy of ad valorem property taxes in the District would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the District. Major Taxpayers MENDOTA UNIFIED SCHOOL DISTRICT Secured Tax Charges and Delinquencies Fiscal Years through Secured Amt. Del. % Del. Tax Charge June 30 June $ 5,319,202 $ 195, % ,091, , ,178, , ,425, , ,083, , Source: California Municipal Statistics, Inc. The following table shows the 20 largest taxpayers in the District as determined by their secured assessed valuations in fiscal year Each taxpayer listed below is a unique name listed on the tax rolls. The District cannot determine from County assessment records whether individual persons, corporations or other organizations are liable for tax payments with respect to multiple properties held in various names that in aggregate may be larger than is suggested by the table below. A large concentration of ownership in a single individual or entity results in a greater amount of tax collections which are dependent upon that property owner s ability or willingness to pay property taxes. Panoche Energy Center, LLC ( Panoche ), is responsible for almost 30% of the total assessed valuation in the District for fiscal year Panoche owns a 400 megawatt intermediate and peaking power generating plant with four General Electric LMS100 turbine units located on property in the District. Dispatched by Pacific Gas & Electric Company ( PG&E ) to meet regional power and grid stabilization needs, the project entered commercial service in July 2009 and operates under a 20-year power purchase agreement with PG&E. Panoche is the largest LMS100 peaking facility in the U.S. The project is an indirectly, wholly owned subsidiary of Energy Investors Fund (EIF) through its private equity fund United States Power Fund II, L.P. (USPF II). In October 2013, Moody's Investors Service affirmed its Baa3 rating for Panoche and revised its outlook from negative to stable, based, among other things, Moody s opinion of the high probability of capacity payments, the primary source of cash flow, -26-

33 continuing to be paid given the terms of the Power Purchase Agreement with PG&E (PG&E: A3 stable) and the very manageable risks associated with operating Panoche. MENDOTA UNIFIED SCHOOL DISTRICT Largest Local Secured Taxpayers % of Property Owner Primary Land Use Assessed Valuation Total (1) 1. Panoche Energy Center, LLC Power Plant $287,200, % 2. Starwood Power-Midway, LLC Power Plant 74,600, Athanasios & Pagona Stefaopoulos Agricultural 33,343, Barry S. Baker, Trustee Agricultural 28,561, Sierra Valley Hulling LLC Industrial 16,292, Michael L. Adolph, Trustee Agricultural 12,386, Sagouspe Family Orhcards I-IV LLC Agricultural 10,515, Christopher S. and Elena Stefanopoulos, Trustees Agricultural 10,466, Juan Calderon, Trustee Agricultural 9,793, Rodney J. Cardella, Trustee Agricultural 9,349, Mendota Biomass Power Ltd. Industrial 9,204, Cortlandt J. and Laura W. Blackburn, Trustees Agricultural 8,190, Gregory R. Pruett, Trustee Agricultural 7,492, Byron and Cheryl Baker Agricultural 5,718, James F. and Dayle Schmiederer, Trustees Agricultural 5,220, Tracey M. Hansen, Trustee Agricultural 5,175, Pappas Farming Company I-V LP Agricultural 4,937, Universal Land Co. Inc. Agricultural 4,881, Kevin W. Gowens Agricultural 4,375, Pappas & Co. Industrial 4,091, $551,794, % (1) local secured assessed valuation: $958,756,146. Source: California Municipal Statistics, Inc. -27-

34 Direct and Overlapping Debt Set forth below is a direct and overlapping debt report (the Debt Report ) prepared by California Municipal Statistics, Inc. for debt issued as of January 1, The Debt Report is included for general information purposes only. The District has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long-term obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency Assessed Valuation: $1,033,249,911 MENDOTA UNIFIED SCHOOL DISTRICT Statement of Direct and Overlapping Bonded Debt (Debt Issued as of January 1, 2014) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 1/1/14 West Hills Community College District % $ 1,550,695 West Hills Community College District School Facilities Improvement District No ,647,987 Mendota Unified School District ,285,000 (1) City of Mendota ,000 City of Mendota 1915 Act Bonds ,185,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $17,683,682 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Fresno County General Fund Obligations 1.680% $ 1,141,812 Fresno County Pension Obligations ,999,262 West Hills Community College District Certificates of Participation ,342,920 City of Mendota Certificates of Participation ,899 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $15,673,893 OVERLAPPING TAX INCREMENT DEBT: Mendota Redevelopment Agency $6,550,000 TOTAL OVERLAPPING TAX INCREMENT DEBT $6,550,000 COMBINED TOTAL DEBT $39,907,575 (2) (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to Assessed Valuation: Direct Debt ($10,285,000) % Total Direct and Overlapping Tax and Assessment Debt % Combined Total Debt % Ratios to Redevelopment Incremental Valuation ($92,608,048): Overlapping Tax Increment Debt % Source: California Municipal Statistics, Inc. -28-

35 THE NOTES- RISK FACTORS The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating a purchase of the Notes. However, they do not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Notes. There can be no assurance that other risk factors will not become evident at any future time. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks. No Assurances on Issuance of General Obligation Bonds As described above, the District has covenanted in the Note Resolution to issue its General Obligation Bonds, bond anticipation notes or other obligations to provide for the payment of the Maturity Value of the Notes at maturity, taking into account original issue premium received on the sale of such General Obligation Bonds. Although the District expects to issue General Obligation Bonds as required to pay the Maturity Value of the Notes at maturity, such issuance is dependent upon a variety of factors over which the District has no control, including those described below. In the case that the District is unable to issue a third series of General Obligation Bonds under the 2012 Authorization, the District will be obligated to issue certificates of participation or general obligation bonds issued pursuant to a new bond authorization, or redeem the Notes from any bond anticipation notes issued in renewal of the Notes or other funds of the District lawfully available for the purpose of repaying the Notes, including state grants. Legal Limitation on Tax Rate to Pay General Obligation Bond Debt Service. The Strict Accountability in Local School Construction Bonds Act of 2000 (the 2000 Act ), as set forth in the California Education Code, which applies to the District s General Obligation Bonds, provides that a new series of General Obligation Bonds cannot be issued unless the tax rate levied to pay debt service on all of the District s General Obligation Bonds issued pursuant to that authorization would not exceed $60 per year per $100,000 of taxable property, when assessed valuation is projected by the District to increase in accordance with Article XIIIA of the California Constitution. See CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS. The District has issued two series of its General Obligation Bonds (including the Series B Bonds), leaving $5,000,000 principal amount unissued as of this date. See DISTRICT FINANCIAL INFORMATION Long-Term Debt. In order for the District to issue a series of General Obligation Bonds under the 2012 Authorization in the principal amount of $5,000,000 to pay the Notes coming due at maturity, and comply with the $60 per $100,000 limitation, the assessed valuation in the District would need to be $1.27 billion (assuming a total interest cost of 4.0%), or approximately 23% higher than the assessed valuation of $1.033 billion. See PROPERTY TAXATION - Assessed Valuation- Assessed Valuation History above for a nine-year history of assessed valuation changes in the District. Despite the total assessed valuation growth of 2.8% over the last two years, the District is projecting a total growth of 23% over the next five years. This projection is due to, among other things, the expectation of a new biorefinery plant for the production of ethanol from sugar beets (which were a major crop in the Mendota area until the closure of the Spreckels Sugar -29-

36 plant in 2008) within the District s boundaries, and the general improving economy and housing market in the area. As of the date of this Official Statement, the biorefinery project has not received the necessary permits, and no assurances can be made that the biorefinery plant will ultimately be constructed and will contribute to future growth of assessed valuation of the District. There can be no assurance that the assessed valuation in the District will be high enough to comply with the $60 per $100,000 tax rate levy limitation in order to redeem the Notes at maturity from proceeds of a third series of General Obligation Bonds issued under the 2012 Authorization. In the case that the District is unable to issue a third series of General Obligation Bonds under the 2012 Authorization, the District will be obligated to issue certificates of participation, general obligation bonds issued pursuant to a new bond authorization, or redeem the Notes from bond anticipation notes issued in renewal of the Notes or other funds of the District lawfully available for the purpose of repaying the Notes, including state grants. There can be no assurance that the District Board of Trustees will adopt a resolution to propose an additional general obligation bond measure to the voters of the District, or that such bond measure, if proposed, will receive sufficient affirmative votes to authorize issuance of general obligation bonds. There may not be other funds lawfully available to the District to redeem the Notes and it may not be possible to cause issuance of certificates of participation or other obligations for such purpose. Legal Limitation on Outstanding Bonded Indebtedness. The 2000 Act limits outstanding general obligation bond indebtedness to 2.5% of the District s taxable property as shown by the last equalized assessment of the County. The District s outstanding principal amount of general obligation bonds as of February 1, 2014 is expected to be $16,285,000(assuming issuance of the Series B Bonds in the amount of $6,000,000. Based on a District assessed valuation of $1,033,249,911 in , the 2.5% bonding capacity is $25,831,248. Thus, assessed valuation within the District does not need to increase in order for the District to stay within the limit on outstanding bonded indebtedness. Bond Anticipation Notes and Renewals Limited to 5-Year Term. The Notes are being issued pursuant to the California Education Code, particularly Section thereof ( Section ). Section currently provides that general obligation bond anticipation notes, and any renewals thereof, must mature in a period of not to exceed 5 years. The Notes mature on August 1, Pursuant to the Note Resolution, the District has covenanted to take all actions required to authorize, sell and issue, three months preceding the final maturity date of the Notes (which would be May 1, 2018), General Obligation Bonds, an additional series of bond anticipation notes or other obligations, including certificates of participation, or any combination of the foregoing, in an aggregate principal amount which is sufficient to pay (taking into account original issue premium received on the sale of the General Obligation Bonds) the Notes, coming due and payable on August 1, Unless Section is amended prior to the maturity date of the Notes, however, any additional series of bond anticipation notes issued to pay the Notes at maturity could not mature beyond January 28, Such a restriction on maturity might cause the District to opt to issue obligations other than bond anticipation notes, such as certificates of participation, in order to refinance the Notes. Other Factors Limiting Issuance of General Obligation Bonds, Certificates of Participation or Other Obligations. Other factors which could affect the ability of the District to issue such General Obligation Bonds, bond anticipation notes, certificates of participation, or other obligations include the financial condition of the District at the time it institutes proceedings -30-

37 to issue such obligations, the presence of conditions prevailing in the bond market which could make it difficult or impossible for the District to issue such obligations, and the difficulty of obtaining municipal bond insurance or other credit enhancement for the General Obligation Bonds or other obligations. No assurances can be given that the District will be able to issue General Obligation Bonds, notes or other obligations when and as required to provide for payment of the Maturity Value of the Notes at maturity. Reduction in Assessed Valuation The reduction of taxable values of property in the District caused by economic factors beyond the District s control, such as successful appeals by property owners for a reduction in property s assessed value, blanket reductions in assessed value due to general reductions in property values or the complete or partial destruction of such property caused by, among other eventualities, an earthquake or other natural disaster, could cause a reduction in assessed valuations. Such factors could also cause the assessed value of District properties to increase at a slower rate than needed to comply with the tax rate limitation described above. Such factors could adversely affect the ability of the District to issue General Obligation Bonds prior to maturity of the Notes. See - No Assurances on Issuance of General Obligation Bonds above. Reduction in Inflationary Rate and Changes in Legislation; Further Initiatives Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Article XIIIA of the California Constitution, which significantly affected the rate of property taxation, was adopted pursuant to California s constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might alter the taxable value, reduce the property tax rate, or broaden property tax exemptions. See CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS - Article XIIIA of the California Constitution. Loss of Tax Exemption As discussed under the heading TAX MATTERS, certain acts or omissions of the District in violation of its covenants in the Bond Resolution or the Note Resolution could result in the interest on the Notes being includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Notes. Should such an event of taxability occur, the Notes would not be subject to a special redemption and would remain outstanding. -31-

38 TAX MATTERS Tax Exemption Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series B Bonds and the Notes is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the District comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Series B Bonds and the Notes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series B Bonds or the Notes. Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public (excluding bond houses and brokers) at which a Series B Bond or a Note is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Series B Bond or a Note is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded. Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Series B Bond or the Notes on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Series B Bonds or the Notes to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Series B Bond or Note. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Series B Bonds or the Notes who purchase the Series B Bonds or the Notes after the initial offering of a substantial amount of such maturity. Owners of such Series B Bonds or Notes should consult their own tax advisors with respect to the tax consequences of ownership of Series B Bonds or Notes with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Series B Bonds or Notes under federal individual and corporate alternative minimum taxes. Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Series B Bond (said term being the shorter of the Series B Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted -32-

39 basis of the owner of the Series B Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Series B Bond is amortized each year over the term to maturity of the Series B Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Series B Bond premium is not deductible for federal income tax purposes. Owners of premium Series B Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Series B Bonds. California Tax Status. In the further opinion of Bond Counsel, interest on the Series B Bonds and on the Notes is exempt from California personal income taxes. Other Tax Considerations. Owners of the Series B Bonds and the Notes should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Series B Bonds and the Notes may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Series B Bonds and the Notes other than as expressly described above. Forms of Opinion. Copies of the proposed forms of opinion of Bond Counsel are attached hereto as Appendix D. Legality for Investment CERTAIN LEGAL MATTERS Under provisions of the California Financial Code, the Series B Bonds and the Notes are legal investments for commercial banks in California to the extent that the Series B Bonds and the Notes, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and under provisions of the California Government Code, the Series B Bonds and the Notes are eligible to secure deposits of public moneys in California. Absence of Litigation No litigation is pending or threatened concerning the validity of the Series B Bonds or the Notes, and a certificate to that effect will be furnished to purchasers at the time of the original delivery of the Series B Bonds and the Notes. The District is not aware of any litigation pending or threatened that (i) questions the political existence of the District, (ii) contests the District's ability to receive ad valorem taxes or to collect other revenues or (iii) contests the District's ability to issue and retire the Series B Bonds or the Notes. The District is routinely subject to lawsuits and claims. In the opinion of the District, the aggregate amount of the uninsured liabilities of the District under these lawsuits and claims will not materially affect the financial position or operations of the District. Compensation of Certain Professionals Payment of the fees and expenses of Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel to the District, Isom Advisors, A Division of Urban -33-

40 Futures, Inc., as financial advisor to the District, and Stradling Yocca Carlson & Rauth, A Professional Corporation, San Francisco, California, as Underwriter s Counsel, is contingent upon issuance of the Series B Bonds and the Notes. CONTINUING DISCLOSURE The District will execute a Continuing Disclosure Certificate in connection with the issuance of the Series B Bonds and the Notes in the form attached hereto as Appendix E. The District has covenanted therein, for the benefit of holders and beneficial owners of the Series B Bonds and the Notes to provide certain financial information and operating data relating to the District to the Municipal Securities Rulemaking Board (an Annual Report ) not later than nine months after the end of the District s fiscal year (which currently would be March 31), commencing March 31, 2014 with the report for the Fiscal Year, and to provide notices of the occurrence of certain enumerated events. Such notices will be filed by the District with the Municipal Securities Rulemaking Board. The specific nature of the information to be contained in an Annual Report or the notices of enumerated events is set forth in APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE. These covenants have been made in order to assist the Underwriter of the Series B Bonds and the Notes in complying with S.E.C. Rule 15c2-12(b)(5) (the Rule ). The District has, within the last 5 years, failed to make certain filings in a timely manner in connection with prior undertakings pursuant to the Rule. Specifically, the District made no filings prior to the issuance of the 2010 General Obligation Refunding Bonds, and although the 2010 General Obligation Refunding Bonds refunded all then-outstanding debt, the failure did occur within the past five years. Since the issuance of the 2010 General Obligation Refunding Bonds, the District has made most required filings, however the District failed to file the Top 10 Secured Property Taxpayers Reports for the and fiscal years, as required by the Continuing Disclosure Certificate in connection with the issuance of the 2010 General Obligation Refunding Bonds. The District is now current in such filings. To ensure future compliance, a dissemination agent has been appointed by the District to make future filings. Isom Advisors, A Division of Urban Futures, Inc., will be serving as dissemination agent to ensure timely and complete compliance with the Rule and its undertakings. Neither the County nor any other entity other than the District shall have any obligation or incur any liability whatsoever with respect to the performance of the District s duties regarding continuing disclosure. -34-

41 RATINGS The Series B Bonds. Standard & Poor s Rating Services ( S&P ) has assigned a rating of AA to the Series B Bonds, with the understanding that, upon issuance of the Series B Bonds, a policy insuring the payment when due of principal of and interest on the Series B Bonds will be issued by BAM. Moody s Investors Services ( Moody s ) has assigned a rating of A1 to the Series B Bonds. The District has provided certain additional information and materials to Moody s (some of which does not appear in this Official Statement). Such rating reflects only the view of Moody s, and explanations of the significance of such rating may be obtained only from Moody s. There is no assurance that any credit rating given to the Series B Bonds will be maintained for any period of time or that the rating may not be lowered or withdrawn entirely by Moody s, if in such agency s judgment, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price of the Series B Bonds. The Notes. Moody s has assigned an underlying rating of A3 to the Notes. The District has provided certain additional information and materials to Moody s (some of which does not appear in this Official Statement). Such rating reflects only the view of Moody s, and explanations of the significance of such rating may be obtained only from Moody s. There is no assurance that any credit rating given to the Notes will be maintained for any period of time or that the rating may not be lowered or withdrawn entirely by Moody s, if in such agency s judgment, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price of the Notes. UNDERWRITING The Series B Bonds. The Series B Bonds are being purchased by E. J. De La Rosa & Co., Inc. (the Underwriter ). The Underwriter has agreed to purchase the Series B Bonds at a price of $6,424, which is equal to the initial principal amount of the Series B Bonds of $6,000,000, plus original issue premium of $483,360.00, and less an Underwriter s discount of $58, The purchase contract relating to the Series B Bonds provides that the Underwriter will purchase all of the Series B Bonds (if any are purchased), and provides that the Underwriter s obligation to purchase is subject to certain terms and conditions, including the approval of certain legal matters by counsel. The Notes. The Notes are being purchased by the Underwriter. The Underwriter has agreed to purchase the Notes at a price of $4,964, which is equal to the initial principal amount of the Notes of $4,998, and less an Underwriter s discount of $33, The purchase contract relating to the Notes provides that the Underwriter will purchase all of the Notes (if any are purchased), and provides that the Underwriter s obligation to purchase is subject to certain terms and conditions, including the approval of certain legal matters by counsel. The Underwriter may offer and sell the Series B Bonds and the Notes to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed by the Underwriter. -35-

42 ADDITIONAL INFORMATION The discussions herein about the Bond Resolution, the Note Resolution and the Continuing Disclosure Certificate are brief outlines of certain provisions thereof. Such outlines do not purport to be complete and for full and complete statements of such provisions reference is made to such documents. Copies of these documents mentioned are available from the Underwriter and following delivery of the Series B Bonds and the Notes will be on file at the offices of the Paying Agent in Los Angeles, California. References are also made herein to certain documents and reports relating to the District; such references are brief summaries and do not purport to be complete or definitive. Copies of such documents are available upon written request to the District. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or Owners of any of the Series B Bonds or the Notes. The execution and delivery of this Official Statement have been duly authorized by the District. MENDOTA UNIFIED SCHOOL DISTRICT By: /s/ Mike Crass Superintendent -36-

43 APPENDIX A DISTRICT AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR A-1

44 [THIS PAGE INTENTIONALLY LEFT BLANK]

45 MENDOTA UNIFIED SCHOOL DISTRICT COUNTY OF FRESNO MENDOTA, CALIFORNIA AUDIT REPORT JUNE 3D, 2012

46 INTRODUCTORY SECTION 2

47 TABLE OF CONTENTS FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis 6 8 Basis Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (GAAP) - General Fund Statement of Fiduciary Net Assets - Fiduciary Funds Notes to the Basic Financial Statements 23 3

48 SUPPLEMENTARY INFORMATION SECTION Organization Schedule of Average Daily Attendance Schedule of Instructional Time Schedule of Financial Trends and Analysis Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Reconciliation of Annual Financial and Budget Report (J-200) With Audited Financial Statements Schedule of Excess Sick Leave Schedule of Charter Schools Combining Statements: Combining Statements - Non-major Funds: Combining Balance Sheet - Non-major Special Revenue Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Non-major Special Revenue Funds Combining Balance Sheet - Non-major Capital Projects Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Non-major Capital Projects Funds Combining Balance Sheet - Non-major Debt Service Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Non-major Debt Service Funds Combining Statement of Changes in Assets and Liabilities-Agency Funds Stalement of Revenues, Expenditures, and Changes in Fund Balance - Budget And Actual - Non-major Special Revenues Funds Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget And Actual- Non-major Capital Projects Funds Statement of Revenues, Expenditures and Changes in Fund Balance- Budget to Aclual, Non-Major Debt Service Fund

49 OTHER INDEPENDENT AUDITOR'S REPORTS Independent Auditor's Report on Intemal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance With OMS Circular A-133 Independent Auditor's Report on State Compliance the types of compliance requirements described in the Standards and Procedures for Audits of California K-12 Local Education Agencies issued by the Education Audit Appeals Board FINDINGS AND RECOMMENDATIONS SECTION Schedule of Audit Findings and Questioned Costs Summary Schedule of Prior Audit Findings

50 Schafer Accountancy Corporation Certified Public Accountants 7080 N. Whitney Ave., Suite 103 Fresno, California INDEPENDENT AUDITOR'S REPORT Board of Trustees Mendota Unified School District Mendota, California We have audited the accompanying financial statements of the governmental activities, business-type activities, and each major fund of the Mendota Unified School District, as of and for the year ended June 30, 2012, which collectively comprise the district's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Mendota Unified School District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted OUT audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation We believe that our audit provides a reasonable basis for its opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the Mendota Unified School District as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The Management's Discussion and Analysis on pages 8 through 14 is not a required part of the basic financial statements, but is supplementary information required by the Governmental Accounting Standards Board. We have appjied certain limited procedures. consisting principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have also issued our reported dated November 20, 2012, on our consideration of the Mendota Unified School District's internal control over financial reporting and our tests of the distnct's compliance with certain provisions of laws, regulations, contracts, and grants That report is an integral part of an audit performed in accordance with Govemment Auditing Standards and should be read in conjunction with this report in considering the results of this audit The purpose of this report is to describe the scope of the testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. Telephone ~ Fax

51 Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise Mendota Unified School District's basic financial statements. The combining and individual fund financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of Mendota Unified School District. 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 Govemments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of Mendota Unified School District. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements laken as a whole. November 20,

52 MENDOTA UNIFIED SCHOOL DISTRICT MNAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) FOR THE YEAR EN DED JUNE 30, 2012 An overview of the Mendota Unified School District's financial activities for the fiscal year ended June 30, 2012, is provided in this discussion and analysis of the district's financial performance. This Management Discussion and Analysis (MD & A) should be read in conjunction with the district's financial statements (including notes and supplementary information). FINANCIAL HIGHLIGHTS The District increased its average daily attendance by 235 over the previous two years. The Districts long-term debt is continuing to decrease each year because no new debt is being incurred. OVERVIEW OF THE FINANCIAL STATEMENTS The full annual financial report is a product of three separate parts: the basic financial statements, supplementary information, and this section, Management Discussion and Analysis. The three sections together provide a comprehensive overview of the district. The basic financials are comprised of two kinds of statements that present financial information from different perspectives, district-wide and funds. }> Oistrict wide financial statements, which comprise the first two statements, provide both shortterm and long-term information about the district's overall financial position. ") Individual parts of the district, which are reported as fund financial statements, focus on reporting the district's operations in more detail. These fund financial statements comprise the remaining statements. :. :. Basic services funding (Le., regular and special education) is described in the governmental funds statements. These statements include short-term financing and balance remaining for future spending. Short and long-term financial information about the activities of the district that operate like businesses (such as food service or self-insurance funds) are provided in the proprietary funds statements. :. Financial relationships, for which the district acts solely as an agent or trustee, for the benefit of others to whom the resources belong, are presented in the fiduciary fund statements. Notes to the financials, which are included in the financial statements, provide more detailed data and explain some of the information in the statements. The required supplementary information section provides further explanations and provides additional support for the fin ancial statements. A comparison of the district's budget for the year is included.

53 The Statement of Net Assets and the Statement of Activities The district as a whole is reported in the district-wide statements and uses accounting methods similar to those used by companies in the private sector. All of the district's assets and liabilities are included in the statement of net assets. The statement of activities reports all of the current year's revenues and expenses regardless of when cash is received or paid. The district's financial health or position (net assets) can be measured by the difference between the district's assets and liabilities. ;.;. Increases or decreases in the net assets of the district over time are indicators of whether its financial position is improving or deteriorating, respectively. )- Additional non-financial factors such as condition of schoot buildings and other facilities, and changes in the property tax base of the district, need to be considered in assessing the overall health of the district. FUND FINANCIAL STATEMENTS More detailed information about the district's most significant funds - not the district as a whole - is provided in the fund financial statements. Funds are accounting devices the district uses to keep track of specific sources of funding and spending on particular programs: ;.;. Some funds are required by bond covenants and by state law. }Io Other funds are established by the district to control and manage money for particular purposes (such as repaying its long-term debts). Other funds may also show proper usage of certain revenues (such as federal grants). The district has two kinds of funds: }Io Governmental funds: Most of the district's basic services are included in governmental funds, which generally focus on : 1. How cash and other financial assets can readily be converted to cash flow (in and out). 2. The balances len at year-end that are available for spending. A detailed short-term view is provided by the governmental fund statements. These help determine whether there are more or fewer financial resources that can be spent in the near future for financing the district's programs. Because this information does not encompass the additional long-term focus of the district-wide statements, additional information is provided at the bottom of the governmental fund statements that explains the differences (or relationships) between them. 9

54 » Fiduciary funds: For assets that belong to others, such as the scholarship fund and/or student activities funds, the district acts as the trustee, or fiduciary. The district is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. A separate statement of fiduciary net assets and a statement of changes in fiduciary net assets reports the district's fiduciary activities. These activities are excluded from the district-wide financial statements, as the assets cannot be used by the district to finance its operations. FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE» Total net assets have increased by $4,779,754 over the previous year.» Revenue exceeded expenses by $4,779,754 during the year.» Health benefits for District employees is the fastest growing expense of the District. Net Assets Table 1: Net Assets Governmental AgivH!II Business Type DIStrict A!3~Hies T21al Total Percentage ~hing!: Current and other assets Cash Receivables Due from other funds Inventories Subtotal of other assets Capital assets Total assets Long term debt oulstancllng Other liabilities Total ~ab i lities Net assets, Investeod in capital assets, Net 01 relateod debt Restricted Unrestricted (deficit) Total net assets $16,202,180 S 18, $ 6,326,612 4,871, ,836 88,345 32,375,993 26,208,525 2,172,148 II;! 49:71711; $ S - $16.202,180 $18,605,166 6,326,612 4,871, ,836 88, : 11;30 22,697, ;l~ 37Q~;l , ,244,957 ;l77 17~ Qn,132 32,375,993 26,208,525 2,172,148 5,689, :,49:7,17 14 ~7,'2~ L... L... $ % U< ---.liq ~ ~ ~ ~ The district's combined net assets increased more than $4,779,754 compared to June 30, Most of the change in the district's financial position came from governmental activities, the net assets of which increased from $46,265,566 to $51,045,319. Many factors contributed to the improved financial position. However, certain events of the last year sland oul beyond others:» Average daily attendance has increased by 91 over the previous year. 10

55 Changes in Net Assets A comparative analysis of government-wide data is presented below. Table 2: Changes in Net Assets Go~emmenta' Business-Type District Adiv~ies Ag~~ies T2I! Revenues Program revenues Charges for services 278,712 18, ,889 Federal and state categorical grants 10,529,n4 6,318,830 10,529,774 6,318,830 General revenues Federal and state formula aid 15,315,945 14,854,226 15, , Other 4,04;l 2!i 2 lq7,4q~ 4,04M~2 2,IQ7,4Q;l Total revenues ;lq,168,on n299.:m8 3Q ,299 } Expenses Instruction-related 16,395,110 18,162,331 16,395,110 18,162,331 Student support services 2,999,393 2,535,656 2,999,393 2,535,656 Maintenance and operations 2.975,458 2,218,039 2, ,218,039 Administration 1,702, ,977 1,70, ,977 Other l.31~,996 1,;lIS 64Q -- I ;l1~,996 1,;lli 64Q Total expenses i ,ne,243 2:;, ", Excess (deficiency) before special items 4.779,754 2,570,705 4, ,570,705 Special item Increase (decrease) In net assets ~ ~ZZ9:Z~ I ~ 5zaZQ5 '--- ~! ~ ZZ~ Z~, ~ ~ZOZQ~ Governmental Activities A comparative analysis of government-wide data is presented below. Table 3: Summary of Revenues for Governmental FUnctions FYE 2012 Percent 01 Amoynl Total Revenues Program revenues Charges for services, 278,712.94% Federal and state categorical grants 10,529,774 34_39 General revenues Federal and state formula aid 15,315,945 Other 4,~;';!M _.. Q Total revenues $ 30 1S8 on % 11

56 Table 4: Summary of Expenses E)(penses Instrucllon-related Student support services Maintenance and operations Administration Other Total expenses $, FYE 2012 Amount 16,395,110 2,999,393 2,975,458 1,702,362 1,315, ill Percent of Total 64 57% 11, % Table 5: Governmental Activities 10tal Cost or ~!i!rvi!3: Instructlon S 14,767,829 $ 15,424,988 Instruction-related services 1,627,281 2,737,343 Pupil services 2,999,393 2,535,656 General administration 1,702, ,977 Maintenance and operahons 2,975,"58 2,218,039 Facility acquisition and construction Ancillary services Community services Interest on lon9 term debt 104, ,935 Other outgo 1,21 1, ,705 Net Cost Qf S~rvicel S 7,301, ,323,568 1,358,193 2,737, , ,357 1,597, ,977 2,594,956 2,218, , ,935 1, ,705 Total I $ S J4 5Z~ 33 ~la3909~~ FINANCIAL ANALYSIS OF THE DISTRICT'S FUNDS General Governmental Functions The dislricl's governmental funds reported a combined fund balance of $18,919,283, which is less than last year's total of $20.430,005, Below is an analysis of the district's fund balances and the lolal Change in fund balances from the prior year, 12

57 Table 6: District's Fund Balances Fund Balance Fund Balance Increase June June 3~ (Decrease) General $ 13,307,838 $ 11,556,328 $ 1,751,510 Building 13,382 13, Cafeteria 2,285,777 1,947, ,025 Child development 288, ,054 (21,869) Adult education 6,671 5,033 1,638 Deferred maintenance 81, ,868 (73,973 ) Special reserve non-capital out lay 768, ,449 11,334 Pupil transportation equipment 7,986 7, SpeCial reserve capital out-lay 1,772,399 5,003,418 3,231,019 Bond interest and redemption 162, ,276 (169,277) State school building Lease purchase 27, Capital facilities 196, ,416!118,416) Total S $ 20430,005 S 0,510722) General Fund Budgetary Highlights The district's budget is prepared in accordance with California law and is based on the modified accrual basis of accounting The district amended its revenue estimates to reflect greater than originally anticipated revenues from state revenue limit sources. The District amended its expenditure estimates for employee benefits to cover greater that expected expenditures in employee benefits. The District amended its expenditure estimates for services and operating expenditures to cover increased operating costs. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The District's investment in capital assets amounts to $35,370,993 (net of accumulated depreciation). This investment includes mainly land, school buildings, administrative offices, furniture, and computer equipment. 13

58 Table 7: Capital Assets (net of depreciation) land Buildlflgs and m provements Equipment Total Governmenlal BUSiness-Type Activities ,, 2012 $2,100,000 32,378, $ District Total 2011 S ,177,855 Total Percentage Change % Long Term Debt The District has not entered into any new long term debt obligations during the year. Consequently, long term debt has decreased by 2003% Table 8: Outstanding Long Term Debt District Total Total Percentage Change General obligation bonds $ 2,995,000 $ 3,685, % (financed with property taxes) Capital lease 92,066 92,066 - % Compensated absences 110, , % Post--employment health benefits 47,536 96, % Total $ $ % FACTORS BEARING ON THE DISTRICT'S FUTURE )- The District is faced with steadily rising costs, particularly medical benefits for employees. )- The Distnct receives a substantial portion of its revenue from the State of California. The District must continue to receive state funds equivalent to prior years in order to meet future operating expenses CO NT ACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, parents, investors, and creditors with a general OVerview of the district's finances and to show the district's accountability for the money it receives. If you have questions regarding this report or need additional financial information, contact the business office, Mendota Unified School District, 115 McCabe Avenue, Mendota, Califomia

59 MENDOTA UNIFIED SCHOOL DISTRICT Statement of Net Assets June Governmental Business-type A!dti!!.~s Assets A!div~!H: T2Ial CaSh in county treasury (Note 2) $ 16,199,180 $ S 16,199,180 Cash In revolving hmd (Nole 2) 3,000 3,000 Accounts receivable (Note 4) 6.326, Due from other funds (Nole 6) 158, ,835 Stores Inventones - food 9,830 9,830 Land (Note 7) Buildings and improvements (Note 7) Equipment (Note 7) Less accumulated depreciation (Note 7) Total assets Liabilities Accounts payable $ 3,619,339 $ S Due to other funds (Nole 6) 158, ,836 Deferred revenue Other liabflitje$ Long-term liabilities Due WIthin one year Capital leases (Nole 9) ,066 General obligation bonds payable (Note 8) 710, ,000 Other (Nole 10) 16,300 16,300 Compensated absences payable (Note 10) Total due within one year 4 673,789 Due after one year Caprlal leases General obligation bonds payable 2,285,000 2,285,000 Other 31,236 31,326 Compensated absences payable 33,107 33,107 Total due after one year 2,349,34;'; Z 349,34~ Total ~abllrlies! !, Net Assets Invested in capllal assets, net of Related debt 32,375,993 32,375,993 Restncted lor' Capital projects 2,009, t49 2,009,149 Debt serva 162, ,999 Educational programs Unrestricted ,178 1l;!,4iZ,17D Tolal net assels! ! S S The notes to the financia l statements are an Integral part of this statement 15

60 ~ Governmental actlvlhes InstructIOn Instruction-related services: Supervision oilnstructjon Instructional library. medicine and technology School site administration Pupil services: Home-to.school transportation Food services All other pupil services General administration Data processing AI' other general adm.,istration Plant services Ancillary services Community services Enterprise activities Interest On lortg-ienn debl Other outgo Depreciation (unallocated), EXPIates 14, ,979 1,336, ,804 1,534, , ,009 1,561,353 2,975, , , , Charges for Services MENDOTA UNIFIED SCHOOL DISTRICT Statement of Activities June 30, ,124 1, ,052 39,650 36,763 E![29fi!m R l!j:nullll Operating Grants and Contributions, 4,683, , ,761 1,629, , , ,739 96,551 Capital Grants and Contributions, 2,756,958 Governmental Activities $ (7,301,254) $ (196,656) (1,161,537 ) (309,043) 270,168 (469,526 ) (1 41,OO9) (1,456,575 ) (2,594,956 ) (104,795 ) ( ) (842,027 ) Net (Expense) Revenue and Chanaes in Net Asset$_ Busjrte5s~Type Activities J.otCll S (7,301,254) (196,656 ) (1,161,537) (309,043 ) 270,168 (469,526 ) (141,009) (1,456,575 ) (2,594,956 ) (I04,795 ) (272,623 ) (842,027 ) Total goyernmenlai actlvrtles 25,m J:19 Busmess-type activities Food services Enlerpnse activities General admlnislralion Plant services OIheroutgo Tolal business-type activities Tolal ekpenses 25,388,J:19 General revenues Taxes and subllenlions. Taxes levied lor general purposes Taxes levied for debt service Taxes levied for other specific purposes Federal and stale aid nol restricted to SpedflC purposes Interest and investment earnings Miscellaneous Total general revenues Change in net assets Net assets beginning Net assets ending ~Z8..I12 278,712 7,772,816 7,772,816 V56,~58 2,756,958 {14 ~79,!rlJ: 1 ( J:J: 1 2,955, ,120 15,315, , ,758 '-9, ,779,754 46,265, Q45.W "4,~71i. :J:J: ) (14,579,8331 2,955, ,315,945 The notes 10 the financial statements are an integral part of this statement. '6

61 MENDOTA UNIFIED SC HOOL DISTRICT Balance Sheet Govemmental Funds June 30, 2012 Other Total Govemmenta! Governmental General Funds Funds Assets Cash in county treasury (Note 2) 9,488,024 $ 6,7'1, ,180 Cash In revolving rund (Nole 2) 2,000 1,000 3,000 Accounts receivable (Note 4) 6,018, ,349 6,326,612 Due from other funds (Nole 6) 156,430 2, ,836 Stores inventories - food jil,!;!j:q li!,~q Total assets I , ! liabilities and hmd balances Liabilities Accounts payable 2,354,973 $ 1,264,366 3,619,339 Due to other funds (Note 6) 2, , ,836 Deferred revenue Other liabilities Totai llabillltes 2 357,:} Q, ,175 fund balances Non-spendable 2,000 9,830, 1,830 RestrICted 476,024 5,326,862 5,802,886 Assigned 5,458, ,753 5,733,329 Unassigned 7,371,238 7, Total fund balances 133Q7, Total ~ab i li1ies al'kf fund balances, J:i e::i 2lZ I Z ~l, 22 6!i1Z!1.58 The notes to the fin ancial statements are an Integral part of this statement 17

62 MENDOTA UNIFIED SCHOOL DISTRICT Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2012 Tolal fund balances - goverm'lenlal funds Capital assets used for goverrmenlal activities are not financial resources and therefore are not reported as assets in govemmenlal funds. The cost of the assets is $55,357,783 and the accumulated depreciation is $19,986,790. s 18,919,283 35,370,993 Long.term liabilities are not due and payable in the current penod and therefore are not reported as liabilities in the funds. Long-term liabilibes at year-end consist of' Capital leases General obl'9alion bonds payable Other Compensated absences (vacation) Total net assets - goverrmentaj activities, 92,066 2, ,536, 10,355 (3,244,957 ), The notes to the financial statements are an integral part of this statement 18

63 " MENDOTA UNIFIED SCHOOL DISTRICT Statement of Revenues, Expenditures, And Changes in Fund Balances Governmental Funds Year Ended June 30, 2012 Other Total Governmental Govemmental General Funds Funds Revenues. Revenue limit sources: State apportionments S 15,638,052 S 15,638,052 local sources 36,647 36,647 Federal 2.260,055, Other state 4,948,216 Other local 1~,,!;i Total revenues 23,947,235 Expenditures, Certificated salanes 9,675,365 18,222 9,693,587 Classified salanes 2,748, ,425 3,412,023 Employee benefits 5.085, ,957 5,475,007 Books and supplies 1.701, ,581 2,588,867 Services and other operating expenditures 2508, ,977 2,975,<158 Capital outlay 79, ,862 6,152,270 Other outgo ,174 Debt service!: PnnClpal 690, ,000 Interest 1~ 79:i 1~ 7~li Total expenchtures ,362 9,293,819 31,461,181 Exee" of revenues of ov.r e.-penses (3,290,594 ) (1,510,721 ) Other sources Other uses Transfers 28,363 28,363 00< " (2 : ~J ) ( 2 :,36 ~ 1 Excess of revenues and other financing sources over (under) eltpenditures and other financing sources (uses) 1,751,510 (3,262,231 ) (1,510,721 ) Fund balances, July I, ,328 8, JO,0Q4 Fund balances, June 30, 2012, J~ loz B38 I ~611!i!i5 S lb The notes to the financial statements are an integral part of this statement

64 MENDOTA UNIFIED SCHOOL DISTRICT Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities Year Ended June 30, 2012 Total net change!n fund balances - governmental funds Repayment of bond principal is an expenditure 10 the goverrmental funds, but the repayment reduces long-term liabilities in the statement of net assels $ (1,510,721 ) 690,000 Repayment of capital leases is an expenditure in the governmental funds, bullhe repayment reduces IOng-lenn liabilities In the statement of net assets Repayment of post retirement benefits is an expenditure in the governmental h.mds, but the repayment reduce! long-term liabilities in the statement of net assets Repayment of compensated absences is an expenditure In the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets Purchase of cap~al assets is an ellpenditure in the Govemment Funds but 15 capitalized in the statement of net assets DepreCiation on capital assets is recognized as an expense in the statement of activities DepreCIation is nol recognized IfI the governmental funds 48,770 74,237 6,319,495 '842,Q27 ) Changes in net assets of governmental activities $ The notes to the financial statements are an Integral part of this statement 20

65 Revenues. Revenue limit sources' MENDOTA UNIFIED SCHOOL DISTRICT Statement of Revenues, Expenditures, And Changes in Fu nd Balance - Budget (non-gaap) and Actual Governmental Fund Year Ended June 30, 2012 State apport1onments Variance W"" Final Qf!9inl!l Finll ~~ul!'!il:udg~:! 14,485,812 S 12,682,439 S ,052 S 2,955,613 Local sources ;J:l' F 36,647 (;til~~,42~ ) Total revenue Imit 14,797,088 15,674,699 ( ) F~e raj 2,463,009 2,260,055 (34,860 ) Other state 4,041,721 4, (19,506) Other local I,Q59 4oo 1,064,265 (106,443 ) Total revenues 22, ,391, ,235 ( ) Expenditures CertifICated salaries 9,645,133 10,245,231 9, ,866 Classified salanes 2,825. too 2, ,748, ,388 Employee benefits 5,222,485 5,194,613 5,085, ,563 Books and supplies 1,708, ,1 66 1,701, ,880 Services and other operating expenditures 2,537,422 2,976,404 2,508,48t 467,923 Capital outlay 86,599 87,737 79,408 8,329 Other outgo 324, , ,174 Total expenditures Z2,34!i.17Q 2~,2i!,l:,~1 I 2V27,~22 1,~27,94~ Exc.ss of revenues over expenses 12, ,542 1,779,873 1,083,331 Transfers 0", (2 36~) (2,36~ ) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other finanging sources (uses) 12, ,542 1,751,510 1,054,968 Fund balances, July " ',!,l:56,~2!!: 11 :22 ~2 l',!,l:56 ;!:2 Fund balances, June 30, 2012 I ll~83z~ I J2 252 azd I l~ 3QZ 838 S l Q The notes to the finangial statements are an integral part of this statement 21

66 MENDOTA UNIFIED SCHOOL DISTRICT Statement of Fiduciary Net Assets Fiduciary Funds Year Ended June Assets: Cash on hand and in banks Total assets $ Agency Funds Student Body Funds 82,738 $, -!!8~2.!,73,;g8 liabilities: Total liabilities s Net Assets Unassigned Total net assets 82, The notes to the financial statements are an integral part of this statement. 22

67 MENDOTA UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES A. Accounting Policies The District accounts for its financial transactions in accordance with the policies and procedures of the Department of Education's California School Accounting Manual, The accounting policies of the District conform to generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GAS B) and the American Institute of Certified Public Accountants. B. Basis of Presentation- Government Wide Financial Statements The Statement of Net Assets and the Statement of Activities displays information about the reporting District as a whole. Fiduciary activities and component groups are not included in the government-wide financial statements. The statement of Net Assets and the Statement of Activities are prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses assets and liabilities resulting from exchange and exchange like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from non...exchange transaction s are recognized in accordance with the requirements of Governmental Accounting Standards Board Codification Section (GASS Cod. Sec.) N C. Fund Accounting The accounts of the District are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The District's accounts are organized into three broad categories which in aggregate include six fund types and one account group as follows: Governmental Funds: 1. General Fund The General Fund is the general operating fund of the District. It is used to account for all financial resources except those requ ired to be accounted for in another fund. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund re accounted for in this fund. General operating expenditures and the capital Improvement costs that are nol aid through other funds are paid from the general fund. 23

68 2. Special Revenue Funds: The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. This classification includes the Adult Education, Deferred Maintenance, Pupil Transportation, Child Development and Special Reserve for Other Than Capital Outlay Projects Funds. 3. Capital Projects Funds: Capital Projects Funds are used to account for resources used for the acquisition and/or construction of capital facilities by the District. This classification includes the Building Fund, Slate School Building Lease1Purchase Fund, Capital Facilities Fund and the County School Facility Fund. 4. Debt Service Funds. Debt Service Funds are used to account for the accumulation of resources for, and the payment of general long-term debt principal, interest. and related costs. This classification includes the Bond Interest and Redemption Fund All records relating to the Bond Interest and Redemption Fund are maintained by the Fresno County Auditor-Controller. The revenue for this fund is raised by school district taxes which are levied, collected and administered by County officials. The Education Code stipulates that the tax rate levied shall be sufficient to provide monies for the payment of principal and interest as they become due on outstanding school district bonds. Proprietary Funds: 1. Cafeteria Fund The Cafeteria Fund is an enterprise fund which accounts for food service operations that are financed and operated in a manner similar to a private business enterprise with the objective of providing food service on a continuing basis partially financed and recovered through user charges. Fiduciary Funds: 1 Student Body Funds Student Body Funds are used to account for revenues and expenditures of the various student body organizations. All cash activity, assets and liabilities of the various student bodies of the District are accounted for in Student Body Funds. Account Groups: The accounting and reporting treatment applied to the long-term liabilities associated with a fund are determined by its measurement focus. All governmental funds are accounted for on a spending or "'financ ial flow measurement focus. This means that only current assets and current liabilities are generally included on their balance sheet. Their reported fund balance is 24

69 considered a measure of "available spendable resources: Thus, the long-term liabilities associated with govemmental funds are accounted for in the account groups of the District. D. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of measurement made, regardless of the measurement focus applied. Accrual Both governmental and business-type activities in the government-wide statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Modified Accrual The governmental fund financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; Le., both measurable and available. "Available" means collectible within the current period or within 60 days after year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if an y, is recognized when due. E. Budgets and Budgetary Accounting Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all government funds. By state law, the Districrs governing board mu~t adopt a final budget no later than July 1. A public hearing must be conducted to receive comments prior to adoption. The District's governing board satisfied these requirements. These budgets are revised by the District's governing board and District Superintendent during the year to give consideration to unanticipated income and expenditures. It is this final revised budget that is presented in the financial statements. Formal budgetary integration was employed as a management control device during the year for all budgeted funds. The District employs budget control by minor object and by individual appropriation accounts. Expenditures cannot legally exceed appropriations by major object account. F. Assets. Liabilities. and Equity 1, Deposits and Investments Cash balances held in banks and in revolving funds are insured up to $250,000 by the Federal Depository Insurance Corporation. All cash held by the financial institutions is fully insured or collateralized. In accordance with Education Code Section 41001, the District maintains substantially all of its cash in the Fresno County Treasury. The county POOlS these funds with those of other districts in the county and invests the cash. These pooled funds are carried at cost which approximates market value, Interest earned is deposited quarterly into participating funds, except for the Tax Override Fund, in which case interest earned is credited to the federal fund. Any investment losses are proportionately shared by all funds in the pool. 25

70 The County is authorized to deposit cash and invest excess funds by California Government Code Section et seq. The funds maintained by the County are either secured by federal depository insurance or are collateralized. Information regarding the amount of dollars invested in derivatives with Fresno County Treasury was not available. 2, Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as interfund receivables and payables. 3. Stores Inventories and Prepaid Expenditures Inventories are recorded using the purchase method in that the cost is recorded as an expenditure at the time individual inventory items are purchased. Inventories are valued at average cost and consist of expendable supplies held for consumption. Reported inventories are equally offset by a fund balance reserve, which indicates that these amounts are not -available for appropriation and expenditure" even though they are a component of net current assets. The District has the option of reporting an expenditure in governmental funds for prepaid items either when purchased or during the benefiting period. The District has chosen to report the expenditure when incurred. 4 Fixed Assets Capital assets purchased or acquired with an original cost of $500 or more are reported at historical cost or estimated historical cost. Contributed assets are reported al fair market value as of the dale received. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives: Land Buildings Furniture and Equipment N/A 50 years 15 years 5. Deferred Revenue Cash received for federal and state special projects and programs is recognized as revenue to the extent that qualified expenditures have been incurred. Deferred revenue is recorded to the extent cash received on specific projects and programs exceeds qualified expenditures. 6. Compensated Absences Accumulated unpaid employee vacation benefits are recognized as liabilities of the District The liabilities are recognized in the generallong-ierm debt account group. 26

71 Accumulated sick leave benefits are not recognized as liabilities of the District. The District's policy is to record sick leave as an operating expense in the period taken since such benefits do not vest nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits when the employee retires. 7. long-term Obligations The District reports long-term debt of governmental funds at face value in the general long-term debt account group. Long-term debt and other obtigations financed by proprietary funds are reported as liabilities in the appropriate funds. 8 Fund Balance Reserves Reservations of the ending fund balance indicate the portions of fund balance not appropriable for expenditure or amounts legally segregated for a specific future use. The Reserve for Revolving Fund and Reserve for Stores Inventory reflect the portions of fund balance represented by revolving fund cash and stores inventory, respectively. These amounts are not available for appropriation and expenditure at the balance sheet date. 9. Property Tax Secured property taxes attach as an enforceable lien on property as of March 1. Taxes are payable in two installments on November 15, and March 15. Unsecured property taxes are payable in one installment on or before August 31. The County of Fresno bills and collects the taxes for the District. Tax revenues are recognized by the District when received. G. Fund Balance Classification Govemmental Accounting Standards Board Codification Sections 1300 and 1800, Fund Balance Reporting and Govemmenta! Fund Type Definitions (GASB Cod. Sec and 1800) implements a five-tier fund balance classification hierarchy that depicts the extent to which a govemment is bound by spending constraints imposed on the use of its resources. The five classifications, discussed in more detail below, are non-spendable, restricted, committed, assigned and unassigned. 1 - Non-spendable Fund Balance: The non-spendable fund balance classification reflects amounts that are not in spendable form, such as revolving fund cash, prepaid expenditures and stores inventory. 2 - Restricted Fund Balance: The restricted fund balance classification reflects amounts subject to externally imposed and legally enforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or regulations of other govemments, or may be imposed by Jaw through constitutional provisions or enabling legislation. These are the same restrictions used to determine restricted net assets as reported in the govemment-wlde, proprietary fund, and fiduciary trust fund statements. 27

72 3 - Committed Fund Balance: The committed fund balance classification reflects amounts subject to internal constraints self-imposed by formal action of the Board of Education. The constraints giving rise to committed fund balance must be imposed no later than the end of the reporting period. The actual amounts may be determined subsequent to that date but prior to the issuance of the financial statements. Fonnal action by the Board of Education is required to remove any commitment from any fund balance. At June 30, 2012, the District had no committed fund balances. 4 - Assigned Fund Balance: The assigned fund balance classification reflects amounts that the Districfs Board of Education has approved to be used for specific purposes, based on the District's intent related to those specific purposes. The Board of Education can designate personnel with the authority to assign fund balances, however, as of June 30, 2012, no such designation has occurred. 5 - Unassigned Fund Balance: In the General Fund only. the unassigned fund balance classification reflects the residual balance that has not been assigned to other funds and that is not restricted, committed, or assigned to specific purposes. H. Spending Order Policy When an expenditure is incurred for purposes which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds and finally unassigned funds, as needed, unless the governing board has provided otherwise in its commitment or assignment actions. I. Eliminations In the process of aggregating data for the Statement of Net Assets and the Statement of Activities, some amounts reported as inter-fund activity and balances in the funds were eliminated or reclassified. Inter-fund receivables and payables were eliminated to minimize the -grossing up effect on assets and liabilities within the governmental activities column. J Program Revenues Program revenues derive directly from the program itself or from parties other than the District, as a whole. Program revenues are classified into three categories, as follows: 1. Charges for services - These arise from charges to customers, applicants, or others who purchase, use, or directly benefit from the goods, services, or privileges provided, or are otherwise directly affected by the services. 2 Program-specific operating grants and contributions - These arise from mandatory and voluntary non-exchange transactions with other governments, organizations, or individuals that are restricted for use in a particular program. 26

73 3. Program-specific capital grants and contributions - These arise from mandatory and voluntary non-exchange transactions with other governments, organizations, or individuals that are restricted for the acquisition of capital assets for use in a particular program. NOTE 2: CASH Cash in County Treasury In accordance with Education Code Section 41001, the District maintains substantially all of its cash in the Fresno County Treasure as part of the common investment pool ($16,199,180 as of June 30, 2012). The fair market value of this pool as of that date, as provided by the pool sponsor, was $16,199,180. The county is restricted by Government Code Section pursuant to Section to invest in time deposits, U.S. government securities, state registered warrants, notes or bonds, State Treasurer's investment pool, bankers' acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements. Cash on Hand, in Banks, and in Revolving Fund Cash balances of $3,000 as of June 30, 2012, are insured up to $250,000 by the Federal Depository Insurance Corporation All cash held by the financial institution are fully in sured or collateralized. Investments The District had no investments as of June 30, NOTE 3: FUND DEFICITS As of June 30, 2012, there were no fund deficits in any fund of the District. NOTE 4: RECEIVABLES Receivables at June 30, 2012, consist of the following: Special Debt Capital General Revenue Service Projects Fund Fund Fund Fund Totals Revenue limit $4,821,243 $ $ $ $4,821,243 Federal Government: Federal Programs 559, , ,850 State Government: Categorical Aid Programs 630, ,536 Other 25,686 25,686 Totals 6,011, ,922 6,314,315 Interest 7,370 2,624 2, Totals.6, $ , ~, Q92 $

74 NOTE 5: EXPENDITURES IN EXCESS OF BUDGETED AMOUNTS There were no over-expended budget categories as of June 30, NOTE 6: INTERFUND TRANSACTIONS Due To/Due From Other Funds Individual inter fund receivable and payable balances at June 30, 2012 are as follows: Interfund Interfund Fund Receivables Payables General Fund $ 156,430 $ 2,406 Cafeteria 1,201 96,759 Adult Education 39 1,591 Child Development 1,166 58,080 Totals $ S Interfund Transfers Intertund transfers consist of operating transfers from funds receiving resources to funds through which the resources are to be expended. NOTE 7: CAPITAL ASSETS AND DEPRECIATION Capital asset activity for the year ended June 30, 2012, are shown below: PRIMARY \:ZQVERNMf;NT Balance Balance July, AddrtiQns Retirements June Srte and improvements S 2.100,000 S S S 2,100,000 BUilding and Improvements 42,606,729 48,669,119 Machinery and equipment 4,~~1,:i~~ 4 :i :!!:,664 5:i 3:i7 7!!:3 Tota!s at histoncal cost, 49,O3,2!!:8 less accljmujated depreciation lor. Buiklmg and mprovements 15,428, ,290,917 Machinery and equipment ~,71:i!!:!!:9 IZQQ16 ) ~,!i2m7~ Total accumulated depreciation ,986,790 Governmenlal Activrt~ Capital Assets, net, 29 a S 5 ~ ZZ ~6a I s 35 3ZQ

75 NOTE 8: GENERAL OBLIGATION BONDS PAYABLE The outstanding general obligation bonded debt of the Mendota Unified School District at June 30, 2012 is: Amount of Redeemed Date of Interest Maturity Original Outstanding Current Outstanding Issue Rate Date Issue Q7101l10 Year /01 / % to 5.00% 05/01 /16 $9,645,000 ~ ~ ~O,QQg ~2 9~5QOO The annual requirements to amortize general obligation bonds payable, outstanding as of June 30, 2012, are as follows: Year Ending June Totals Princi!;!al $ 710, , , ,000 $~, 99,gOO Interest Total $ 82,875 $ 792,875 68, ,675 50, ,425 19, ,000 $,2Q,~ Z ~ ~ J,'H~ az ~ NOTE 9: LEASES A. Capital Leases The District leases equipment valued at S780,000 under an agreement that provides for title to pass upon expiration of the tease period. Future minimum lease payments are as follows: Year Ended June less amount representing interest Present value of net minimum lease payments Lease Payments $ 94,957 (2,891 ) $ 92,066 The District will receive no sublease rental revenues nor pay any contingent rentals for this equipment. NOTE 10 GENERAL LONG-TERM DEBT - SCHEDULE OF CHANGES A schedule of changes in long-term debt for the year ended June is shown below: Balance Balance /11 Additions Deletions 06/30112 General Obligation Bonds $3,685,000 S $ 690,000 $ 2,995,000 Capital lease 92,066 92,066 Compensaled Absences 164,592 74, ,355 Post-Employment Health Benefits 96,306 48,770 47,536 Totals $~ Q5Z, 96!1 S s l~ OQZ j ~,!1S 9~ Z 31

76 NOTE 11 JOINT VENTURES (Joint Powers Agreements) The Mendota Unified School District participates in a joint venture under a joint powers agreement (JPA) with the Fresno County Self Insurance Group, Organization of Self lnsured Schools, and the Central Valley Schools Trust. The relationship between the Mendota Unified School District and the JPAs is such that the JPAs is not a component unit of the Mendota Unified School District for financial reporting purposes. Fresno County Self-Insurance Group (FCSIG) The FCSIG arranges for and provides workers' compensation insurance for its member Districts. FCSIG is governed by a Board consisting of a representative from each member District. The Board controls the operations of FCSIG, including budgets, Independent of any influence by the member Districts beyond their representation on the Board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to their participation in the FCSIG. Organization of Self-Insured Schools (OSS) The OSS arranges for and provides property and liability insurance for its member districts. OSS is governed by a Board consisting of a representative from each member district. The Board controls the operations of OSS, including the selection of management and approval of operating budgets, independent of any influence by the member districts beyond their representation on the Board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to their participation in the OSS. Central Valley Schools Trust (CVSn The CVST arranges for and provides a program of employee health coverage for its member districts. The types of insurance currently provided are medical, dental, VISion, and life. NOTE 12: COMMITMENTS AND CONTINGENCIES A. State and Federal Allowances, Awards and Grants The District has received state and federal funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, it is believed that any required reimbursement will not be material. NOTE 13: EMPLOYEE RETIREMENT SYSTEMS Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Certificated employees are members of the State Teachers' Retirement System (STRS), and classified employees are members of the Public Employees' Retirement System (PERS). Plan Description and Proyisions STRS Plan Description 32

77 The Mendota Unified School District contributes to the State Teachers' Retirement System (STRS), a costsharing multiple-employer public employee retirement system defined benefit pension plan administered by STRS. The plan provides retirement, disability, and survivor benefits to beneficiaries. Benefit provisions are established by the state statutes, as legislatively amended, within the State Teachers' Retirement Law. STRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from the STRS, 7667 Folsom Boulevard, Sacramento, California Funding Policy Active plan members are required to contribute 8.0% of their salary and the Mendota Unified School District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the STRS Teachers' Retirement Board. The required employer contribution rate for fiscal year was 8.25% of annual payroll. The contribution requirements of the plan members are established by state statute. The Mendota Unified School District's contributions to STRS for the fiscal year ending June 30, 2012, 2011, and 2010 were $782,923, $753,420, and $740,828. respectively, and equal 8.25% of the required contributions for each year. PERS Plan Description The Mendota Unified School District contributes to the School Employer Pool under the California Public Employees' Retirement System (CaIP ERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CaIPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, with the Public Employees' Retirement law. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information, Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California Funding Policy Active plan members are required to contribute 7.0% of their salary and the Mendota Unified School District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contnbution rate for fiscal year was 6.03% of annual payroll. The contribution requirements of the plan members are established by state statute. The Mendota Unified School District's contributions to CalPERS for the fiscal year ending June 30, 2012, 2011, and 2010 were $348,391, $336,263, and $253,637, respectively, and equal 6.03% of the required contributions for each year. NOTE 14: POST-EMPLOYMENT BENEFITS (OTHER THAN PENSION BENEFITS) DEFINED BENEFIT PLAN The District provides posl-employment health care benefits, in accordance with District employment contracts, to all employees who retire from the District on or after attaining age 55 with at least 10 years of service. Currently, one employee meets those eligibility requirements. The District contributes 100% of the amount of premiums incurred by retirees and their dependents. Expenditures for post-employment benefits are recognized on a pay-as-you-90 basis. During the year expenditures of $48,770 were recogmzed for post-employment health care benefits. 33

78 The approximate accumulated future liability for the District at June 30, 2012 amounts to $47,536. This amount was calculated based upon the number of retirees receiving benefits multiplied by the yearly district payment per employee in effect at June 30, 2012, multiplied by the number of years of payments remaining. DEFINED CONTRIBUTION MONTHLY STIPEND PLAN The District administers a defined contribution postempjoyment health care benefit ploan, whereby a contributions is made by the District each year, pursuant to collective bargaining agreements, for the payment of monthly benefits to the plan members. The contribution is calculated using a base amount plus cost--of-living percentage increases equal to negotiated increases in salary schedules. According to bargaining agreements with various bargaining units the District is obligated to contribute specified annual amounts to each of the bargaining uolts. District contributions end if they are not renegotiated and included in subsequent bargaining agreements. The bargaining units are responsible for establishing the amount of the available stipend distributed to eligible retirees. The monthly distributions are based on periodic projections of the available funds and number of participating retirees. The stipend arrangement does not result in a GASB No. 45 obligation and the actuary has not included this benefit in the valuation. As of October 1, 2007, 5 retirees received a monthly stipend. The District's funding policy is based on the projected pay-as-you-go financing requirements, with additional amounts to prefund benefits as determined annually by the District's Governing Board. The District's annual OPES cost is calculated based on the Annual Required Contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cast each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the District's annual OPES cost for the year, the amount actually contributed to the plan, and changes in the District's net OPES obligation: Annual required contribution Interest on net OPES obligation Annual OPES cost Contributions made Increase in net OPES obligation Net OPES obligation, beginning of year Net OPES obligation, end of year $ $ 339,552 16, ,530! ) 269,687 3,294, The District's annual OPES cost, the percentage of annual OPES cost contributions to the plan, and the net OOPES obligation for are as follows: Actuarial Valuation Date Actuarial Accrued Liability (AAL) Unfunded AAL (UAAL) Funded Ratio November 1, 2007 $ 3,294,576 2,525, % FUNDED STATUS AND FUNDING PROGRESS-QPEB PLANS As of November 1, 2007, the most recent actuarial valuation date, the implicit rate subsidy plan was unfunded The actuarial accrued liability (AAL) for benefits was $3.3 million and the unfunded actuarial accrued liability (UAAl) was $2 5 million. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject 10 continual revision as actual results are compared with past expectations and new 34

79 estimates are made about the future. The schedules of funding progress, presented as required supplementary information following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits ACTUARIAL METHODS AND ASSUMPTIONS Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designated to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Additional information as of the latest actuarial valuation follows: Valuation Date Actuarial Cost Method Entry Age Normal Cost Amortization Method Level-Dollar Basis Remaining Amortization Period 25 years Actuarial Assumptions: Discount Rate: 5% 35

80 SUPPLEMENTARY INFORMATION SECTION 36

81 MENDOTA UNIFIED SCHOOL DISTRICT ORGANIZATION JUNE 30, 2012 The Mendota Unified School District was organized on July 1, 1988 and is located in Fresno County. There were no changes in the boundaries of the District during the current year. The District is currently operating two elementary schools, one intermed iate school, and one high school. The District also maintains a continuation high school. BOARD OF TRUSTEES Name Jose Zavala Araceli Perez Lupe Flores Ismael Herrera Isabel Maldonado Diana Toscano Jesus Zavala Office President Vice President Clerk Member Member Member Member Term Expires December 2014 December 2012 December 2012 December 2014 December 2012 December 2012 December 2014 ADMINISTRATON Michael Crass Superintendent 37

82 MENDOTA UNIFED SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Second Period Report Annual Report Elementary: Kindergarten Grades One through Three Grades Four through Six Grades Seven and Eight Special Education Elementary Totals , ,017 High School: Grades Nine through Twelve, Regular Classes Continuation Education Special Education Community Day Schools High School Totals ADA Totals ,]06 Summer School High School Hours of Attendance None Average daily attendance is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to school Districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs. 38

83 MENDOTA UNIFIED SCHOOL DISTRICT SCHEDULE OF INSTRUCTIONAL TIME FOR THE FISCAL YEAR ENDED JUNE 30, Number Number of Days of Days Minutes Actual Actual Traditional Multi-track Grade Level Requirement Minutes Minutes Calendar Calendar Status Kindergarten 36,000 (a) 55, In Compliance Grades 1 50,400 (a) 55, In Compliance Grades 2 50,400 (a) 55, In Compliance Grades 3 50,400 (a) 55, In Compliance Grades 4 54,000 (a) 55, In Compliance Grades 5 54,000 (a) 55, In Compliance Grades 6 54,000 (a) 55, In Compliance Grades 7 54,000 (a) 62, In Compliance Grades 8 54,000 (a) 62, In Compliance Grades 9 64,800 (b) 65, In Compliance Grades 10 64,800 (b) 65, In Compliance Grades 11 64,800 (b) 65, In Compliance Grades 12 64,800 (b) 65, In Compliance (a) Information not available (b) High School was not established in Districts must maintain their instructional minutes at either the actual minutes or the requirement, whichever is greater, as required by Education Code Section The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. This schedule presents information on the amount of instruction time offered by the District and whether the District complied with the provisions of Education Code Sections through

84 MENDOTA UNIFED SCHOOL DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 (Budget) General Fund Revenues and Other Financing Sources $ 23,7QO,586 $ 23,947,235 $ 23, $ 23,280,024 Expenditures 27,374,486 21,798,189 21,354,941 2,126,068 Other Uses and Transfers Qut 397,536 3,264, ,972 Total Outgo 27, ,195,725 24,619, ,04Q Change in Fund Balance (3, ) 1.751,51 0 (784,292 ) 1,827,984 Ending Fund Balance , Available Reserves Designated for Economic Uncertainties Undesignaled Fund Balance SQ Available reserves as a percentage of total outgo 23.16% % 27,01% 22.32% Total long term debt 2,442,891 3,244,957 4,057,964 4,787,683 Average daily attendance at P 2 2,717 2,707 2,616 2,472 t This schedule discloses the District's financial trends by displaying past years' data along with current year budget information. These financial trend disclosures are used to evaluate the District's ability to continue as a going concern for a reasonable period of time. The General Fund balance has increased by $1,487,774 over the past two years. The fiscal year budget projects an decrease of $3,673,900. For a district this size, the state recommends available reserves of at least 3% of tolal General Fund expenditures, transfers out, and other uses (total outgo). The District has incurred no operating deficits in the past Ihree years. Total long-term debt has decreased by $1,542,726 over the past two years. Average daily attendance has increased by 235 over the past two years. ADA is anticipated to increase during fiscal year by 10 ADA. 40

85 MENDOTA UNIFIED SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Pass- Through Federal Entity Catalog Identifying Program Name Number Number Federal Programs: U.S. Department of Education: Passed through California Department Of Education (CDE): NCLS ntl. I" NeLB Title IV Improving Teacher Quality A Vocational Education Emergency Immigrant Education NeLB nile 111- Limited English Migrant Education Education Jobs Fund Education Technology Total U.S. Department of Education American Recovery and Reinvestment Act as follows: SpeCial Education IDEA B NelS Title I. A Total American Recovery and Reinvestment Act U.S. Department of Agriculture: Passed through CDE: Food Distribution Program " National School Breakfast National School Lunch" Total U.S. Department of Agriculture Total Federal Programs Federal Expenditures S 1,126, , ,486 23,157 20, , ,416 6,949 3,238 2,069, ,734 3, ,422 31, ,032 1,629,2 0 1,826,417 S ~M!~fi ~Z, " Major Program This federal program's revenue is not reflected within Federal Revenue on the Combined Statement of Revenues, Expenditures and Changes in Fund Balances. The accompanying schedule of expenditures of federal awards includes the federal grant activity of Mendota Unified School District and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general purpose financial stoitements.

86 " MENDOTA UNIFIED SCHOOL DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT (J-200) WITH AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 There were no differences between the annual financial and budget report and the audited financial statements. This schedule provides the information necessary to reconcile the fund balances of all funds and the lotal liabilities balance of the general long-term debt account group as reported on District Reports to the audited financial statements.

87 " MENDOTA UNIFIED SCHOOL DISTRICT EXCESS SICK LEAVE FOR THE FISCAL YEAR ENDED JUNE There is neither authorized nor accrued excess sick leave.

88 MENDOTA UNIFIED SCHOOL DISTRICT SCHEDULE OF CHARTER SCHOOLS YEAR ENDED JUNE 30, 2012 The District is not affiliated with any charter schools at any time during the year. 44

89 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING BALANCE SHEET - NON MAJOR SPECIAL REVENUE FUNDS JUNE 30, 2012 Pupil AM Deferred Transportation Cafeteria Education Maintenance EqUipment Elm<! El!!ll! El!!ll! El!!ll! Special Reserve (Non Child Capital Development Outlay) El!!ll! El!!ll! Total Assets Cash in County Treasury Cash in Revolvmg Fund Accounts Receivable Due from other Funds Siores Inventory - Food And Supplies Total Assets 52,832,267 $ 9,033 $ $ 7,986 1, , ,201 " 9e:~Q ! 9 082! ! ,395 S ,047,791 1, ,546 1,166 2,406 UJQ, S S liabilities and Fund Balances liabilities: Accounts Payable Due to Other Funds Other Liabilities Total liabilities Fund Balances' NOI'I-spendabie Restricted Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances 766, $ $ ,591!H!~ 644 ~,41, 9,830 2,006,601 6,671 81,895 7, ,346 2,2 ~,777!ii71 1, ~~ 7,!;!aQ S~ HI! Q~l! 9082! ! Z 986 S 3,541 S S 770,846 58, , ,1221!l:27,;m;i 9, , ,783 3,154, ,753 2 l ~ 7,7a~ ~ 4~!;! 2!;!7 I ~9: BOO ~ ZSB 1B3 I ~ 3 ~Z3 The notes to the financial statements are an integral part of this statement. 45

90 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON MAJOR SPECIAL REVENUE FUNDS FOR THE FISCAL YEAR ENDED JUN E 30, 2012 Pupil A,,", Deferred Transponation Child Cafeteria Education Maintenance Equipment Development ElIllII El!!l2 Ful1d El!!l2 El!!l2 Revenue Limit Sources' Stale Apportionment $ $ S $ $ Federal 1,795,292 Other State 166, , ,310 Special Reserve (Non- Capital Outlay) El!!l2 $ $ Total 1, ,219 Other Local 246 ~ :, 100 2;3;7 ~, 4QZ Total Revenues ~ ~Q7 ~7 45!! 2,100 tn,"" ]3!:!,ZlZ Expenditures: CertifICated Salaries Classified Salaries 573,023 3,555 86,847 Employee Benefits 349,905 3,747 36,305 Books and SupplieS 878,738 1,659 2,250 4,934 Services and Other Operallng Expenditures 49,092 73, Capital Outlay Total Expe!'lditures U!!i!,i:i:' 2l.1f!J: 7 Q7J: t72,fl77 I Q :i:!!!2 ",J:~ 2,I!U!, 1,;l34 2, ~J:J: 99 18, , , ,292 19,1 93 2,;106 27Q Transfer In ZI.! i J: Z!!,36;,): Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Uses 338,025 1,638 (73,973 ) 237 (21,869 ) Fund Balances July 1, ,947, ,868 7, Fund Balances June 30, 2012 ;~ 2S ZZZ I ~ Zl! Al S~:i: 1 Z986 i 288 ISS 11, , , I ZfiS ZSJ ~ J!l3929Z The notes to the financial statements are an Integral part of this statement..

91 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING BALANCE SHEET NON-MAJOR CAPITAL PROJECTS FUNDS JUNE 30, 2012 State School Building Capital Building Lease-Purchase Facilities El!!!l! El!!ll! El!!!!I County School Facility El!!!!I Im! Assets Cash in County Treasury Accounts Receivable Due to Other Funds Total Assets $ 13,372 $ 27,349 $ 195, $ $ $ $ 2,264,015 $ 2,500,577 1,904 2,092 $ 2265,919 $ 2502,669 Liabilities and Fund Balances Liabilities: Accounts Payable Due to Other Funds Total Liabilities $ - $ - $ -- $ 493,520 $ 493, , ,520 Fund Balances: Restricted 13,382 27, ,000 Total Liabilities and Fund Balances ~ 1~,~6, ~ :lz..i! ~ ] il!l cog 1,772,399 2,009,149 s,265 ~l~,~,~q2 69 The notes to the financial statements are an integral part of this statemenl 47

92 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANACES NON-MAJOR CAPITAL PROJECTS FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Stale SChool Building Capital Building Lease-Purchase f acilities Elm!! El!!!!! Elm!! County School facility El!!!!! I2!!! Revenues; Other State $ -- $ $ $ 2,756,958 Other local ,546 74,413 Total Revenues ,546 2,831,371 Expenditures: Books and Supplies Services and Operating Expenditures 129,964 8,721 Capital Outlay 6,053,669 Total Expenditures 129,964 6,062,390 Excess of Revenues Over (Under) Expenditures (118,416 ) (3,231,019 ) $ 2,756,958 87,049 2,844, ,685 6,053,669 6,192,354 (3,348,347 ) Transfers In Out Excess of Revenues Over (Under) Expenditures after Transfers (118,416 ) (3,231,019 ) Fund Balances, July 1, ,184 26, ,416 5,003,418 Fund Balances, June 30, 2012 ~ J3382 ~.z ~.6a ~ 196, QGG ~ J ZZ 2, ~~9 (3,348,347) 5,357,496 ~ 2 Og 9,l ~1i The notes to the financial statements are an integral part of this statement. 48

93 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING BALANCE SHEET NON-MAJOR DEBT SERVICE FUNDS JUNE 30, 2012 s,'" Interest and Redemption Fund Assets Cash in county treasury Account receivable Total Assets Liabilities and fund balances Fund balances. Restricted Total fund balances Total liabilities and fund balances s,,, 162,788 2" , , The notes to the financial statements are an integral part of this statement.

94 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2012 Bond Interest and RedempUon Fund Revenues. Actual Otner state, 49,985 Other local 575 S34 Total revenues 625,519 Expenditures; Debt services' Principal 690,000 Interest 104,795 Total expenditures 794,795 Excess (deficiency) of Revenues over(uncler) expenditures (1 69,276 ) Other Sources Other Uses Excess (deficiency) of Revenues over(under} expenditures After Other Sources and Uses (1 69,276 ) Fund balances, July 1, Fund balances, June 30, 2012, ls299.9 The notes to the financial statements are an integral part of this statement 50

95 " MENDOTA UNIFIED SCHOOL DISTRICT COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Balance Additions Deductions Washington Elementa!) School Assets: Cash $ $ 20,761 $ 22,994 liabilities: Due to Student Groups $ $ $ Balance $ 9619 S 9619 McCabe Elementa!) School Assets: Cash $ $ $ liabilities: Due to Student Groups S $ $ $ 4492 $ 4492 Mendota Junior High School Assets: Cash $ $ $ Liabilities: Due to Student Groups $ $ 37,564 $ $ 9873 $ 9873 Mendota High School Assets: Cash $ 19,027 $ 243,996 $ liabilities: Due to Studenl Groups $ $ $ $ $ Total - All Agenc:i Funds Assets: Cash $ $ $ Liabilities: Due to Student Groups $ ~~ Z92 $ ~6,~Z~ S ~~Q,628 $ ~, zab The noles to the financial statements are an Integral part of this statement.

96 MENDOTA UNIFIED SCHOOL DI STRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUNDS FOR THE FI SCAL YEAR ENDEDJl!NI; 3J Qlfi!!eril! E!,!!lg M!!!1 fd!&i!li2!l F!.!~ Variance Variance Favorable Favorable lll!j!goj Revenue Limit Sources. &llij (Uofi!vQ!abl :l lll!j!goj 8o!lIil {!.![!fj!vqi1!li!lil Slate Apportionment S S S S S S Federal 1, ,795,292 Other State 166, ,032 Other Local = 246, Total Revenues ,297,976 ", Eli;penditures Certificated Salaries 19, ,612 Classified Salaries 572, ,023 (76 ) 3,555 3,555 Employee Benefits 350, ,905 1,076 3,772 3, Books and Supplies 881, ,738 2,321 1,661 1,659 2 Services and Other Operating Expenditures 51,244 49,092 2,152 5, Capital Oul!ay 20,200 19, Total Expenditures ,480 33,854 27, EJ:Gess of Revenues Over (Under) Expenditures 331, ,025 6,480 (33,396 ) (26,725 ) Other FinanCIng Sources (Uses) Other Uses Transfers in 28,363 28,363 Transfers 01,11 Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Uses 331, ,025 6,480 (5,033 ) 1,638 6,671 Fund Balances July , Fufld Balances June 30, S ' S _ S. - S S 6.6zt The notes to the financial statement are an Integral part of this slatement. Page 1 of 3 52

97 MENDOTA UNIFIED SCHOOL DI STRI CT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, Defjl:fred Mainl!:!nan t: Fyng -!;gui2!!!!!nl EUQQ Variance Vananc.e Favorable Favorable 8Otl!I!!!.!!lfa~ri!blel 8Otl!I! l!.!nfi!iiqh!t!!l1 Revenue Limit Sources Slate AplXlrtionmenl S S S $ S S Federal Other Stale 896,500 (86,500 ) 172, ,877 Other Local L1II!l ji:,iqq 2~Z 2;lZ Total Revenues M.!!!! 2,100,86,~) 17;J,1l Expenditures: Certificated Salanes Classified Salaries Employee Benefits Books and Supplies Services and Other Operating Ekpendilures , , ,877 Capital Outlay Total Expenditures Excess of Revenues Over (Under) Expenditures (73,973 ) (86,500 ) other Financing Sources (Uses)' Other Uses Transfers in Transfers oul Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Uses 12,527 (73,973 ) (86,500 ) Fund Balances, July I, 2011 l:i::i:,~68 155,868 7,742 7,742 Fund Balances, June 30, 2012 '----1lia.J9S i Dl895 I '!l 500)! Z 986 S, Z 986 The notes 10 the financial statement are an integral part of this stalement Page20f3 53

98 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUNDS FOR TH" FIS(;AL Y"AR ENDED JUNE 30, 2012 Special Reserve - - ~bi!!j Dev!:IQQ!!!!:m Elln!;! {NQn:tiII2MI Q!.!I!i~1 E!.!ng TQli!11 {Mi!!I!2fj!ndum Qnl:.:l Valiance Variance Vanance Favorable Favorable Favorable i\!i!j!fl {Unli!vQrilllej -.. i\!i!j!fl {U[!'I:iQfi!t!ml i\!i!j!fl Revenue limit Sources' State Apportionment' S S S S S S S S S Federal 1,795,292 1,795,292 {!.!!l'lvqra!2!!t1 Other State 133, , , ,219 ( ) Other Local H::!J: ~,4QZ '''46) ]1,;}34 ]l,;}34 il:66.~j.4,66,188 {44 ) Total Revenues lj:2,hij: lj:.zlz '~46) 1',;}34 11.J:34 2,Q:lQ ~:i: Z,:iJ:;}, 22 (86,94 : ) Expenditures' Certificated Salaries 19, ,612 Classified Salaries 88,036 86,847 1, , ,425 1,113 Employee Benefits ,305 2, , ,957 4,046 Books and Supplies 7,709 4,934 2, , ,581 5,098 Services and Other Operating Expenditures 32,500 32, , ,184 Capital Outlay il:qil: Total Expenditures 1!H,~~:::! l Q~!M!Q , ,060 Excess of Revenues Over (Under) Expenditures (28,332 ) (21,869) 6,463 11,334 11, , ,029 (66,886 ) Other FinanCIng Sources (Uses) Other Uses Transfers in 20,020 (20,020) 48,383 28,363 (20,020 ) Transfers out E)(cess of Revenues and Other Finance Sources Over (Under) Expenditures and Other Uses (8,312) (21,869) (13,557 ) 11,334 11, , ,392 (86,906 ) Fund Balances, July I, 2011 J:1Q Q54 J1Q,Q54 Z~z.~~~ Z~Z,442 J:,I!!:a 90~ a,l a,f!q~ Fund Balances, June 30, 2012 S 3Ql Z~2 $ ;zea J85 l-j1~) $ Z68.1B3 S Zfia za~ $ UJ262C~ ~ ~ ~39 29l 1-@J!ll!!) The notes to the financial statement are an integral part of this statement. Page 3 of 3 54

99 MENDOTA UNIFI ED SCHOOL DI STRI CT COMBI NING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CAPITAL PROJECTS FUNDS FOR THE FI SCAL YEAR ENDED JUNE 30, ~ - Fa vorab~ Favorable Favorable (Unfavorable) ~ (Unfayorable) l!!!!!!i<l ~ (Unfayorable) State School Building ayi!!;!ing F!,!nsj LeaH E:!.!f2:!i!!I~ E!.!!lsl Qall:~al Facilities Eun; Variance Variance Variance Revenues: Other Stale S S S S S S S S S Other Local W,.. IZl ~ 90 1',~7 11 ~ : {JO ) Total Revenues m 'l!,~ ) lk! iq 11,~7!1: 11.~B (30) Expenditures Books and Supplies 3,458 3,458 Services and Other Operating Expenditures Capital Outlay ,964 Total Expenditures W ~QQ.. 1 ~J, 4 Z ~,4~ Excess of Revenues Over (Under Expenditures,.., (121,844 ) (118,416) 3,428 Other FinanCIng Sources (Uses): Other Sources Other Uses TransfeB in Transfers out Excess of Revenues and Other Finance Sources Over (Under) Expenditures and Other Uses,.. ' (121,844 ) (1 18,. ' 6 ) 3,428 Fund Balances, July I, 2011 lj.l84 lj;,is4 2MZ 2,47 J] 4,41 314,416 Fund Balances, June 30, L-lJ.1M ~.a,-, S ] gb. S 2LJ65! 2Z J6.f1. S $--192,514 ~!l!!ll J ~ 28 The notes to these financial statements are an Integra! part of this statement. Pagelof 2 55

100 MENDOTA UNIFIED SCHOOL DISTRICT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CAPITAL PROJECTS FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 County School - - EI!~I~X EII!!2 TQIIII {M!m!!2u!lld!.!m Qn!:J:J Variance Variance Favorable FavOfable 8o!JII! (Unfavorable) 8si1J!>! {Unfavorable} Revenues Other State S 2.756,958 $ 2,756,958 $ S 2.756,958 S 2,756,958 $ Other Local H.ill ,081 87,049 (32 ) Total Revenues 2,831, ,039 2,844,007 (32) EKpendilures' Books and Supplies 3,458 3,458 Services and Other Operating Expenditures 8,721 8, , , Capital Outlay 6,053, ,Q Total E)(pendltures ,062,390 6,196, ,354 3,658 Excess of Revenues Over (Under) E)[penditures (3,231,019) (3,231,019) (3,351,973 ) (3,348,347 ) 3,626 Other Financing Sources (Uses) Other Sources Other Uses Transfers in Transfers 001 Excess of Revenues and other Finance Sources Over (Under) Expenditures and Other Uses (3,231,019) (3,231,019 ) (3,351,973 ) (3,348,347 ) 3,626 Fund Balances, July " 20\ 1 5, ,003,418 5,357,462 5,357,496 Fund Balances, June 30, 2012 S17723~ :5: l ZZ~ 399 UJl!i~m ~ I 362$ The notes to these finandal statements are an Integral part of this statement. Page2of2 56

101 MENDOTA UNIFIED SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2012 li!udgm BQ!lQ Int~[J!!i! lind Red~:!m2!!2[! Fynd Variance Favorable Ag!.!11 {!.!nlavqfi!!:!!tj Revenues. Other state S 613,264 S 49,985 S Other local (563,279 ) 569,786 Total revenues, 619,Q12 S 625,519 S 6,507 Expenditure Debt service: Principal 1,432, , ,998 Interest lq.4,72~ 104,Zli!~ Total6Kpenditures 1 S;P Z !;i Excess (deficiency) of revenues Over (under) expenditures (918,781 ) ( ) Other Financmg Sources (Uses): Other Sources 9,775 Other Uses 13,392) 74,,99 749,505 (9,775 ) 3,392 Excess of Revenues and Other Finance Sources Over (Under) Expenditures and Other Uses (912,398) (169,276 ) 743,122 Fund balances, July ;l:~2 ~:7:i ~~2 Z7:i Fund balances, June 30, 2012 S ) I lb2 999 I Z!l~ J22 The notes to the financial statements are an integral part of this statement. 57

102 Schafer Accountancy Corporation Certified Public Accountants 7080 N. Whitney Ave., Suite 103 Fresno, California REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPliANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Trustees Mendota Unified School District Mendota, California We have audited the financial statements of Mendota Unified School District as of and for the year ended December 31, 2012, and have issued our report thereon dated November 20, We conducted OUf audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Mendota Unified School District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not the purpose of expressing an opinion on the effectiveness of Mendota Unified School District's internal control over financia l reporting. Accordingly, we do not express an opinion on the effectiveness of Mendota Unified School District's internal control over financial reporting A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did nol identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Te!ephone Fax

103 Co mpliance over Other Matters As part of obtaining reasonable assurance about whether Mendota Unified School District's financial statements are free of material misstatements. we performed tests of its compliance with certain provisions of laws. regulations. contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with these provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management. the audit committee, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 20,2012 Fresno, California 5.

104 Schafer Accountancy Corporation Certified Public Accountants 7080 N. Whitney Ave., Suite 103 Fresno, California INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON tnternal CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMS CIRCULAR A 133 Board of Trustees Mendota Unified School District Mendota, Ca lifornia Compliance We have audited Mendota Unified School District's compliance with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A 133 Compliance Supplement that cou ld have a direct and material effect on each of Mendota Unified School District's major federal programs for the year ended June 30, Mendota Unified School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Audit Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of Mendota Unified School District management. Our responsibility is to express an opinion on Mendota Unified School District compliance based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards generally accepted in the Unites States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMS Circular A 133, Audits of States, Local Governments, and Non Profit Organizations. Those standards and OMS Circular A 133 requ ire that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requ irements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Mendota Unified School District compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Mendota Unified School District compliance with those requirements. In our opinion, Mendota Unified School District complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Internal Control Over Compliance The management of Mendota Unified School District IS responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regu lations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered Mendota Unified School District internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A 133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School's internal control over compliance. Telephone Fax

105 A deficiency In internal control over compliance exists when the design or operation of a control over cnmpliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, non-compliance with a type of compliance requ ifement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Board of Trustees, management, and federal awarding agencies and pass through entities and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited. November 20,2012 Fresno, California f..,

106 Schafer Accountancy Corporation Certified Public Accountants 7080 N. Whitney Ave., Suite 103 Fresno, California INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE WITH STATE LAWS AND REGULATIONS Board of Trustees Mendota Unified School District Mendota, California Compliance We have audited Mendota Unified School District's compliance with the types of compliance requirements described in the Standards and Procedures for Audits of California K-12 Local Education Agencies to the state laws and regulations listed below for the year ended June 30, Compliance with the requirements of state laws and regulations is the responsibility of Mendota Unified School District's management. Our responsibility is to express an opinion on Mendota Unified School District's compliance with these laws and regulations based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards in the Unites Stales of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroffer General of the United States; and the Standards and Procedures for Audits of California K-12 Local Education Agencies. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements fisted below occurred. An audit includes examining, on a test basis, evidence about Mendota Unified School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Mendota Unified School District's compliance with those requirements. Description Attendance reporting Teacher certification and misassignment Kindergarten continuance Independent study Continuation education Instructional time for school districts for county office of education Instructional materials, general requirements Ratio of administrative employees to teachers Classroom Teacher Salary Early Retirement Incentive Program GANN Limit Calculation School accountability report card Public hearing, receipt of funds Juvenile court school Exclusion of pupils- Pertussis immunization Procedures In The Audit Guide to t 4 t Procedures Performed YES YES YES NOT APPLICABLE YES YES NOT APPLICABLE YES YES YES NOT APPLICABLE YES YES YES NOT APPLICABLE YES Telephone Fax

107 Class size reduction: General 7 YES Option one 3 YES Option two 4 NOT APPLICABLE Districts or charter school with only one school serving K-3 4 YES After School Education and Safety Program General 4 NOT APPLICABLE After school 4 NOT APPLICABLE Before school 6 NOT APPLICABLE Charter Schools Contemporaneous records of attendance 1 NOT APPLICABLE Mode of instruction 1 NOT APPLICABLE Non-classroom based instruction I independent study 15 NOT APPLICABLE Determination of funding for non-classroom based instruction 3 NOT APPLICABLE Annual instructional minutes - classroom based 4 NOT APPLICABLE In our opinion, the Mendota Unified School District complied, in all material respects, with the compliance requirements referred to above that are applicable to the statutory requirements listed in the schedule above for the year ended June 30, This report is intended solely for the information and use of the Board of Trustees, management, the State Controller's Office, the Department of Education and the California Department of Education and is not intended to be and should not be used by anyone other than those specified parties. A~ a-~... =.;; c:..-..,o. November 20, 2012 Fresno, California 63

108 FINDINGS AND RECOMMENDATIONS SECTION

109 MENDOTA UNIFIED SCHOOL DISTRICT SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 Section I - Summary of Auditor's Results Financial Statements Type of aud itor's report issued: Internal control over financial reporting : Material weakness(es) identified? Significant deficiencies identified not considered to be material weaknesses? Non-compliance material to financia l statements noted? Unqualified No None reported No Federal Awards Internal control over financial reporting : Material weakness(es) identified? Significant deficiencies identified not considered to be material weaknesses? Type of auditor's report issued on compliance fof major programs: Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section.510(a) No None reported Unqualified No Identification of major programs CFDA NumberCs) Name of Federal Program or Cluster National School Lunch Program No Child Left Behind Title I National School Breakfast Program Doliar threshold used to distinguish between Type A and Type B programs: $ 500,000 Auditee qualified as low-risk auditee? Yes 65

110 [THIS PAGE INTENTIONALLY LEFT BLANK]

111 APPENDIX B GENERAL AND FINANCIAL INFORMATION FOR THE MENDOTA UNIFIED SCHOOL DISTRICT GENERAL DISTRICT INFORMATION The information in this and other sections concerning the District's operations and operating budget is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Series B Bonds and the Notes are payable from the general fund of the District. The Series B Bonds and the Notes are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof. See "SECURITY FOR THE SERIES B BONDS" in the front half of the Official Statement. General Information The District serves the communities of the City of Mendota and unincorporated areas in Fresno County (the County ). The District currently operates two elementary schools, one middle school, one high school, and one continuation high school. The District s current enrollment is estimated to be 3,043 students. The District currently has no charter schools within its boundaries. Administration Board of Trustees. The District is governed by a seven-member Board of Trustees (the Board ), each member of which is elected to a four-year term. Elections for positions to the Board are held every two years, alternating between three and four available positions. Current members of the Board, together with their office and the date their term expires, are listed below: Name Office Term Expires Araceli Perez President December 2016 Jesus Zavala Vice President December 2014 Diana Toscano Clerk December 2016 Jose Zavala Member December 2014 Ismael Herrera Member December 2014 Lupe Flores Member December 2016 Isabel Maldonado Member December 2016 Superintendent and Administrative Personnel. The Superintendent of the District, appointed by the Board, is responsible for management of the day-to-day operations and supervises the work of other District administrators. Mike Crass is currently serving as the Superintendent. Mike Crass, Superintendent. Michael Crass has served as Superintendent of the Mendota Unified School District for the past 1 ½ years. He has held many leadership positions in the educational community, including Assistant Superintendent, Coordinator of Curriculum, and High School Principal. Before coming to the Mendota Unified School District, Mr. Crass was the B-1

112 Superintendent of the Winton School District for fifteen years. Prior to his leadership roles, Mr. Crass was both a high school and elementary teacher. He has also taught at the Community College and University levels. Michael earned his bachelor s degree from Cal. State University Fresno and has master s degree from Chapman University. Recent Enrollment Trends The following table shows enrollment and average daily attendance history for the District since fiscal year with estimates for fiscal years and ANNUAL ENROLLMENT and AVERAGE DAILY ATTENDANCE Fiscal Years through Mendota Unified School District School Year Enrollment ADA ,056 2, ,603 2, ,779 2, ,873 2, ,978 2, * 3,043 2, * 3,158 2, *Projection. Source: California Department of Education for through ; Mendota Unified School District for and Employee Relations The District employs 134 full-time equivalent certificated employees, 92 classified, and 21 management and supervisory employees. There are two formal bargaining units in the District: the Mendota Teachers Association (the Teachers Association ) represents certificated employees and the California Schools Employees Association (the CSEA ) represents classified employees. The District s contracts with the Teacher s Association and the CSEA each expire on June 30, District Retirement Systems Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Certificated employees are members of the State Teachers' Retirement System ( STRS ) and classified employees are members of the Public Employees' Retirement System ( PERS ). STRS. All full-time certificated employees participate in STRS, a cost-sharing, multipleemployer contributory public employee retirement system. The plan provides retirement and disability benefits and survivor benefits to beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the State Teacher s Retirement Law. Active plan members are required to contribute 8.0% of their salary and the District is required to contribute an actuarially determined rate. The required employer contribution rate for fiscal years , and is 8.25% of annual payroll. The District s contribution to STRS for fiscal years , and was $753,420 (audited), $782,923 (audited) and B-2

113 $838,215 (unaudited actual), respectively. A STRS payment of $654,939 is budgeted for (1 st Interim Report). PERS. All full-time and some part-time classified employees participate in PERS, an agent multiple-employer contributory public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State of California. The District is part of a "cost-sharing" pool within PERS. Active plan members are required to contribute 7.0% of their salary and the District is required to contribute an actuarially determined rate (11.417% for fiscal year and 13.51% for fiscal year ). One actuarial valuation is performed for those employers participating in the pool, and the same contribution rate applies to each. The District s contribution to PERS for fiscal years , and was $336,263 (audited), $348,391 (audited) and $302,974 (unaudited actual), respectively. A PERS payment of $331,203 is budgeted for (1 st Interim Report). State Pensions Trusts. Both the PERS and STRS systems are operated on a statewide basis. District contribution rates to PERS can vary annually depending on changes in actuarial assumptions and other factors, such as liability. Contributions to STRS can only be changed legislatively. STRS has a substantial State unfunded actuarial liability, being $71.0 billion as of June 30, PERS also has a substantial state unfunded liability, being approximately $14.6 billion as of June 30, Since this liability has not been broken down by the state agency, information is not available showing the District's share. Both STRS and PERS issue separate comprehensive financial reports that include financial statements and required supplemental information. Copies of such reports may be obtained from STRS and PERS, respectively, as follows: (i) STRS, P.O. Box 15275, Sacramento, California ; (ii) PERS, P.O. Box , Sacramento, California More information regarding STRS and PERS can also be obtained at their websites, and respectively. However, information in the financial reports and on the websites is not incorporated in this Official Statement by reference. See also the following paragraphs on recent pension reform legislation. Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, Governor Brown signed AB 340, a bill that enacted the California Public Employees Pension Reform Act of 2013 ( PEPRA ) and amended various sections of the California Education and Government Codes. AB 340 (i) increases the retirement age for new State, school, and city and local agency employees depending on job function, (ii) caps the annual PERS and STRS pension benefit payouts, (iii) addresses numerous abuses of the system, and (iv) requires State, school, and certain city and local agency employees to pay at least half of the costs of their PERS pension benefits. PEPRA applies to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with PERS.) The provisions of AB 340 went into effect on January 1, 2013 with respect to new State, school, and city and local agency employees hired on that date and after; existing employees who are members of employee associations, including employee associations of the District, has a five-year window to negotiate compliance with AB 340 through collective bargaining. If no deal is reached by January 1, 2018, a city, public agency or school district could force employees to pay their half of the costs of PERS pension benefits, up to 8 percent of pay for civil workers and 11% or 12% for public safety workers. B-3

114 PERS has predicted that the impact of AB 340 on employers, including the District and other employers in the STRS system, and employees will vary, based on each employer s current level of benefits. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn. Additionally, PERS has noted that changes arising from AB 340 could ultimately have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector. With respect to STRS, for employees hired after January 1, 2013, future members will pay the greater of either (1) at least 50% of the normal cost of their retirement plan, rounded to the nearest one-quarter percent, or (2) the contribution rate paid by current members. The member contribution rate could be increased from this level through collective bargaining or may be adjusted based on other factors. Public employers will pay at least the normal cost rate, after subtracting the member s contribution. The District is unable to predict the amount of future contributions it will have to make to STRS as a result of the implementation of AB 340 (being its future contributions for the normal costs of new employees), and as a result of negotiations with its employee associations, or, notwithstanding the adoption of AB 340, resulting from any legislative changes regarding STRS employer contributions that may be adopted in the future. More information about AB 340 can be accessed through the PERS s web site at pca=st and through the STRS web site at AB340_detailed_impact_analysis.pdf. The references to these internet websites are shown for reference and convenience only; the information contained within the websites may not be current and has not been reviewed by the District and is not incorporated herein by reference. Other Post-Employment Retirement Benefits The District implemented GASB Statement No. 45 for fiscal year ended June 30, Plan Description. The District provides other post-employment retirement benefits ( OPEB ) in accordance with District employment contracts to all employees who retire from the District on or after attaining age 55 with at least 10 years of service. Currently, one employee meets those requirements. The District contributes 100% of the amount of premiums incurred by retirees and their dependents. Expenditures of $48,770 were recognized for postemployment benefits in fiscal year , and $137,738 was allocated in fiscal year Annual OPEB Cost and Net OPEB Obligation. The District s annual OPEB cost (expense) is calculated based on the annual required contribution ( ARC ), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. Funded Status and Funding Progress. As of July 1, 2012, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability ( AAL ) for benefits was $3,041,005, and because the District has not established an irrevocable trust for the pre-funding of OPEB obligations but pays as it goes, the unfunded AAL was $3,041,005. B-4

115 A summary of the District s OPEB obligation, as shown in the District s audited financial statements as of June 30, 2012, is as follows: Annual required contribution ( ARC ) $339,552 Contributions for the fiscal year 16,978 Increase in net OPEB obligation 356,530 Contributions made (86,843) Increase in net OPEB obligation 269,687 Net OPEB obligation- June 30, ,294,576 Net OPEB obligation- June 30, 2012 $3,564,263 For more information regarding the District s OPEB and assumptions used in the Actuarial Study, see Note 14 in the District s Audit in Appendix A hereto. Insurance Joint Powers Agreements The District is exposed to various risks of loss related to torts, theft or destruction of assets, errors and omissions, and natural disasters. The District manages these risks through participation in public entity risk pools. The Fresno County Self-Insurance Group (the FCSIG ) arranges for and provides workers compensation insurance for its members. The FCSIG is governed by a commission composed of one representative from each member agency. Each member district pays a premium commensurate with the level of coverage requested and share surpluses and deficits proportionately to its participation in FCSIG. The Organization of Self-Insured Schools ( OSS ) arranges for and provides property and liability insurance for its members. OSS is governed by a commission composed of one representative from member districts which have one hundred or more insured persons and one representative for those other member districts. Each member district pays a premium commensurate with the level of coverage requested and share surpluses and deficits proportionately to its participation in OSS. The Central Valley Schools Trust arranges for and provides a program of employee health coverage for its member districts. The types of insurance currently provided are medical, dental, vision, and life. B-5

116 DISTRICT FINANCIAL INFORMATION The information in this and other sections concerning the District's operations and operating budget is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Series B Bonds is payable from the general fund of the District. The Series B Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof. Accounting Practices The accounting practices of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California School Accounting Manual. This manual, according to Section of the California Education Code, is to be followed by all California school districts. District accounting is organized on the basis of fund groups, with each group consisting of a separate set of self-balancing accounts containing assets, liabilities, fund balances, revenues and expenditures. The major fund classification is the general fund which accounts for all financial resources not requiring a special fund placement. The District's fiscal year begins on July 1 and ends on June 30. District expenditures are accrued at the end of the fiscal year to reflect the receipt of goods and services in that year. Revenues generally are recorded on a cash basis, except for items that are susceptible to accrual (measurable and/or available to finance operations). Current taxes are considered susceptible to accrual. Revenues from specific state and federally funded projects are recognized when qualified expenditures have been incurred. State block grant apportionments are accrued to the extent that they are measurable and predictable. The State Department of Education sends the District updated information from time to time explaining the acceptable accounting treatment of revenue and expenditure categories. The Governmental Accounting Standards Board ( GASB ) published its Statement No. 34 Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments on June 30, Statement No. 34 provides guidelines to auditors, state and local governments and special purpose governments such as school districts and public utilities, on new requirements for financial reporting for all governmental agencies in the United States. Generally, the basic financial statements and required supplementary information should include (i) Management s Discussion and Analysis; (ii) financial statements prepared using the economic measurement focus and the accrual basis of accounting, (iii) fund financial statements prepared using the current financial resources measurement focus and the modified accrual method of accounting and (iv) required supplementary information. Financial Statements General. The District's general fund finances the legally authorized activities of the District for which restricted funds are not provided. General fund revenues are derived from such sources as State school fund apportionments, taxes, use of money and property, and aid from other governmental agencies. The District's June 30, 2012 Audited Financial Statements were prepared by Schafer Accountancy Corporation, Fresno, California and are attached hereto as Appendix A. Audited financial statements for the District for prior fiscal years are on file with the District and available for public inspection at the office of the Superintendent, Mendota B-6

117 Unified School District, 115 McCabe Ave, Mendota, California 93640; telephone (559) The District has not requested, and the auditor has not provided, any review or update of such Financial Statements in connection with inclusion in this Official Statement. Copies of such financial statements will be mailed to prospective investors and their representatives upon written request to the District. This District may impose a charge for copying, mailing and handling. General Fund Revenues, Expenditures and Changes in Fund Balance. The following table shows the audited income and expense statements for the District for the fiscal years through and unaudited actual figures for fiscal year Revenues REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Years through (Audited) and Fiscal Year (Unaudited Actual) Mendota Unified School District Audited Audited Audited Unaudited Actual Revenue limit sources: State apportionments $14,188,106 $11,382,180 $15,638,052 Local sources (175,759) 2,686,003 36,647 Total Revenue Limit Sources 14,012,347 14,068,183 15,674,699 $15,229,592 Federal Revenues 3,705,834 4,101,420 2,260,055 2,712,010 Other state revenues 4,369,359 4,744,730 4,948,216 5,099,478 Other local revenues 1,192, ,129 1,064,265 1,256,974 Total Revenues 23,280,024 23,835,462 23,947,235 24,298,055 Expenditures Certificated salaries 9,292,260 9,302,340 9,675,365 10,378,100 Classified salaries 2,623,620 2,604,743 2,748,598 2,987,444 Employee benefits 4,420,894 4,719,956 5,085,050 5,463,613 Books and supplies 1,902,639 2,502,145 1,701,286 2,078,503 Services; other operating expenditures 2,729,533 2,176,505 2,508,481 3,241,733 Capital outlay 297,532 49,252 79,408 2,997,745 Other outgo (excluding transfers of direct costs) 185,972 8, , ,669 Other outgo (transfers of direct costs) (93,446) Total Expenditures 21,452,450 21,363,279 22,167,362 27,442,361 Excess of Revenues Over/(Under) Expenditures 1,827,984 2,472,183 1,779,873 (3,144,306) Other Financing Sources (Uses) Transfers in Transfers out -- (3,256,475) (28,363) (354,575) Total Other Financing Sources (Uses) -- (3,256,475) (28,363) (354,575) Net change in fund balance 1,827,984 (784,292) 1,751,510 (3,498,881) Fund Balance, July 1 10,512,636 12,340,620 11,556,328 13,307,838 Fund Balance, June 30 $12,340,620 $11,556,328 $13,307,838 $9,808,957 Source: District Audit Reports for fiscal years through ; Unaudited Actual Financial Report for fiscal year B-7

118 General Fund Budget and First Interim Report - Revenues, Expenditures and Changes in Fund Balance. The District adopted its fiscal year Budget on June 18, 2013, following a public hearing. The District s budget presentation differs from the District s audit reports; expenses are presented by object not function. The following table shows the income and expense statements for the District with (i) budgeted figures from the Adopted Budget and (ii) projected year totals from the First Interim Report, for fiscal year Summary of General Fund Revenues, Expenditures and Changes in Fund Balance Fiscal Year (Adopted Budget and First Interim Report) Mendota Unified School District Revenues Budgeted Fiscal Year st Interim Report Fiscal Year Total Revenue Limit Sources/LCFF $15,484,594 $20,797,757 Federal Revenues 3,054,639 3,200,139 Other state revenues 5,802,964 2,177,200 Other local revenues 1,301,973 1,211,040 Total Revenues 25,644,170 $27,386,136 Expenditures Certificated Salaries 11,519,315 11,339,109 Classified Salaries 3,136,930 3,048,751 Employee Benefits 5,403,415 5,257,882 Books and Supplies 1,738,213 2,068,131 Contract Services & Operating Exp. 3,050,780 3,299,697 Capital Outlay 5,795,874 5,805,874 Other Outgo (excluding indirect costs) 93, ,168 Other Outgo Transfers of Indirect Costs Total Expenditures 30,737,944 30,923,612 Excess of Revenues Over/(Under) Expenditures (5,093,775) (3,537,476) Other Financing Sources (Uses) Operating transfers in -- - Operating transfers out (33,280) (33,280) Total Other Financing Sources (Uses) (33,280) (33,280) Net change in fund balance (5,127,055) (3,570,756) Fund Balance, July 1 9,808,957 9,808,957 Fund Balance, June 30 $4,681,902 $6,238,201 Source: District First Interim Report for Fiscal Year Assumptions Used with Respect to Budget. Legislation adopted in connection with the State s Budget includes the implementation of the Local Control Funding Formula (the LCFF ), which changes the formula by which school districts in California receive funding from the State. At the time of District budget preparation, the District followed the pre-lcff model of education finance, which took a conservative approach to education funding in Local Control Funding Formula. As described in more detail herein under the heading STATE FUNDING OF EDUCATION - Recent State Budgets, the adoption of the B-8

119 State Budget and its related implementing legislation includes significant reforms to education finance in the State with the adoption of the LCFF. Under the LCFF, the emphasis shifts from a State-controlled system with funding based largely on ADA and the revenue limit with numerous State-mandated categorical programs, to a locally-controlled system with a funding formula which attempts to better meet the needs of students, particularly those students which come from low-income families or are English language learners which may require more support for success in school, and which provides local school officials with the ability to decide how best to meet the needs of their students. Funding under the LCFF consists of the following: 1. Base grant of $7,643 per ADA, plus 2. 20% supplemental funding for English language learners, students from lowincome families and foster youth, plus 3. A concentration grant for districts with enrollment of more than 55% of English learners, students from low-income families and foster youth of up to 22.5% of a local education agency s base grant, based on the number of such students, plus 4. An economic recovery target, to bring local agencies back to pre-recession funding levels. The new legislation includes a hold harmless provision which provides that a district or charter school will maintain total revenue limit and categorical funding at its level, unadjusted for changes in ADA or cost of living adjustments. The District has a high proportion of English language learners, students from lowincome families and foster youth (95.56% in ), and expects to receive the base grant funding as well as supplemental funding and a concentration grant in There are many variables which still remain to be finalized with respect to the LCFF model of education finance and the District is unable to predict at this time all of the impacts that this change in education funding will have on its finances. Reserve Levels. The District s ending general fund balance reflects the accumulation of surpluses from prior years. This fund balance is used to meet the State s minimum required reserve of 3% of expenditures, plus any other allocation or reserve which might be approved as an expenditure by the District in the future. The District has successfully maintained its reserve for economic uncertainties at or above the State requirement, with its unrestricted general fund balance being 33.3% in , 35.7% in fiscal year and budgeted to be 20.1% in fiscal year District Budget and Interim Financial Reporting Budgeting Procedures. State law requires school districts to maintain a balanced budget in each fiscal year. The State Department of Education imposes a uniform budgeting and accounting format for school districts. B-9

120 Under current law, a school district governing board must adopt and file with the county superintendent of schools a tentative budget by July 1 in each fiscal year. The District is under the jurisdiction of the County Superintendent of Schools (the "County Superintendent"). The County Superintendent must review and approve or disapprove the budget no later than August 15. The County Superintendent is required to examine the adopted budget for compliance with the standards and criteria adopted by the State Board of Education and identify technical corrections necessary to bring the budget into compliance with the established standards. If the budget is disapproved, it is returned to the District with recommendations for revision. The District is then required to revise the budget, hold a public hearing thereon, adopt the revised budget and file it with the County Superintendent no later than September 8. Pursuant to State law, the County Superintendent has available various remedies by which to impose and enforce a budget that complies with State criteria, depending on the circumstances, if a budget is disapproved. After approval of an adopted budget, the school district's administration may submit budget revisions for governing board approval. Subsequent to approval, the County Superintendent will monitor each district under its jurisdiction throughout the fiscal year pursuant to its adopted budget to determine on an ongoing basis if the district can meet its current or subsequent year financial obligations. If the County Superintendent determines that a district cannot meet its current or subsequent year obligations, the County Superintendent will notify the district's governing board of the determination and may then do either or both of the following: (a) assign a fiscal advisor to enable the district to meet those obligations or (b) if a study and recommendations are made and a district fails to take appropriate action to meet its financial obligations, the County Superintendent will so notify the State Superintendent of Public Instruction, and then may do any or all of the following for the remainder of the fiscal year: (i) request additional information regarding the district's budget and operations; (ii) after also consulting with the district's board, develop and impose revisions to the budget that will enable the district to meet its financial obligations; and (iii) stay or rescind any action inconsistent with such revisions. However, the County Superintendent may not abrogate any provision of a collective bargaining agreement that was entered into prior to the date upon which the County Superintendent assumed authority. Interim Certifications Regarding Ability to Meet Financial Obligations. Under the provisions of AB 1200, each school district is required to file interim certifications with the county office of education as to its ability to meet its financial obligations for the remainder of the thencurrent fiscal year and, based on current forecasts, for the subsequent two fiscal years. The county office of education reviews the certification and issues the following types of certifications: Positive certification - the school district will meet its financial obligations for the current fiscal year and subsequent two fiscal years. Negative certification - the school district will be unable to meet its financial obligations for the remainder of the fiscal year or the subsequent fiscal year. Qualified certification - the school district may not meet its financial obligations for the current fiscal year or subsequent two fiscal years. B-10

121 Under California law, any school district and office of education that has a qualified or negative certification in any fiscal year may not issue, in that fiscal year or in the next succeeding fiscal year, certificates of participation, tax anticipation notes, revenue bonds or any other debt instruments that do not require the approval of the voters of the district, unless the applicable county superintendent of schools determines that the district s repayment of indebtedness is probable. In addition, under the California Education Code, a school district which has received a qualified or negative certification on its most recent interim report may not issue and sell general obligation bonds on its own behalf pursuant to the provisions of the Education Code, notwithstanding that the Board of Supervisors of the County with jurisdiction over the school district has adopted a resolution allowing a school district to do so. District s Budget Approval/Disapproval and Certification History. During the past five years, each of the District s adopted budgets have been approved by the County Superintendent and the District has received positive certifications on all of its interim reports, including the District s First Interim Report. Copies of the District s budget, interim reports and certifications may be obtained upon request from the District Office at Mendota Unified School District, 115 McCabe Ave, Mendota, California 93640; telephone (559) The District may impose charges for copying, mailing and handling. Effect of State Reductions in Education Funding on District; District Response. As a result of the State s budgeting difficulties (see STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS below), the District has responded with cautious expenditures of federal and state funding together with several accompanying trends and strategies. The District s Budget included an assumption that Proposition 30, which appeared on the November, 2012 State-wide ballot, would not pass, resulting in trigger cuts in education funding from the State. As described below, however, Proposition 30 was passed on November 6, therefore these trigger reductions will not occur. In order to address reductions in education funding by the State in recent years, District has undertaken a continuous program of marketing the school and its programs through parents and the local press, creating a favorable public view toward the District. Certificated collective bargaining has been well-controlled in a positive negotiating environment to assure careful growth of certificated wage enhancements. Modest enhancements have been successfully offered in order to encourage retirements and classified wage enhancements have been offered primarily to attract qualified new applicants to specific positions. Across-the-board classified enhancements have not been considered in the current economic environment. Parent and community fund-raising, together with grant-writing, has provided 100% of the necessary revenue for enrichment programs such as music, gardening, drama and marine education. Federal stimulus funds have been spent cautiously, with significant unspent carryovers helping to balance annual budgets. Lastly, the District has taken advantage of categorical flexibility in order to maximize use of revenues. Furlough days have been considered by the Board, and will continue to be considered as needed but have not been necessary at this time. Cost saving strategies include installation of high-efficiency heating units (to be completed in the summer of 2013), partial funding of school maintenance through a federal adult employment program, reduction in funding of instructional materials, reduction of student home-to-school transportation, and restriction of certificated and classified F.T.E. s. B-11

122 Revenue Sources The District categorizes its general fund revenues into four primary sources: PERCENTAGE OF TOTAL DISTRICT GENERAL FUND REVENUES BY SOURCE Mendota Unified School District Audited Audited Audited Unaudited Revenue Source Revenue limit sources (1) 60.2% 59.0% 65.5% 62.7% Federal revenues Other State revenues Other local revenues Totals 100.0% 100.0% 100.0% 100.0% (1) Consisted of a mix of State apportionments of basic and equalization aid and local property tax revenues. Source: Mendota Unified School District. Each of these revenue sources is described below. Revenue Limit Sources. Prior to fiscal year , funding of the District's revenue limit was provided by a mix of (1) local property taxes and (2) State apportionments of basic and equalization aid. Generally, the State apportionments amounted to the difference between the District's revenue limit and its local property tax revenues. Since fiscal year until fiscal year , California school districts had operated under general purpose revenue limits established by the State Legislature. In general, revenue limits had been calculated for each school district by multiplying (1) the average daily attendance for such district by (2) a base revenue limit per unit of A.D.A. The revenue limit calculations had been adjusted annually in accordance with a number of factors designated primarily to provide cost of living increases and to equalize revenues among all California school districts of the same type. Beginning in , Proposition 13 and its implementing legislation provided for each county to levy (except for levies to support prior voter-approved indebtedness) and collect all property taxes, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county. The principal component of local revenues was a school district s property tax revenues, i.e., a district s share of the local 1% property tax, received pursuant to Sections 75 and following and Sections 95 and following of the California Revenue and Taxation Code. Education Code Section 42238(h) itemizes the local revenues that are counted towards the base revenue limit before calculating how much the State must provide in equalization aid. Historically, the more local property taxes a district received, the less State equalization aid it is entitled to. As described in this Official Statement, with the implementation of the LCFF in fiscal year , the amount of State funding provided to school districts will now be determined with a funding model which attempts to better meet the needs of students, particularly those students which come from low-income families or are English language learners which may require more support for success in school, and which provides local school officials with the ability to decide how best to meet the needs of their students. The LCFF affects how much funding a district will receive, but generally not the source of such funding, being its share of local property taxes together with the State funding provided in the LCFF. B-12

123 Federal Revenues. The federal government provides funding for several District programs, including special education programs, programs under No Child Left Behind, the Individuals With Disabilities Education Act, and specialized programs such as Drug Free Schools. Other State Revenues. As discussed above, the District receives State apportionment of basic and equalization aid in an amount equal to the difference between the District's revenue limit and its property tax revenues. In addition to such apportionment revenue, the District receives substantial other State revenues. These other State revenues are primarily restricted revenues funding items such as Economic Impact Aid, Class Size Reduction Program, Mandated Cost Reimbursement, and After School Education and Safety. The District receives State aid from the California State Lottery (the "Lottery"), which was established by a constitutional amendment approved in the November 1984 general election. Lottery revenues must be used for the education of students and cannot be used for non-instructional purposes such as real property acquisition, facility construction, or the financing of research. Moreover, State Proposition 20 approved in March 2000 requires that 50% of the increase in Lottery revenues over levels must be restricted to use on instruction material. For additional discussion of State aid to school districts, see STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS - State Funding of Education. Other Local Revenues. In addition to property taxes, the District receives additional local revenues from items such as interest earnings and other local sources. Long-Term Debt General Obligation Refunding Bonds. On February 18, 2010, the District issued its $4,985, General Obligation Refunding Bonds, to refund the District s outstanding General Obligation Bonds, Election 1988, Series B (the 1998 Series B Bonds ). The 2010 Refunding Bonds bear interest rates ranging from the rate of 2.00% to 3.50% per annum. On March 27, 2013 the District issued $8,000,000 General Obligation Bonds, Election of 2012, Series A under the 2012 Authorization (the Series A Bonds ). For the remaining debt service on the 1998 Series B Bonds and the Series A Bonds see DEBT SERVICE SCHEDULE in the body of this Official Statement. Capital Leases The District currently has no operating leases. Investment of District Funds In accordance with Government Code Section et seq., the Fresno County Treasurer manages funds deposited with it by the District. The County is required to invest such funds in accordance with California Government Code Sections et seq. In addition, B-13

124 counties are required to establish their own investment policies which may impose limitations beyond those required by the Government Code. See APPENDIX G - FRESNO COUNTY INVESTMENT POLICY. Effect of State Budget on Revenues Public school districts in California are dependent on revenues from the State for a large portion of their operating budgets. California school districts generally receive the majority of their operating revenues from various State sources. The primary source of funding for school districts is the revenue limit, which is a combination of State funds and local property taxes (see State Funding of Education Revenue Limits above). State funds typically make up the majority of a district s revenue limit. School districts also receive funding from the State for various categorical programs. The availability of State funds for public education is a function of constitutional provisions affecting school district revenues and expenditures (see CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS below), the condition of the State economy (which affects total revenue available to the State general fund), and the annual State budget process. State Funding of Education and Recent State Budgets General. The State requires that from all State revenues there first shall be set apart the moneys to be applied for support of the public school system and public institutions of higher education. Public school districts in California are dependent on revenues from the State for a large portion of their operating budgets. California school districts receive an average of about 55% of their operating revenues from various State sources. The primary source of funding for school districts is the revenue limit, which is a combination of State funds and local property taxes (see State Funding of Education and Revenue Limitations above). State funds typically make up the majority of a district s revenue limit. The availability of State funds for public education is a function of constitutional provisions affecting school district revenues and expenditures (see CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS below), the condition of the State economy (which affects total revenue available to the State general fund), and the annual State budget process. Decreases in State revenues may significantly affect appropriations made by the Legislature to school districts. The following information concerning the State s budgets for the current and most recent preceding years has been compiled from publicly-available information provided by the State. Neither the District nor the County is responsible for the information relating to the State s budgets provided in this section. Further information is available from the Public Finance Division of the State Treasurer s Office. The Budget Process. The State s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the Governor s Budget ). Under State law, the annual proposed Governor s Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor s Budget, the Legislature takes up the proposal. B-14

125 Under the State Constitution, money may be drawn from the State Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a majority vote of each house of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each house of the Legislature. Appropriations also may be included in legislation other than the Budget Act. Bills containing appropriations (including for K-14 education) must be approved by a majority vote in each house of the Legislature, unless such appropriations require tax increases, in which case they must be approved by a two-thirds vote of each house of the Legislature, and be signed by the Governor. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State Treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt. Recent State Budgets Certain information about the State budgeting process and the State Budget is available through several State of California sources. A convenient source of information is the State s website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only, the information contained within the websites may not be current and has not been reviewed by the District and is not incorporated herein by reference. The California State Treasurer Internet home page at under the heading Bond Information, posts various State of California Official Statements, many of which contain a summary of the current State Budget, past State Budgets, and the impact of those budgets on school districts in the State. The California State Treasurer s Office Internet home page at under the heading Financial Information, posts the State s audited financial statements. In addition, the Financial Information section includes the State s Rule 15c2-12 filings for State bond issues. The Financial Information section also includes the Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation from the State s most current Official Statement, which discusses the State budget and its impact on school districts. The California Department of Finance s Internet home page at under the heading California Budget, includes the text of proposed and adopted State Budgets. The State Legislative Analyst s Office prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst s Internet home page at under the heading Subject Area Budget (State). B-15

126 Prior Years Budgeting Techniques. Declining revenues and fiscal difficulties which arose in the State commencing in fiscal year led the State to undertake a number of budgeting strategies which had subsequent impacts on local agencies within the State. These techniques included the issuance of IOUs in lieu of warrants (checks), the enactment of statutes deferring amounts owed to public schools, until a later date in the fiscal year, or even into the following fiscal year (known as statutory deferrals), trigger reductions, which were budget cutting measures which were implemented or could have been implemented if certain State budgeting goals were not met, among others, and the dissolution of local redevelopment agencies in part to make available additional funding for local agencies. Although the fiscal year Budget is balanced and projects a balanced budget for the foreseeable future, largely attributable to the additional revenues generated due to the passage of Proposition 30 at the November 6, 2012 statewide election, as well as other spending cuts, there can be no certainty that budget-cutting strategies such as those used in recent years will not be used in the future should the State Budget again be stressed and if projections included in such budget do not materialize State Budget On June 27, 2013, Governor Brown approved the Budget Act, projecting $97.1 billion in general fund revenues and adopting a $96.3 billion spending plan, the first balanced budget in many years. Temporary revenues provided by the passage of Proposition 30 (Sales and Income Tax Revenue Increase approved by State voters at an election held on November 6, 2012) and spending cuts made in the past two years mean that the State s budget is projected to remain balanced for the foreseeable future. The State Budget maintains a $1.1 billion reserve and pays down a budgetary deficit, projected to be reduced from $35 billion to $27 billion in and to below $5 billion by the end of The State Budget includes total funding of $70 billion ($39.6 billion General Fund and $30.4 billion other funds) for all K 12 education programs. The State Budget and its related implementing legislation enacts significant reforms to the State s system of K-12 education finance with the enactment of the LCFF. With LCFF, Proposition 98 funding, the State s minimum funding guarantee for K-12 schools and community colleges that went into effect in fiscal year , is expected to be $55.3 billion in the fiscal year, an increase of more than $8 billion over the fiscal year funding level. The Budget projects Proposition 98 funding for K 12 education to grow by almost $20 billion from the fiscal year to the fiscal year, representing an increase of more than $2,800 per student during such period. Local Control Funding Formula. The LCFF attempts to move from an existing school funding system characterized as overly complex and inequitable to a locally-controlled system, which responds to research and practical experience indicating that students from low income families and English language learners often require supplemental services and support to be successful in school. State Funding under the LCFF. The LCFF changes the State funding system for school districts, charter schools and county offices of education by, among other features, consolidating most categorical programs with the existing revenue limit structure to provide a new student formula which will be phased in over seven years, and implementing supplemental B-16

127 and concentration grants to English language learners and economically disadvantaged students. The LCFF includes the following components: A base grant for each local education agency equivalent to $7,643 per unit of A.D.A. This base grant is $2,375 more than the average revenue limit provided prior to LCFF implementation. A 20% supplemental grant for English learners, students from low-income families and foster youth to reflect increased costs associated with educating those students. An additional concentration grant of up to 22.5% of a local education agency s base grant, based on the number of English learners, students from low-income families and foster youth served by the local agency that comprise more than 55% of enrollment. An economic recovery target to ensure that almost every local education agency receives at least their pre-recession funding level, adjusted for inflation, at full implementation of the Local Control Funding Formula. Accountability under the LCFF. The LCFF moves from a State controlled system that emphasized inputs (largely in the form of categorical funding which required funds to be spent on specific projects and programs) to a locally controlled system in which local agencies decide the best way to spend funds, focused on improved outcomes. However, districts will be required to increase or improve services for English language learners, low income, and foster youth students in proportion to supplemental and concentration grant funding received. All school districts, county offices of education, and charter schools will be required to develop and adopt local control and accountability plans, which will identify local goals in areas that are priorities for the State, including pupil achievement and parent engagement. County superintendents will review and provide support to the districts under their jurisdiction, and the Superintendent of Public Instruction will perform a corresponding role for county offices of education. In addition, the State Budget creates the California Collaborative for Education Excellence to advise and assist school districts, county offices of education, and charter schools in achieving the goals identified in their plans. The State will continue to measure student achievement through statewide assessments, produce an Academic Performance Index for schools and subgroups of students, determine the contents of the school accountability report card, and establish policies to implement the federal accountability system. Other K-12 Budget Adjustments. In addition to the first year funding provided under the LCFF, the State Budget includes: Common Core Implementation Funding. An increase of $1.25 billion in one-time Proposition 98 funding to support the implementation of the Common Core new standards for evaluating student achievement in English-language arts and math. Funding will be distributed on the basis of enrollment for professional development, instructional materials and technology. Local agencies must develop a plan on how to spend these funds over the next two years, and hold a public hearing on such plan. B-17

128 Career Technical Education Pathways Grant Program. $250 million for one-time competitive capacity building grants for K-12 and community colleges to support programs based on work-based learning. K-12 Mandates Block Grant. $50 million to reflect the inclusion of graduation requirements mandate within the block grant program, which will be distributed to school districts, county offices of education and charter schools with enrollment in grades K-12 Budget Deferral Repayment. An increase of $1.6 billion in and an increase of $242.3 million in for the repayment of inter-year budgetary deferrals. Proposition 39 (Energy Efficiency Projects) Implementation. $381 million in Proposition 98 funding is allocated to support energy efficiency projects approved by the California Energy Commission. Of this amount, 85% will be allocated based on A.D.A and 15% will be allocated based on free and reduced price meal eligibility. Special Education Funding Reform. Consolidations for various special education programs to simplify special education finance and provide additional funding flexibility. Higher Education and Health Care. The State Budget increases funding for higher education by between $1,649 and $2,491 per student through The State Budget provides funding to expand Medi-Cal to approximately 1.4 million Californians pursuant to the federal law known as the Affordable Care Act. The State anticipates that this will significantly increase health care coverage, improve access to mental health services, expand substance use disorder treatment and take advantage of new federal dollars. Numerous Factors Affecting Budget and Projections. The execution of the State Budget may be affected by numerous factors, including but not limited to: (i) shifts of costs from the federal government to the State, (ii) national, State and international economic conditions, (iii) litigation risk associated with spending reductions, including the elimination of redevelopment agencies, (iv) rising health care costs, (v) large unfunded liabilities for retired State employee pensions and healthcare, (vi) deferred maintenance of State s critical infrastructure and (vii) other factors, all or any of which could cause the revenue and spending projections made in State Budget to be unattainable. The District cannot predict the impact that the State Budget, or subsequent budgets, will have on its own finances and operations. Additionally, the District cannot predict the accuracy of any projections made in the State s State Budget. The complete State Budget is available from the California Department of Finance website at The District can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated in this Official Statement by such reference. The information referred to above should not be relied upon in making an investment decision with respect to the Bonds. B-18

129 Uncertainty Regarding Future State Budgets. The District cannot predict what actions will be taken in future years by the State Legislature and the Governor to address the State s current or future budget deficits. Future State budgets will be affected by national and state economic conditions and other factors over which the District has no control. The District cannot predict what impact any future budget proposals will have on the financial condition of the District. To the extent that the State budget process results in reduced revenues to the District, the District will be required to make adjustments to its budgets. The State has not entered into any contractual commitment with the District, the County, or the Owners of the Bonds to provide State budget information to the District or the owners of the Bonds. Although they believe the State sources of information listed above are reliable, neither the District nor the Purchaser assumes any responsibility for the accuracy of the State Budget information set forth or referred to in this Official Statement or incorporated herein. However, the Bonds are secured by ad valorem taxes levied and collected on taxable property in the District, without limit as to rate or amount, and are not secured by a pledge of revenues of the District or its general fund. Legal Challenges to State Funding of Education The application of Proposition 98 and other statutory regulations has been the subject of various legal challenges in recent years, and is likely to be further challenged in the future. For a discussion of how the provisions of Proposition 98 have been applied to school funding see - State Funding of Education" and "-Recent State Budgets above Robles-Wong Litigation. On May 20, 2010, a plaintiff class of numerous current California public school students and several school districts, together with the California Congress of Parents, Teachers & Students, the Association of California School Administrators and the California School Boards Association filed suit in Riverside County Superior Court challenging the system of financing for public schools in California as unconstitutional. In Maya Robles-Wong, et al. v. State of California, plaintiffs seek declaratory and injunctive relief, including a permanent injunction compelling the State to abandon the existing system of public school finance. On July 16, 2010, the California Teachers Association filed a Complaint in Intervention, making the same allegations and seeking the same declaratory and injunctive relief. On January 14, 2011, the court dismissed certain of the causes of action, including causes of action that alleged a constitutional right to a particular level of education funding and violations of equal protection of the law, based on certain State constitutional provisions. On July 26, 2011, the Superior Court rejected the plaintiff s amended complaint as not stating an equal protection claim. On January 25, 2012, the plaintiffs filed an appeal in the 1st Appellate District. The District cannot predict the ultimate outcome of the Robles-Wong litigation. However, if successful, the lawsuit could result in changes to the implementation of school finance in California CSBA Litigation. The California School Boards Association, the Association of California School Administrators, the Los Angeles Unified School District, the San Francisco Unified School District and the Turlock Unified School District announced on August 28, 2011 that they were filing a lawsuit (the CSBA Lawsuit ) in the Superior Court of the City and County of San Francisco, seeking to restore more than $2 billion that had been designated to California public schools under Proposition 98, but was cut from the State Budget. The Superior Court has rejected the CSBA Lawsuit. The plaintiffs appealed the decision. On February 26, 2013, the Appeals Court dismissed the appeal and affirmed the trial court s ruling. B-19

130 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Principal of, and interest on the Series B Bonds are payable from the proceeds of an ad valorem tax levied by the County for the payment thereof. Articles XIIIA, XIIIB, XIIIC, and XIIID of the State Constitution, Propositions 62, 98, 111 and 218, and certain other provisions of law discussed below, are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the District to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the District to levy taxes for payment of the Series B Bonds. The tax levied by the County for payment of the Series B Bonds was approved by the District's voters in compliance with Article XIIIA and all applicable laws. Article XIIIA of the California Constitution Basic Property Tax Levy. On June 6, 1978, California voters approved Proposition 13 ("Proposition 13"), which added Article XIIIA to the State Constitution ("Article XIIIA"). Article XIIIA limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on (i) indebtedness approved by the voters prior to July 1, 1978, (ii) (as a result of an amendment to Article XIIIA approved by State voters on June 3, 1986) bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the voters on such indebtedness (which provided the authority for the issuance of the Refunded Bonds), and (iii) (as a result of an amendment to Article XIIIA approved by State voters on November 7, 2000) bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Article XIIIA defines full cash value to mean "the county assessor s valuation of real property as shown on the tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership have occurred after the 1975 assessment". This full cash value may be increased at a rate not to exceed 2% per year to account for inflation. The Series B Bonds were approved by a 55% vote as described in (iii) of this paragraph. Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in other minor or technical ways. Both the United States Supreme Court and the California State Supreme Court have upheld the general validity of Article XIIIA. Legislation Implementing Article XIIIA. Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the county and distributed according to a formula B-20

131 among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the annual adjustment not to exceed 2% are allocated among the various jurisdictions in the taxing area based upon their respective situs. Any such allocation made to a local agency continues as part of its allocation in future years. Inflationary Adjustment of Assessed Valuation. As described above, the assessed value of a property may be increased at a rate not to exceed 2% per year to account for inflation. On December 27, 2001, the Orange County Superior Court, in County of Orange v. Orange County Assessment Appeals Board No. 3, held that where a home s taxable value did not increase for two years, due to a flat real estate market, the Orange County assessor violated the 2% inflation adjustment provision of Article XIIIA, when the assessor tried to "recapture" the tax value of the property by increasing its assessed value by 4% in a single year. The assessors in most California counties, including the County, use a similar methodology in raising the taxable values of property beyond 2% in a single year. The State Board of Equalization has approved this methodology for increasing assessed values. On appeal, the Appellate Court held that the trial court erred in ruling that assessments are always limited to no more than 2% of the previous year s assessment. On May 10, 2004 a petition for review was filed with the California Supreme Court. The petition has been denied by the California Supreme Court. As a result of this litigation, the recapture provision described above may continue to be employed in determining the full cash value of property for property tax purposes. Unitary Property Some amount of property tax revenue of the District is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions ( unitary property ). Under the State Constitution, such property is assessed by the State Board of Equalization ( SBE ) as part of a going concern rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the District) according to statutory formulae generally based on the distribution of taxes in the prior year. Constitutional Appropriations Limitation Article XIIIB ( Article XIIIB ) of the State Constitution, as subsequently amended by Propositions 98 and 111, respectively, limits the annual appropriations of the State and of any city, county, school district, authority or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and in population and for transfers in the financial responsibility for providing services and for certain declared emergencies. For fiscal years beginning on or after July 1, 1990, the appropriations limit of each entity of government shall be the appropriations limit for the fiscal year adjusted for the changes made from that fiscal year under the provisions of Article XIIIB, as amended. The appropriations of an entity of local government subject to Article XIIIB limitations include the proceeds of taxes levied by or for that entity and the proceeds of certain state subventions to that entity. Proceeds of taxes include, but are not limited to, all tax revenues and the proceeds to the entity from (a) regulatory licenses, user charges and user fees (but only B-21

132 to the extent that these proceeds exceed the reasonable costs in providing the regulation, product or service), and (b) the investment of tax revenues. Appropriations subject to limitation do not include (a) refunds of taxes, (b) appropriations for debt service, (c) appropriations required to comply with certain mandates of the courts or the federal government, (d) appropriations of certain special districts, (e) appropriations for all qualified capital outlay projects as defined by the legislature, (f) appropriations derived from certain fuel and vehicle taxes and (g) appropriations derived from certain taxes on tobacco products. Article XIIIB includes a requirement that all revenues received by an entity of government other than the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years. Article XIIIB also includes a requirement that 50% of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be transferred and allocated to the State School Fund under Section 8.5 of Article XVI of the State Constitution. Article XIIIC and Article XIIID of the California Constitution On November 5, 1996, the voters of the State of California approved Proposition 218, popularly known as the Right to Vote on Taxes Act. Proposition 218 added to the California Constitution Articles XIIIC and XIIID (respectively, Article XIIIC and Article XIIID ), which contain a number of provisions affecting the ability of local agencies, including school districts, to levy and collect both existing and future taxes, assessments, fees and charges. According to the Title and Summary of Proposition 218 prepared by the California Attorney General, Proposition 218 limits the authority of local governments to impose taxes and property-related assessments, fees and charges. Among other things, Article XIIIC establishes that every tax is either a general tax (imposed for general governmental purposes) or a special tax (imposed for specific purposes), prohibits special purpose government agencies such as school districts from levying general taxes, and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote; and also provides that the initiative power will not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. Article XIIIC further provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles XIII and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4. B-22

133 On November 2, 2010, Proposition 26 was approved by State voters, which amended Article XIIIC to expand the definition of tax to include any levy, charge, or exaction of any kind imposed by a local government except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor s burdens on, or benefits received from, the governmental activity. Article XIIID deals with assessments and property-related fees and charges, and explicitly provides that nothing in Article XIIIC or XIIID will be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development. Proposition 218 does not affect the ad valorem property taxes to be levied by the County to pay debt service on the Series B Bonds. Proposition 62 A statutory initiative ( Proposition 62 ) was adopted by the voters at the November 4, 1986, general election which (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the District be approved by a twothirds vote of the governmental entity s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, California appellate court cases have overturned the provisions of Proposition 62 pertaining to the imposition of taxes for general government purposes. However, the California Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of B-23

134 Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme Court s decision, such as what remedies exist for taxpayers subject to a tax not in compliance with Proposition 62, and whether the decision applies to charter cities. The District has not experienced any substantive adverse financial impact as a result of the passage of this initiative. Proposition 98 On November 8, 1988, California voters approved Proposition 98, a combined initiative constitutional amendment and statute called the Classroom Instructional Improvement and Accountability Act (the Accountability Act ). Certain provisions of the Accountability Act have, however, been modified by Proposition 111, discussed below, the provisions of which became effective on July 1, The Accountability Act changes State funding of public education below the university level and the operation of the State s appropriations limit. The Accountability Act guarantees State funding for K-12 school districts and community college districts (hereinafter referred to collectively as K-14 school districts ) at a level equal to the greater of (a) the same percentage of general fund revenues as the percentage appropriated to such districts in , and (b) the amount actually appropriated to such districts from the general fund in the previous fiscal year, adjusted for increases in enrollment and changes in the cost of living. The Accountability Act permits the Legislature to suspend this formula for a oneyear period. The Accountability Act also changes how tax revenues in excess of the State appropriations limit are distributed. Any excess State tax revenues up to a specified amount would, instead of being returned to taxpayers, be transferred to K-14 school districts. Any such transfer to K-14 school districts would be excluded from the appropriations limit for K-14 school districts and the K-14 school district appropriations limit for the next year would automatically be increased by the amount of such transfer. These additional moneys would enter the base funding calculation for K 14 school districts for subsequent years, creating further pressure on other portions of the State budget, particularly if revenues decline in a year following an Article XIIIB surplus. The maximum amount of excess tax revenues which could be transferred to K 14 school districts is 4% of the minimum State spending for education mandated by the Accountability Act. Proposition 111 On June 5, 1990, the voters approved Proposition 111 (Senate Constitutional Amendment No. 1) called the Traffic Congestion Relief and Spending Limit Act of 1990 ( Proposition 111 ) which further modified Article XIIIB and Sections 8 and 8.5 of Article XVI of the State Constitution with respect to appropriations limitations and school funding priority and allocation. The most significant provisions of Proposition 111 are summarized as follows: Annual Adjustments to Spending Limit. The annual adjustments to the Article XIIIB spending limit were liberalized to be more closely linked to the rate of economic growth. Instead of being tied to the Consumer Price Index, the change in the cost of living is now measured by the change in California per capita personal income. The definition of change in population specifies that a portion of the State s spending limit is to be adjusted to reflect changes in school attendance. B-24

135 Treatment of Excess Tax Revenues. Excess tax revenues with respect to Article XIIIB are now determined based on a two-year cycle, so that the State can avoid having to return to taxpayers excess tax revenues in one year if its appropriations in the next fiscal year are under its limit. In addition, the Proposition 98 provision regarding excess tax revenues was modified. After any two-year period, if there are excess State tax revenues, 50% of the excess are to be transferred to K-14 school districts with the balance returned to taxpayers; under prior law, 100% of excess State tax revenues went to K-14 school districts, but only up to a maximum of 4% of the schools minimum funding level. Also, reversing prior law, any excess State tax revenues transferred to K-14 school districts are not built into the school districts base expenditures for calculating their entitlement for State aid in the next year, and the State s appropriations limit is not to be increased by this amount. Exclusions from Spending Limit. Two exceptions were added to the calculation of appropriations which are subject to the Article XIIIB spending limit. First, there are excluded all appropriations for qualified capital outlay projects as defined by the Legislature. Second, there are excluded any increases in gasoline taxes above the 1990 level (then nine cents per gallon), sales and use taxes on such increment in gasoline taxes, and increases in receipts from vehicle weight fees above the levels in effect on January 1, These latter provisions were necessary to make effective the transportation funding package approved by the Legislature and the Governor, which expected to raise over $15 billion in additional taxes from 1990 through 2000 to fund transportation programs. Recalculation of Appropriations Limit. The Article XIIIB appropriations limit for each unit of government, including the State, is to be recalculated beginning in fiscal year It is based on the actual limit for fiscal year , adjusted forward to as if Proposition 111 had been in effect. School Funding Guarantee. There is a complex adjustment in the formula enacted in Proposition 98 which guarantees K-14 school districts a certain amount of State general fund revenues. Under prior law, K-14 school districts were guaranteed the greater of (1) 40.9% of State general fund revenues (the first test ) or (2) the amount appropriated in the prior year adjusted for changes in the cost of living (measured as in Article XIIIB by reference to per capita personal income) and enrollment (the second test ). Under Proposition 111, schools will receive the greater of (1) the first test, (2) the second test, or (3) a third test, which will replace the second test in any year when growth in per capita State general fund revenues from the prior year is less than the annual growth in California per capita personal income (the third test ). Under the third test, schools will receive the amount appropriated in the prior year adjusted for change in enrollment and per capita State general fund revenues, plus an additional small adjustment factor. If the third test is used in any year, the difference between the third test and the second test will become a credit to schools which will be paid in future years when State general fund revenue growth exceeds personal income growth. Proposition 1A and Proposition 22 On November 2, 2004, California voters approved Proposition 1A, which amended the State constitution to significantly reduce the State's authority over major local government revenue sources. Under Proposition 1A, the State cannot (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from local governments to schools or community colleges, (iii) change how property tax revenues are shared among local governments without two-thirds approval of both houses of the State Legislature or (iv) decrease Vehicle License Fee revenues without providing local governments B-25

136 with equal replacement funding. Under Proposition 1A, beginning, in , the State may shift to schools and community colleges a limited amount of local government property tax revenue if certain conditions are met, including: (i) a proclamation by the Governor that the shift is needed due to a severe financial hardship of the State, and (ii) approval of the shift by the State Legislature with a two-thirds vote of both houses. Under such a shift, the State must repay local governments for their property tax losses, with interest, within three years. Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 1A also amended the State Constitution to require the State to suspend certain State laws creating mandates in any year that the State does not fully reimburse local governments for their costs to comply with the mandates. This provision does not apply to mandates relating to schools or community colleges or to those mandates relating to employee rights. Proposition 22, a constitutional initiative entitled the Local Taxpayer, Public Safety, and Transportation Protection Act of 2010, approved on November 2, 2010, superseded many of the provision of Proposition 1A. This initiative amends the State constitution to prohibit the legislature from diverting or shifting revenues that are dedicated to funding services provided by local government or funds dedicated to transportation improvement projects and services. Under this proposition, the State is not allowed to take revenue derived from locally imposed taxes, such as hotel taxes, parcel taxes, utility taxes and sales taxes, and local public transit and transportation funds. Further, in the event that a local governmental agency sues the State alleging a violation of these provisions and wins, then the State must automatically appropriate the funds needed to pay that local government. This Proposition was intended to, among other things, stabilize local government revenue sources by restricting the State s control over local property taxes. Because Proposition 22 reduces the State s authority to use or reallocate certain revenue sources, fees and taxes for State general fund purposes, the State will have to take other actions to balance its budget, such as reducing State spending or increasing State taxes, and school and college districts that receive Proposition 98 or other funding from the State will be more directly dependent upon the State s general fund. Application of Constitutional and Statutory Provisions; Legal Challenges The application of Proposition 98 and other statutory regulations has become increasingly difficult to predict accurately in recent years. For a discussion of how the provisions of Proposition 98 have been applied to school funding see STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS. In addition, legal challenges to education funding in California have been made in the past and may be made in the future. The District cannot predict the outcomes of any legal challenges or how such lawsuits could impact the District. See also above under the heading STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS Legal Challenge to State Funding of Education. Future Initiatives Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID of the California Constitution and Propositions 98, 111 and 22 were each adopted as measures that qualified for the ballot under the State s initiative process. From time to time other initiative measures could be adopted further affecting District revenues or the District s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the District. B-26

137 APPENDIX C GENERAL INFORMATION ABOUT FRESNO COUNTY The District is located in the City of Mendota (the City ) in the heart of California's San Joaquin Valley in Fresno County (the County ). It is predominantly an agriculturally based economy, but is promoting business growth through the expansion of industrial development and through partnerships with Fresno County, the I-5 Business Development Corridor, the Economic Development Corporation serving Fresno County and the Regional Jobs Initiative. Population The most recent estimate of the County s population at January 1, 2013 was 952,166 according to the State Department of Finance. The City of Fresno, with an estimated 2013 population of 508,453, is the largest city in the County. The table below shows population estimates for the cities in the County for the last five years. FRESNO COUNTY Population Estimates Calendar Years 2009 through 2013 as of January Clovis 93,629 95,447 96,848 98,377 99,983 Coalinga 18,303 18,206 17,996 16,788 16,729 Firebaugh 7,262 7,464 7,591 7,776 7,777 Fowler 5,476 5,561 5,699 5,742 5,801 Fresno 487, , , , ,453 Huron 6,658 6,790 6,765 6,770 6,790 Kerman 13,286 13,551 13,699 13,908 14,225 Kingsburg 11,293 11,383 11,465 11,509 11,590 Mendota 10,761 10,983 11,038 11,141 11,178 Orange Cove 9,182 9,128 9,163 9,297 9,353 Parlier 14,244 14,463 14,601 14,791 14,873 Reedley 23,790 24,139 24,407 24,563 24,965 Sanger 24,118 24,286 24,391 24,580 24,703 San Joaquin 3,993 4,010 4,010 4,021 4,029 Selma 23,048 23,217 23,307 23,631 23,799 Balance Of County 166, , , , ,918 County Total 918, , , , ,166 Source: State Department of Finance, Demographic Research. C-1

138 Employment and Industry The unemployment rate in the County was 12.6% in November 2013, up from a revised 12.0% in October 2013, and below the year-ago estimate of 14.3%. This compares with an unadjusted unemployment rate of 8.3% for California and 6.6% for the nation during the same period. The following tables show civilian labor force and wage and salary employment data for Fresno County, for the years 2008 through FRESNO COUNTY Civilian Labor Force, Employment and Unemployment, Unemployment by Industry (Annual Averages) Civilian Labor Force (1) 430, , , , ,100 Civilian Employment 385, , , , ,700 Civilian Unemployment 45,100 65,100 74,100 73,100 67,400 Civilian Unemployment Rate 10.5% 15.0% 16.8% 16.5% 15.2% Wage and Salary Employment: (2) Agriculture 48,900 45,100 46,000 46,500 46,000 Mining and Logging Construction 17,900 13,700 12,000 11,600 12,000 Manufacturing 27,100 25,100 24,100 23,900 24,700 Wholesale Trade 12,900 11,900 11,500 12,300 12,500 Retail Trade 35,400 33,100 32,800 33,100 34,800 Information 4,700 4,100 3,400 3,200 3,200 Financial and Insurance 10,300 9,500 9,300 9,100 9,100 Professional and Business Services 30,700 28,200 26,700 27,000 27,700 Educational and Health Services 40,100 40,200 40,700 41,500 42,500 Leisure and Hospitality 28,000 26,600 26,800 27,400 28,200 Other Services 10,600 10,200 10,000 9,900 9,900 Federal Government 9,800 9,800 10,700 10,200 10,900 State Government 10,800 10,900 10,500 10,700 10,400 Local Government 49,400 48,000 45,900 44,800 43,900 Total All Industries (3) 351, , , , ,400 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. March 1, 2011 benchmark. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department. C-2

139 The largest employers in the County of Fresno for the year ending June 30, 2012 were as follows: COUNTY OF FRESNO LARGEST EMPLOYERS Year Ending June 30, 2012 (Ranked by Number of Employees) Employer Name Product/Service Employment Fresno Unified School District Education 8,023 County of Fresno Government 6,309 Community Medical Services Healthcare 6,000 City of Fresno Government 3,258 Clovis Unified School District Education 2,977 State Center Community College State College 2,892 Saint Agnes Medical Healthcare 2,710 California State University, Fresno University 2,118 Pelco by Schneider Electric Security Cameras 1,972 Kaiser Permanente Medical Healthcare 1,873 Source: County of Fresno, Comprehensive Annual Financial Report for fiscal year ending June 30, C-3

140 Construction Activity Provided below are the building permits and valuations for the City and the County for calendar years 2008 through CITY OF MENDOTA Total Building Permit Valuations (Valuations in Thousands) Permit Valuation New Single-family $2,938.8 $1,401.7 $5,364.6 $0.0 $0.0 New Multi-family Res. Alterations/Additions Total Residential 2, , , New Commercial , New Industrial New Other Com. Alterations/Additions ,456.7 Total Nonresidential $1,002.2 $290.7 $105.5 $2,393.1 $2,841.6 New Dwelling Units Single Family Multiple Family TOTAL FRESNO COUNTY Total Building Permit Valuations (Valuations in Thousands) Permit Valuation New Single-family $397,573.2 $377,345.3 $376,465.4 $206,433.7 $304,106.2 New Multi-family 34, , , , ,836.2 Res. Alterations/Additions 48, , , , ,063.5 Total Residential 480, , , , ,005.9 New Commercial 173, , , , ,185.4 New Industrial 21, , , , ,469.7 New Other 56, , , , ,231.6 Com. Alterations/Additions 103, , , , ,031.1 Total Nonresidential $354,872.1 $211,955.1 $182,352.9 $138,438.5 $184,917.8 New Dwelling Units Single Family 2,532 2,258 2, ,349 Multiple Family TOTAL 2,669 2,416 2,449 1,309 1,492 Source: Construction Industry Research Board, Building Permit Summary. C-4

141 Effective Buying Income Effective Buying Income is defined as personal income less personal tax and nontax payments, a number often referred to as disposable or after-tax income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as disposable personal income. The following table summarizes the median household effective buying income for the City, the County, the State of California, and the United States for the years 2008 through COUNTY OF FRESNO, THE STATE OF CALIFORNIA AND THE UNITED STATES Median Household Effective Buying Income As of January 1, 2008 through City of Mendota $28,228 $27,586 $25,705 $25,750 $22,569 Fresno County 39,348 38,851 36,456 36,444 37,735 California 48,952 49,736 47,177 47,062 47,307 United States 42,303 43,252 41,368 41,253 41,358 Source: The Nielsen Company (US), Inc. C-5

142 Commercial Activity In 2009 the State Board of Equalization converted the business codes of sales and use tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2009 is not comparable to that of prior years. Total taxable sales reported during the first two quarters of calendar year 2012 in the City were reported to be $26.4 million, a 4.3% increase from the total taxable sales of $25.3 million reported during the first two quarters of calendar year A summary of historic taxable sales within the City is shown in the following table. Annual figures for 2012 are not yet available. CITY OF MENDOTA Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (shown in thousands of dollars) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions $28, $46, , , (1) 93 26, , (1) 88 23, , (1) 91 30, ,429 (1) Not comparable to prior years. Retail category now includes Food Services. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Total taxable sales reported during the first two quarters of calendar year 2012 in the County were reported to be $5.83 billion, an 8.3% increase from the total taxable sales of $5.38 billion reported during the first two quarters of calendar year A summary of historic taxable sales within the County is shown in the following table. Annual figures for 2012 are not yet available. COUNTY OF FRESNO Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (shown in thousands of dollars) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions 2007 $9,583 $8,776,111 20,415 $12,308, ,848 7,872,783 20,273 11,729, (1) 12,341 6,735,619 19,004 9,966, (1) 12,160 6,973,969 18,652 10,154, (1) 12,659 7,602,313 19,238 11,179,478 (1) Not comparable to prior years. Retail category now includes Food Services. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). C-6

143 APPENDIX D PROPOSED FORMS OF OPINION OF BOND COUNSEL [LETTERHEAD OF JONES HALL] FORM OF OPINION FOR THE SERIES B BONDS [Closing Date] Board of Trustees Mendota Unified School District 115 McCabe Ave Mendota, California OPINION: $6,000,000 Mendota Unified School District (Fresno County, California) General Obligation Bonds Election of 2012, Series B Members of the Board of Trustees: We have acted as bond counsel to the Mendota Unified School District (the District ) in connection with the issuance by the District of $6,000,000 principal amount of Mendota Unified School District (Fresno County, California) General Obligation Bonds Election of 2012, Series B, dated the date hereof (together, the Bonds ), under the provisions of Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Act ), and a resolution of the Board adopted on November 27, 2013 (the Bond Resolution ). We have examined the law and such certified proceedings and other papers as we deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Board contained in the Resolution and in the certified proceedings and other certifications furnished to us, without undertaking to verify such facts by independent investigation. Based upon our examination, we are of the opinion, under existing law, as follows: 1. The District is a duly created and validly existing unified school district with the power to issue the Bonds, and to perform its obligations under the Bond Resolution and the Bonds. 2. The Resolution has been duly adopted by the Board, and constitutes a valid and binding obligation of the District enforceable upon the District. D-1

144 3. The Bonds have been duly authorized, executed and delivered by the District, and are valid and binding general obligations of the District. 4. The Board of Supervisors of Fresno County is required under the Act to levy an ad valorem tax upon the property in the District, unlimited as to rate or amount, for the payment of principal of and interest on the Bonds. 5. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, A Professional Law Corporation D-2

145 FORM OF OPINION FOR THE NOTES [Closing Date] Board of Trustees Mendota Unified School District 115 McCabe Ave Mendota, California OPINION: $4,998, Mendota Unified School District (Fresno County, California) 2014 Bond Anticipation Notes Members of the Board of Trustees: We have acted as bond counsel in connection with the delivery by the Mendota Unified School District (the District ) of $4,998, aggregate principal amount of notes of the District, designated the Mendota Unified School District (Fresno County, California) 2014 Bond Anticipation Notes (the Notes ), under the laws of the State of California and a Resolution adopted by the Board of Trustees of the District on November 27, 2013 (the Authorizing Resolution ), authorizing the issuance of the Notes. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the District contained in the Authorizing Resolution and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based upon our examination we are of the opinion, under existing law, that: 1. The District is a unified school district duly organized and existing under the laws of the State of California, with power to adopt the Authorizing Resolution, to perform the agreements on its part contained therein and to issue the Notes. The Notes constitute legal, valid and binding special obligations of the District enforceable in accordance with their terms and payable solely from the sources provided therefor in the Authorizing Resolution. 2. The Authorizing Resolution has been duly adopted by the Board of Trustees of the District and constitutes a legal, valid and binding obligation of the District enforceable against the District in accordance with its terms. The Authorizing Resolution establishes a valid first and exclusive lien on and pledge of the proceeds of the General Obligation Bonds (as such term is defined in the Authorizing Resolution) and other funds pledged thereby for the security of the Notes, in accordance with the terms of the Authorizing Resolution. 3. Interest on the Notes is exempt from California personal income taxation. 4. Interest on the Notes is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions set forth in the preceding sentence D-3

146 are subject to the condition that the District comply with all requirements of the Code which must be satisfied subsequent to the issuance of the Notes in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted in the Authorizing Resolution and in other instruments relating to the Notes to comply with each of such requirements; and the District has full legal authority to make and comply with such covenants. Failure to comply with certain of such requirements may cause the inclusion of interest on the Notes in gross income for federal income tax purposes to be retroactive to the date of issuance of the Notes. We express no opinion regarding other federal tax consequences arising with respect to the Notes. The rights of the owners of the Notes, and the enforceability of the Notes and the Authorizing Resolution, may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. Respectfully submitted, A Professional Law Corporation D-4

147 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE $6,000,000 MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) General Obligation Bonds Election of 2012, Series B $4,998, MENDOTA UNIFIED SCHOOL DISTRICT (Fresno County, California) 2014 Bond Anticipation Notes CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this Disclosure Certificate ) is executed and delivered by the Mendota Unified School District (the District ) in connection with the execution and delivery of the captioned bonds (the Bonds ) and the captioned notes (the Notes ). The Bonds are being executed and delivered pursuant to two resolutions adopted by the Board of Trustees of the District on November 27, 2013 (together, the Resolutions ). Wells Fargo Bank, National Association, Los Angeles, California, is initially acting as paying agent for the Bonds and the Notes (the Paying Agent ). The District hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and the Notes and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings: Annual Report means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Annual Report Date means the date not later than nine months after the end of each fiscal year of the District (currently June 30 th ), the first being March 31, Dissemination Agent means, initially, Isom Advisors, A Division of Urban Futures, Inc., or any successor Dissemination Agent designated in writing by the District and which has filed with the District and the Paying Agent a written acceptance of such designation. Listed Events means any of the events listed in Section 5(a) of this Disclosure Certificate. MSRB means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. E-1

148 Official Statement means the final official statement executed by the District in connection with the issuance of the Bonds and the Notes. Paying Agent means Wells Fargo Bank, National Association, Los Angeles, California, or any successor thereto. Participating Underwriter means the original Underwriter of the Bonds and the Notes required to comply with the Rule in connection with offering of the Bonds and the Notes. Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing not later than March 31, 2014 with the report for the fiscal year, provide to the MSRB in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the District hereunder. (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A, with a copy to the Paying Agent and Participating Underwriter. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) (ii) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and if the Dissemination Agent is other than the District, file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. E-2

149 Section 4. Content of Annual Reports. The District s Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the District for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement: (i) The District s adopted Budget; (ii) Assessed value of taxable property in the jurisdiction of the District as shown on the most recent equalized assessment roll; (iii) Changes, if any, in the operation of Fresno County s Teeter Plan affecting the District; (iv) Changes, if any, in the operation of Fresno County Investment Pool which would affect the District s access to property taxes used to pay debt service on the Bonds and the Notes; (v) Property tax collection delinquencies for the District, for the most recently completed Fiscal Year, if the District is no longer a participant in Fresno County s Teeter Plan; (vi) In addition to any of the information expressly required to be provided under paragraphs (i) through (v), of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the District shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are available to the public on the MSRB s internet web site or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference. E-3

150 Section 5. Reporting of Significant Events. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds and the Notes: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the District. (13) The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, the District shall, or shall cause the Dissemination Agent (if not the District) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds or Notes under the Resolutions. (c) The District acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier if material and that subparagraph (a)(6) also contains the qualifier "material" with E-4

151 respect to certain notices, determinations or other events affecting the tax status of the Bonds and the Notes. The District shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event s occurrence is material for purposes of U.S. federal securities law. Whenever the District obtains knowledge of the occurrence of any of these Listed Events, the District will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the District will cause a notice to be filed as set forth in paragraph (b) above. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The District s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds and the Notes. If such termination occurs prior to the final maturity of the Bonds or the Notes, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Isom Advisors, A Division of Urban Futures, Inc. Any Dissemination Agent may resign by providing 30 days written notice to the District and the Paying Agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds and the Notes, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds and E-5

152 the Notes, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds or the Notes in the manner provided in the Resolutions for amendments to the Bond Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds and the Notes. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. If the District fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds or the Notes may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under a Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. E-6

153 Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent s negligence or willful misconduct. The Dissemination Agent will have no duty or obligation to review any information provided to it by the District hereunder, and shall not be deemed to be acting in any fiduciary capacity for the District, the Bondholders or any other party. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds and the Notes. (b) The Dissemination Agent shall be paid compensation by the District for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: January 28, 2014 MENDOTA UNIFIED SCHOOL DISTRICT By: Name: Title: ACCEPTANCE OF DUTIES AS DISSEMINATION AGENT Isom Advisors, A Division of Urban Futures, Inc. By: Title: E-7

154 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Name of Bond Issue: Name of Note Issue: Mendota Unified School District (the District ) Mendota Unified School District General Obligation Bonds, Election of 2012, Series B Mendota Unified School District 2014 Bond Anticipation Notes Date of Issuance: January 28, 2014 NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated as of January 28, The District anticipates that the Annual Report will be filed by. Dated: DISSEMINATION AGENT: cc: Paying Agent and Participating Underwriter By: Its: E-8

155 APPENDIX F DTC AND THE BOOK-ENTRY ONLY SYSTEM The following description of the Depository Trust Company ( DTC ), the procedures and record keeping with respect to beneficial ownership interests in the Series B Bonds and the Notes (the Obligations ), payment of principal, interest and other payments on the Obligations to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Obligations and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the District nor the Paying Agent take any responsibility for the information contained in this Section. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Obligations, (b) Bonds representing ownership interest in or other confirmation or ownership interest in the Obligations, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Obligations, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the securities (in this Appendix, the Obligations ). The Obligations 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 fullyregistered Bond will be issued for each maturity of the Obligations, in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any maturity exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and F-1

156 dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at The information contained on this Internet site is not incorporated herein by reference. 3. Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for the Obligations on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership interests in Obligations, except in the event that use of the book-entry system for the Obligations is discontinued. 4. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC s records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. 6. Redemption notices will be sent to DTC. If less than all of the Obligations within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. F-2

157 7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Obligations unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and interest payments on the Obligations will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from District or Paying Agent on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent, or District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to District or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Obligations are required to be printed and delivered. 10. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that District believes to be reliable, but District takes no responsibility for the accuracy thereof. F-3

158 [THIS PAGE INTENTIONALLY LEFT BLANK]

159 APPENDIX G FRESNO COUNTY INVESTMENT POLICY G-1

160 [THIS PAGE INTENTIONALLY LEFT BLANK]

161 Vicki Crow C.P.A. Auditor-Controller/Treasurer-Tax Collector County of Fresno Treasury Investment Pool INVESTMENT POLICY Established: 1984 Current Revision: December 4, 2012 (559) Room 105 Hall of Records 2281 Tulare Street Fresno, California 93721

162 COUNTY OF FRESNO AUDITOR-CONTROLLERITREASURER-TAX COLLECTOR TREASURY INVESTMENT POOL INVESTMENT POLICY TABLE OF CONTENTS Page 1.0 PURPOSE SCOPE OBJECTIVE LEGALITY 3.2 SAFETY 3.3 LIQUIDITY 3.4 RETURN ON INVESTMENT 3.5 LOCAL COMMUNITY REINVESTMENT 4.0 DELEGATION OF AUTHORITy ETHICS AND CONFLICT OF INTEREST PRlTDENCE BORROWING FOR PURPOSES OF MAKING INVESTMENTS AUTHORIZED INVESTMENTS AND LIMITS UNITED STATES TREASURY BILLS, NOTES, CERTIFICATES OF INDEBTEDNESS 8.2 FEDERAL AGENCY SECURITIES 8.3 BANKERS ACCEPTANCES 8.4 COMMERCIAL PAPER 8.5 NEGOTIABLE CERTIFICATES OF DEPOSIT 8.6 NON-NEGOTIABLE TIME CERTIFICATES OF DEPOSIT CERTIFICA TES OF DEPOSIT USING A PRIVATE SECTOR ENTITY THAT ASSISTS IN THE PLACEMENT OF CERTIFICATES OF DEPOSIT (PRIVATE PLACEMENT) 8.7 REPURCHASE AGREEMENTS 8.8 MEDIUM-TERM NOTES 8.9 LOCAL AGENCY INVESTMENT FUND 8.10 MUTUAL FUNDS 8.11 MORTGAGE-BACKED SECURITIES 2

163 8.12 BOND PROCEEDS 8.13 EXTERNAL INVESTMENT MANAGERS 8.14 STATE OF CALIFORNIA DEBT 9.0 SELECTION OF INVESTMENTS DIVERSIFICATION MAXIMUM MATURITIES SELLING SECURITIES PRIOR TO MATURITY AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS CONFIRMATION SAFEKEEPING AND CUSTODy PERFORMANCE STANDARDS MARKET YIELD BENCHMARK 17.0 ADMINISTRATIVE COST OF INVESTING CREDIT OF INTEREST EARNINGS LOCAL AGENCY DEPOSIT OF EXCESS FUNDS WITHDRA W AL OF FUNDS FROM THE TREASURY POOL REPORTING INTERNAL CONTROL INVESTMENT POLICY REVIEW DISASTERIBUSINESS CONTINUITY PLAN APPENDIX A APPENDIX B APPENDIX C

164 COUNTY OF FRESNO AUDITOR-CONTROLLERITREASURER-TAX COLLECTOR TREASURY INVESTMENT POOL INVESTMENT POLICY 1.0 Purpose 2.0 Scope 3.0 Objective The Auditor-ControllerlTreasurer-Tax Collector's policy is to invest public funds in a manner which will provide a market average rate of return consistent with the objectives included herein while meeting the daily cash flow demands of the County Treasury, and conform to all state laws governing the investment of public funds. Investments differing from this policy shall be made only in circumstances where market timing or economic trends indicate such investments are beneficial. Such investments will require written approval by the Auditor Controller/Treasurer-Tax Collector. This investment policy applies to all financial assets deposited and retained in the County of Fresno Treasury Investment Pool. The primary objectives, in priority order, of the County of Fresno's investment activities shall be the following: 3.1 Legality. Investments shall only be made in securities legally permissible by the California Government Code, Sections 53635, et. seq. In recognition of a rapidly changing and expanding marketplace, new concepts or securities shall be reviewed for compliance and possible consideration. Legality issues shall be resolved with County Counsel. 3.2 Safety. Investments shall be undertaken in a manner that seeks to ensure preservation of capital in the overall portfolio. To attain this objective, diversification is required. Investments should be made in securities of high quality to avoid credit risk and loss of principal. 4

165 3.3 Liguidity. The investment portfolio should remain sufficiently liquid to enable the Treasury Investment Pool to meet all operating requirements which might be reasonably anticipated or respond to opportunities for investments arising from changing market conditions. 3.4 Return on Investment. The investment portfolio shall be designed with the objective of attaining the highest interest revenue, taking into consideration the objectives of this policy and the cash flow characteristics of the portfolio. 3.5 Local Community Reinvestment. When in the best interest of the investment portfolio, and within the confines of other objectives enumerated herein, the investment portfolio may invest in local investment opportunities. 4.0 Delegation of Authority Authority to manage the County of Fresno Treasury Investment Pool is derived from Government Code Section Management responsibility for the investment program, in accordance with this provision, has been delegated to the Auditor-ControllerlTreasurer-Tax Collector. This delegation is included in the Ordinance Code of the County of Fresno, Section and is subject to annual renewal. The Auditor-Controller/Treasurer-Tax Collector shall establish written procedures for the operation of the investment program consistent with this investment policy. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions (GC 53607). No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Auditor ControllerlTreasurer-Tax Collector. The Auditor-Controller/Treasurer-Tax Collector shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate staff. The County of Fresno Treasury Oversight Committee shall annually review and monitor the Investment Policy. The County of Fresno Treasury Oversight Committee shall also cause an annual audit to determine the Auditor Controller/ Treasurer-Tax Collector's compliance with the Investment Policy. The cost of the audit shall be considered an Administrative cost of investing. Audit Reports are available to participants of the pool upon request (GC 27133, GC and GC 27135). 5.0 Ethics and Conflict of Interest The Auditor-Controller/Treasurer-Tax Collector, the County of Fresno Treasury Oversight Committee and staff involved in the investment process shall refrain from personal business activity that could conflict with proper 5

166 6.0 Prudence execution of the investment program, or which could impair their ability to make impartial investment decisions. Receipt of honoraria, gifts and gratuities from advisors, brokers, dealers, bankers or other persons with whom the County Treasury conducts business by any member of the County of Fresno Treasury Oversight Committee shall require the completion of an annual Statement of Economic Interests by each member to be filed with the member's respective agency. This policy sets a $420 per current filing limit on the amount of honoraria, gifts and gratuities that a committee member may receive from a single source in calendar year. Investments shall be made with judgment and care, under the circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, and not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. 6.1 The standard of prudence to be used by investment officials shall be the "prudent investor" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk of market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 7.0 Borrowing for Purposes of Making Investments The Fresno County Auditor-ControllerlTreasurer-Tax Collector is prohibited from the practice of borrowing for the sole purpose of making investments. 8.0 Authorized Investments and Limits The following securities are authorized investments for the County of Fresno Treasury Investment Pool. Securities shall be valued at amortized cost when determining their percentage to the money in the County of Fresno Treasury Investment Pool. Additions or deviations from this list, in addition to being permissible under the Government Code, require approval by the Auditor Controller/ Treasurer-Tax Collector. Investments not expressly authorized by law are prohibited. Attachment A summarizes the authorized investments and applicable limits (CDIAC Local Agency Investment Guidelines). The Auditor-ControllerlTreasurer-Tax Collector interprets the authorized investment limits to be based upon the portfolio allocation at the time a security is purchased. The portfolio allocation may temporarily fall outside of these limits due to maturities and fluctuations in the size of the pool after the purchase of a security. Additionally, the applicable credit ratings are interpreted to be based upon the rating at the time the security is purchased. 6

167 8.1 United States Treasury Bills, Notes, Certificates ofindebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest. 8.2 Obligations issued by Federal Farm Credit Banks, Federal Home Loan Banks, the Federal Home Loan Mortgage Company, or in obligations, participations, or other instruments of or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association; or in obligations, participations, or other instruments of or issued by a federal agency or a United States Government-sponsored enterprise 8.3 Bills of Exchange or Time Drafts drawn on and accepted by a commercial bank, otherwise known as Bankers Acceptances, both domestic and foreign, which are eligible for purchase by the Federal Reserve System. Any investment in Bankers Acceptances shall be restricted to the top 150 world banks as determined by their total assets and limited to those institutions in this group whose short term debt (commercial paper) is of prime quality of the highest ranking or of the highest letter and numerical rating as provided for by a nationally recognized statistical-rating service. Purchases of Bankers Acceptances may not exceed 180 days maturity or 40 percent of the money in the Treasury Investment Pool. 8.4 Commercial Paper of prime quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc., or Standard and Poor's (P-l; A-I). Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars and having an "A" or higher rating for the issuer's other outstanding debentures by Standard and Poor's, or its equivalent or better ranking by a nationally recognized statisticalrating service. Investments in Commercial Paper may not exceed 270 days maturity and is limited to 10 percent of the assets held by the Treasury Investment Pool in any single issuer (GC (a)(2)). Investments may not exceed 40 percent of the money in the Treasury Investment Pool in accordance with Section of the California Government Code. 8.5 Negotiable Certificates of Deposit issued by a nationally or state-chartered bank, savings association, federal association, or state-licensed branch of a foreign bank. Any investment is to be restricted to the top 150 world banks as determined by their total assets and limited to those institutions in this group whose short term debt (commercial paper) is of prime quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc. or Standard and Poor's (P-I; A-I). As an alternative to the credit guidelines above, banks, savings associations or federal associations having a four star rating or higher rating as provided for by Bauer 7

168 Financial, Inc. or a comparable rating service, shall be considered eligible institutions for these investments. Investments in Negotiable Certificates of Deposit (in combination with section 8.6.1) may not exceed 30 percent of the money in the Treasury Investment Pool. No more than 5 percent of the money shall be invested in anyone institution. 8.6 Non-negotiable Time Certificates of Deposit issued by a nationally or state-chartered bank, savings association or federal association (GC (n)). Unless fully covered by FDIC insurance, including the interest earned, these investments require full collateralization with government securities totaling 110 percent or mortgages totaling 150 percent of the principal amount (GC 53652). Any investment is to be restricted to those institutions whose short term rating is of prime quality of the highest ranking as provided for by Moody's Investors Service, Inc. or Standard and Poor's (P-l; A-I). As an alternative to the credit guidelines above, banks, savings associations or federal associations having a four star rating or higher as provided for by Bauer Financial, Inc. or a comparable rating service, shall be considered eligible institutions for these investments. Any investment will require the approval and execution of a Contract for Deposit by the Auditor-ControllerlTreasurer Tax Collector. Investments in Non-negotiable Time Certificates of Deposit may not exceed 50 percent of the money in the Treasury Investment Pool. No more than 15 percent of the money shall be invested in anyone institution Investments in certificates of deposit at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of certificates of deposit. Investments will be made in compliance with Government Code section Investments shall be initially placed with a nationally or state-chartered commercial bank, savings bank, savings and loan association or a credit union in this state, which shall be known as the selected depository institution. Any investment will require the approval and execution of a Deposit Placement Agreement by the Auditor-ControllerlTreasurer-Tax Collector. Combined purchases under sections 8.5 and shall not exceed 30% of the portfolio. Additionally, purchases under shall not exceed 15% of the portfolio. 8.7 Investments in Repurchase Agreements representing United States Treasury Securities, United States Agency discount and coupon securities, domestic and foreign Banker's Acceptances, commercial paper, and domestic bank/savings associations or federal associations Negotiable Certificates of Deposit. 8

169 Investments shall be made only after the execution of a Repurchase and Custody Agreement (Tri-Party Agreement) between the County or the investment manager (if under contract), the dealer and the Custodian. Investments will consist of overnight Repurchase Agreements, which includes weekend placements and maturities; however, securities with longer maturities may be used as collateral for these Agreements. (GC ) Excluding circumstances of market-timing and known cash demands, investments in Repurchase Agreements shall be limited to not more than 15 percent of the money in the Treasury Investment Pool. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against these securities. Any exceptions to the maturity or investment amount provisions will require written approval by the Auditor-ControllerlTreasurer-Tax Collector. 8.8 Medium-term Notes with a maximum remaining maturity of five years or less issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment shall be rated in a rating category of "A" or higher, by Standard and Poor's Corporation, or its equivalent or better by a nationally recognized rating service Investments in Medium-term Notes may not exceed 30 percent of the money in the Treasury Investment Pool. 8.9 Investment of funds in the Local Agency Investment Fund (LAIF California) created by law, which the State Treasurer invests through the Pooled Money Investment Account. Money invested in LAIF is available for overnight liquidity; however, it is also subject to a limited number of transactions per month. Money shall be placed in LAIF as alternative liquid investments under the guidelines of this policy pertaining to yield. Investment of funds in the LAIF is limited to $50,000,000. An exception to this dollar limit is available for bond and note proceeds. The Auditor-Controller/ Treasurer-Tax Collector may invest any portion of debt proceeds in the LAIF Shares of beneficial interest issued by diversified management companies, otherwise known as Mutual Funds, investing in the securities and obligations as authorized by the California Government Code, Sections et. seq. To be eligible for investment, these companies shall either: (1) attain the highest ranking or the highest letter and numerical rating provided by two of the largest nationally recognized rating services, or (2) have an investment adviser registered with the Securities and Exchange Commission with at least five years experience investing in the securities authorized by the code sections noted above and with assets under management in excess of$500,000,000. 9

170 Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of To be eligible for investment, these companies shall either: (1) attain the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations, or (2) retain an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of $500,000,000 (GC 53601). Investment in Mutual Funds shall not include the payment of any commission that these companies may charge and may not exceed 20 percent of the surplus funds in the Treasury Investment Pool. Only 10 percent of the surplus funds may be invested in anyone mutual fund (GC 53601, ) Any mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or other pay-through bond of a maximum of five years maturity. Securities eligible for investment shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by a nationally recognized rating service and rated "AA" or its equivalent or better by a nationally recognized rating service. Investments in these securities may not exceed 10 percent of the surplus funds in the Treasury Investment Pool Bond proceeds may be invested in accordance with the Government Code provisions, or they may be invested in alternative vehicles if authorized by bond documents (GC Section and CDIAC Local Agency Investment Guidelines) External Investment Managers. The Auditor-ControllerlTreasurer-Tax Collector may contract with external investment managers to provide investment management services. These managers may be hired to invest funds not needed for liquidity and to increase the rate of return of the pool by employing an active investment strategy. The external investment manager is allowed to make specific investment decisions within the framework of this investment policy. External investment managers are required to provide timely transaction documentation and investment reports to ensure that the manager's actions comply with the requirements of the law and this investment policy. External investment managers shall remit, at least quarterly, the interest earnings to the Pool to allow these earnings to be apportioned to the pool participants. 10

171 Selection of External Investment Managers is subject to section 13.0 of this investment policy. Additionally, after selection, the manager's performance shall be reviewed against the agreed upon benchmark Registered state warrants or treasury notes or bonds of the State of California, including bonds payable solely out of the revenues from a revenueproducing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Investments in these securities may not exceed 10 percent of the surplus funds in the Treasury Investment Pool. 9.0 Selection of Investments Investments, with the exception of California registered state warrants in section 8.14, above, shall only be made following a minimum of three competitive comparisons with offerings documented and retained for each type of investment Diversification The Treasury Investment Pool shall be diversified by security type and institution Maximum Maturities To the extent possible, investments shall be made to match anticipated cash requirements. Unless matched to a specific cash flow, normal investments will be in securities such that the average weighted maturity of the Treasury Investment Pool shall not exceed 3.5 years. Proceeds of sales or funds set aside for the repayment of any notes issued for temporary borrowing purposes shall not be invested for a term that exceeds the term of the notes Selling Securities Prior to Maturity Securities purchased shall normally be held until maturity. Occasionally, opportunities will exist to sell securities prior to maturity and purchase other securities (swap/trade). These transactions shall only be considered if the proposed swap/trade enhances the yield over the life of the new security on a total return basis. Additionally, securities that are no longer in compliance with this investment policy may be sold prior to maturity. Securities may also be sold in order to maintain the liquidity of the pool. 11

172 13.0 Authorized Financial Dealers and Institutions The Auditor-Controller/Treasurer-Tax Collector shall maintain a list of financial institutions authorized to provide investment services. In addition, a list shall also be maintained of approved security broker/dealers selected by credit worthiness, who maintain an office in the State of California. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). No public deposit shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the following: audited financial statements, proof of Financial Industry Regulatory Authority membership, trading resolution, proof of state registration, completed broker/dealer questionnaire, certification of having read County's Investment Policy, and if applicable, depository contracts. Broker/dealers are evaluated and selected based upon criteria that include: organization experience and credibility, individual broker/dealer, compliance, product inventory, and economic research. An annual review of the financial conditions and registrations of selected brokers shall be conducted by the Auditor-Controller/Treasurer-Tax Collector. A current audited financial statement is required to be on file for each authorized financial institution and broker/dealer. Investment managers are evaluated and selected based upon criteria that include: organization experience and credibility, staff experience, compliance, and performance. The selection of any broker, brokerage firm, dealer or securities firm that has, within any consecutive 48 month period following January I, 1996, made a political contribution in an amount exceeding the limitations contained in Rule 0-37 of the Municipal Securities Rulemaking Board, to the Auditor Controller/ Treasurer-Tax Collector or member of the Board of Supervisors or any candidate for those offices shall be prohibited. The County will, to the best of its ability, monitor and comply with this requirement Confirmation Receipts for confirmation of purchase of authorized securities should include the following information: trade date, par value, maturity, rate, price, yield, settlement date, description of securities purchased, agency's name, net amount due, and third party custodian information. Confirmation of all investment 12

173 transactions should be received by the Auditor-Controller/Treasurer-Tax Collector within five business days of the transaction Safekeeping and Custody Investments, excluding Non-negotiable Time Certificates of Deposit, Repurchase Agreements and investments that are under the management of contracted parties, shall be held in custody with the Service Bank or its correspondent or other institutions approved by the Auditor Controller/Treasurer-Tax Collector. Investments in Repurchase Agreements shall be held in custody by the Custodian to the Tri-Party Agreement Performance Standards The investment portfolio shall be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account investment risk constraints and cash flow needs Market yield benchmark. The investment strategy is passive. Given this strategy, the basis used by the Auditor-Controller/Treasurer-Tax Collector to determine whether market yields are being achieved shall be the one-year U.S. Treasury note rate Administrative Cost of Investing The Auditor-Controller/Treasurer-Tax Collector may deduct actual administrative costs associated with investing, depositing, banking, auditing, reporting, or otherwise handling or managing of funds. The administrative costs shall be segregated and deducted from the interest earnings of the Treasury Pool each quarter prior to the distribution of interest earnings Credit of Interest Earnings Interest shall be credited based on the average daily cash balance of money on deposit in the County Treasury for the calendar quarter and shall be paid quarterly Local Agency Deposit of Excess Funds The County Auditor-Controller/Treasurer-Tax Collector is authorized to accept deposits of excess funds from local agencies within Fresno County 13

174 pursuant to Resolution and in accordance with Government Code section Withdrawal of Funds from the Treasury Pool The withdrawal of funds by any depositor/participant in the County of Fresno Treasury Investment Pool shall not adversely affect the interests ofthe other depositors/participants in the County of Fresno Treasury Investment Pool. All withdrawals that are not considered as funds being utilized for operations shall be presented to the Auditor-Controller/Treasurer-Tax Collector for review and approval. The Auditor-Controller/ Treasurer-Tax Collector shall perform an assessment of the effect of a proposed withdrawal on the stability and predictability of the investments in the Treasury Investment Pool as is required by Government Code Sections and 27l33. Prior to the approving a withdrawal, the Auditor-Controller/ Treasurer-Tax Collector shall find that the proposed withdrawal will not adversely affect the interests of the other depositors in the Treasury Investment Pool. All requests for withdrawals shall be considered in order of receipt and shall in no way affect the ability of the Auditor-Controller/Treasurer-Tax Collector to meet the pool's expenditure requirements. If the assessment of the effect of the proposed withdrawal does not negatively impact the stability and predictability of the investments and the interests of other depositors, the Auditor-ControllerlTreasurer-Tax Collector may authorize a total or partial withdrawal of funds from the Treasury Pool. A total withdrawal of funds from the County of Fresno Treasury Investment Pool by a participant requires a 30 day written notice to the Auditor Controller/Treasurer-Tax Collector. Withdrawals involving less than the participant's total funds (other than for operational needs) are subject to the following constraints: each withdrawal shall be limited to a maximum of $5,000,000 no more than two withdrawals of a non-operational purpose are allowed per 30 day period at least ten days must lapse before the second withdrawal in any 30 day period will be considered by the Auditor-Controller/Treasurer Tax Collector each withdrawal shall be submitted to the Auditor Controller/Treasurer-Tax Collector by 9:00 a.m. on the day of withdrawal. 14

175 The Auditor-Controller/Treasurer-Tax Collector shall be notified of normal operating expenditures or disbursements in excess of $1,000,000 as early as possible, preferably three business days in advance of disbursement, in order to adjust the cash position to meet disbursement requirements Reporting The Auditor-Controller/Treasurer-Tax Collector shall provide the Board of Supervisors with a monthly inventory report and a monthly transaction report of the Treasury Investment Pool. The Auditor~Controllerl Treasurer-Tax Collector shall provide a quarterly investment report to the Board of Supervisors, the County Administrative Officer and the County of Fresno Treasury Oversight Committee. The quarterly report shall be submitted within 30 days following the end of the quarter covered by the report. Monthly inventory reports and quarterly investment reports are available to participants of the pool upon request (GC 53646). The Auditor-Controller/Treasurer-Tax Collector shall provide the California Debt and Investment Advisory Commission, no later than 60 days after the close of the second and fourth quarters of each calendar year, quarterly reports pursuant to Government Code Sections 8855 and The Auditor Controller/Treasurer~ Tax Collector shall provide the California Debt and Investment Advisory Commission, no later than 60 days after the close of the second quarter of each calendar year and 60 days after the subsequent amendment thereto, the statement of investment policy pursuant to Government Code Section Internal Control As part ofthe County of Fresno's annual independent audit, the investment program shall be reviewed for appropriate internal controls that provide assurance of compliance with policies and procedures Investment Policy Review The investment policy shall be reviewed on an annual basis by the Auditor Controller/Treasurer~ Tax Collector and the investment policy shall be rendered annually to the Board of Supervisors and the County of Fresno Treasury Oversight Committee, which consists of the following members: The County Auditor-Controller/Treasurer~ Tax Collector A representative appointed by the County Board of Supervisors The County Superintendent of Schools or designee A representative selected by a majority of the presiding officers of the governing bodies of the school districts and community college districts in the County 15

176 A representative selected by a majority of the presiding officers of the legislative bodies of the special districts in the County that are required or authorized to deposit funds in the County treasury The Board of Supervisors shall accept and approve the investment policy and any changes thereto at a public meeting (GC 27133) (GC 53646) DisasterlBusiness Continuity Plan The County of Fresno Treasurer's banking and investment functions are critical to the function of County of Fresno Treasurer Treasury Investment Pool and therefore must have a continuity plan to guide operations in the event of a disaster or business interruption. The objective of the DisasterlBusiness Continuity Plan is to protect and account for all funds on deposit with the county treasurer and to be able to continue banking and investment functions for all participants in the event of an occurrence; i.e. earthquake, fire, flood, or some other event, which disrupts normal operations. The Plan provides for the ability to perform banking and investment functions at an off-site location under less than optimal conditions. Approved Vicki Crow, C.P.A. Auditor-Controller/Treasurer-Tax Collector 16

177 APPENDIX A Government Investment Investment Code Policy Policy Term Permitted InvestmentslDeposits Limits % Limits % Limit Rating Securities of the U.S. Government No Limit No Limit 5 years N/A Securities issued by United States No Limit No Limit 5 years N/A Government Sponsored Enterprises Bankers Acceptances (1) 40% 40% 180 days N/A Commercial Paper 40% 40% 270 days P-l,A-I Negotiable Certificates of Deposit (2) 30% 30% 13 months P-l,or A-lor 4 Star Non-negotiable Certificates of Deposit (2) No Limit 50% 13 months P-l or A-lor 4 Star Account Registry Service Deposits (2) 30% 15% 13 months N/A Repurchase Agreements No Limit 15% OvernightIW eekend N/A Medium Term Notes 30% 30% 5 years A LAIF (3) No Limit $50,000,000 5 years N/A Mutual Funds (4) 20% 20% 5 years AAA,Aaa Mortgage-Backed Securities 20% 10% 5 years AA State of California Debt No Limit 10% 5 years N/A 17

178 APPENDIX A (Continued) (I) Investment policy limits any investment in bankers acceptances to the top 150 world banks as detennined by their total assets and limited to those institutions in this group whose short tenn debt is of prime quality and of the highest ranking as provided for by Moody's or Standard and Poor's (P-1, A-I). (2) Banks, savings associations or federal associations having a "4 Star" or higher rating as provided by Bauer Financial, Inc. or a comparable rating service. For negotiable certificates of deposit, no more than 5 percent of the money shall be invested in anyone institution. Negotiable certificates of deposit and account registry service deposits combined shall not exceed 30% of the portfolio. For non-negotiable certificates of deposit, no more than 15 percent of the money shall be invested in anyone institution. (3) LAIF Board of Directors limits the investment to $50,000,000, excluding bond and note proceeds. Government Code does not place a percentage limit on the amount of money that may be invested in LAIF. (4) Diversified management companies investing in the securities and obligations as authorized by California Government Code, Sections 5360 I, et seq., shall either (1) attain the highest ranking or the highest letter and numerical rating provided by two of the largest nationally recognized rating services, or (2) have an investment adviser registered with the SEC with at least five years experience investing in the securities authorized by code sections noted in the policy and with assets under management in excess of $500,000,000. Diversified management companies issuing shares of beneficial interest that are money market funds registered with the Securities and Exchange Commission (SEC) under the Investment Act of 1940 shall either (1) attain the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations, or (2) retain an investment adviser registered or exempt from registration with the SEC with not less than five years experience managing money market mutual funds with assets under management in excess of $500,000,000. Only 10 percent of the money may be invested in anyone mutual fund. 18

179 APPENDIXB RATING SUMMARY RATING SERVICE RATING CATEGORY RATING DEFINITION Moody's Moody's Modifiers Moody's Commercial Paper Standard & Poors Standard & Poors - Modifiers Aaa Aa A Baa Ba B Caa Ca C 1,2,and 3 Prime-l Prime-2 Prime-3 Not Prime AAA AA A BBB BB B CCC CC C CI D (+) or (-) Best Quality High Quality Upper-medium grade Medium grade obligations Judged to have speculative elements Lack characteristics of desirable investment Investment in poor standing Speculative in a high degree Poor prospect of attaining investment standing Rankings within rating category Superior ability for repayment Strong ability for repayment Acceptable ability for repayment Do not fall in top 3 rating categories Highest Rating Strong capacity for repayment Strong capacity for repayment but less than AA category Adequate capacity for repayment. Speculative Greater vulnerability to default than BB category Identifiable vulnerability to default Subordinated debt of issues ranked in CCC category Subordinated debt of issues ranked in CCC category Income bonds where no interest is paid Default Rankings within rating category Standard & Poors - Commercial A-I A-2 A-3 B C D Highest degree of safety Timely repayment characteristics is satisfactory Adequate capacity for repayment Speculative Doubtful repayment Default 19

180 APPENDIXB (Continued) RATING SUMMARY RATING SERVICE Fitch RATING CATEGORY AAA AA A BBB BB B CCC,CC,C DDD,DD,D RATING DEFINITION Highest credit quality Very high credit quality High credit quality Good credit quality Speculative High speculative High default risk Default Fitch Modifiers "+" or "- Relative status within rating categories Fitch Commercial Paper FI F2 F3 B C D Highest credit quality Good credit quality F air credit quality Speculative High default risk Default Bauer 5 Star 4 Star 3 Y2 Star 3 Star 2 Star 1 Star Zero Superior Excellent Good Adequate Problematic Troubled Our lowest star rating 20

181 APPENDIXC Glossary of Cash Management Terms The following is a glossary of key investing terms, many of which appear in County of Fresno Treasury Investment Policy. This glossary has been adapted from the Government Finance Officer's Association (GFOA) sample investment policy. Accrued Interest - The accumulated interest due on a bond as of the last interest payment made by the issuer. Agency - A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of federal agency is the Government National Mortgage Association (GNMA). An example ofa FSA is the Federal National Mortgage Association (FNMA). Amortization - The systematic reduction of the amount owed on a debt issue through periodic payments of principal. Average Life - The average length of time that an issue of serial bonds and/or term bonds with a mandatory sinking fund feature is expected to be outstanding. Bankers' Acceptance A draft or bill or exchange accepted by a bank or trust company. The accepting institution, as well as the issuer, guarantees payment of the bill. Basis Point - A unit of measurement used in the valuation of fixed-income securities equal to of 1 percent of yield, e.g., "114" of 1 percent is equal to 25 basis points. Bid - The indicated price at which a buyer is willing to purchase a security or commodity. Book Value - The value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security's current value in the market. Callable Bond - A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions. Call Price - The price at which an issuer may redeem a bond prior to maturity. The price is usually at a slight premium to the bond's original issue price to compensate the holder for loss of income and ownership. Call Risk - The risk to a bondholder that a bond may be redeemed prior to maturity. Cash Sale/Purchase - A transaction which calls for delivery and payment of securities on the same day that the transaction is initiated. 21

182 APPENDIXC (Continued) Certificate of Deposit - A short-term, secured deposit in a financial institution that usually returns principal and interest to the lender at the end of the loan period. Certificate of Deposit Account Registry System (CDARS) - A private CD placement service that allows local agencies to purchase more than $100,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $100,000 each, so that FDIC coverage is maintained. Collateralization - Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security. Commercial Paper - An unsecured short-term promissory note issued, with maturities ranging from 1 to 270 days. Convexity - A measure of a bond's price sensitivity to changing interest rates. A high convexity indicates greater sensitivity of a bond's price to interest rate changes. Coupon Rate - The annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the "interest rate." Credit Quality - The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies. Credit Risk - The risk to an investor that an issuer will default in the payment of interest and/or principal on a security. Current Yield (Current Return) - A yield calculation determined by dividing the annual interest received on a security by the current market price of that security. Delivery Versus Payment (DVP) - A type of securities transaction in which the purchaser pays for the securities when they are delivered either to the purchaser or hislher custodian. Discount - The amount by which the par value of a security exceeds the price paid for the security. Diversification - A process of investing assets among a range of security types by sector, maturity, and quality rating. Fair Value - The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. 22

183 APPENDIX C (Continued) Federal Funds (Fed Funds) - Funds placed in Federal Reserve banks by depository institutions in excess of current reserve requirements. These depository institutions may lend fed funds to each other overnight or on a longer basis. They may also transfer funds among each other on a same-day basis through the Federal Reserve banking system. Fed funds are considered to be immediately available funds. Federal Funds Rate - Interest rate charged by one institution lending federal funds to the other. Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms in the United States. Government Securities - An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds. 1I Interest Rate - See "Coupon Rate." Interest Rate Risk - The risk associated with declines or rises in interest rates which cause in investment in a fixed-income security to increase or decrease in value. Inverted Yield Curve - A chart formation that illustrates long-term securities having lower yields than short-term securities. This configuration usually occurs during periods of high inflation coupled with low levels of confidence in the economy and a restrictive monetary policy. Investment Company Act of Federal legislation which sets the standards by which investment companies, such as mutual funds, are regulated in the areas of advertising, promotion, performance reporting requirements, and securities valuations. Investment Policy - A concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities. Investment-grade Obligations - An investment instrument suitable for purchase by institutional investors under the prudent person rule. Investment-grade is restricted to those obligations rated BBB or higher by a rating agency. Liquidity - An asset that can be converted easily and quickly into cash without significant loss of value. Local Agency Investment Fund - A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer's Office. Local Government Investment Pool (LGIP) - An investment by local governments in which their money is pooled as a method for managing local funds. Mark-to-market - The process whereby the book value or collateral value of a security is adjusted to reflect its current market value. 23

184 APPENDIXC (Continued) Market Risk - The risk that the value of a security will rise or decline as a result of changes in market conditions. Market Value - Current market price of a security. Maturity - The date on which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. See "Weighted Average Maturity." Medium-Term Note Corporate or depository institution debt securities meeting certain minimum quality standards (as specified in California Government Code) with a remaining maturity of five years or less. Money Market Mutual Fund - Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds). Mortgage Backed Securities - Mortgage-backed securities (MBS) are created when a purchaser of residential real estate mortgages creates a pool of mortgages and markets undivided interest or participations in the pool MBS owners receive a prorate share of the interest and principal passed through from the pool of mortgages. Most MBS are issued and/or guaranteed by federal agencies and instrumentalities. Mortgage Pass-through Obligations - Securities that are created when residential mortgages are pooled together and undivided interests or participations in the stream of revenues associated with the mortgages are sold. Mutual Fund - An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by the following Securities and Exchange Commission (SEC) disclosure guidelines: 1. Report standardized performance calculations. 2. Disseminate timely and accurate information regarding the fund's holdings, performance, management and general investment policy. 3. Have the fund's investment policies and activities supervised by a board of trustees, which are independent of the adviser, administrator or other vendor of the fund. 4. Maintain the daily liquidity of the fund's shares. 5. Value their portfolios on a daily basis. 6. Have all individuals who sell SEC-registered products licensed with a selfregulating organization (SRO) such as the National Association of Securities Dealers (NASD). 7. Have an investment policy governed by a prospectus which is updated and filed by the SEC annually. 24

185 APPENDIXC (Continued) Negotiable Certificates of Deposit - Short-term debt instrument that usually pays interest and is issued by a bank, savings or federal association, or state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor). Net Asset Value - The market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fund's assets which includes securities, cash, and any accrued earnings, subtracting this from the fund's liabilities and dividing this total by the number of shares outstanding. This is calculated once a day based on the closing price for each security in the fund's portfolio. (See below.) [(Total assets) - (Liabilities)]/(Number of shares outstanding) Nominal Yield - The stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the "coupon," "coupon rate,1i or "interest rate." Non-negotiable Certificates of Deposit - CDs that carry a penalty if redeemed prior to maturity. Non-negotiable CDs issued by banks and savings and loans are insured by the Federal Deposit Insurance Corporation up to $100,000, including principal and interest. Amounts deposited above this amount may be secured with other forms of collateral. Offer - An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the "Ask price." Par - Face value or principal value of a bond, typically $1,000 per bond. Positive Yield Curve - A chart formation that illustrates short-term securities having lower yields than long-term securities. Premium - The amount by which the price paid for a security exceeds the security's par value. Principal - The face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security. Prospectus - A legal document that must be provided to any prospective purchaser of a new securities offering registered with the SEC. This can include information on the issuer, the issuer's business, the proposed use of proceeds, the experience of the issuer's management, and certain certified financial statements. Prudent Person Rule - An investment standard outlining the fiduciary responsibilities of public funds investors relating to investment practices. 25

186 APPENDIXC (Continued) Regular Way Delivery - Securities settlement that calls for delivery and payment on the third business day following the trade date (T +3); payment on a T + 1 basis is currently under consideration. Mutual funds are settled on a same day basis; government securities are settled on the next business day. Reinvestment Risk - The risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding. Repurchase Agreement (repo or RP) - An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date. Reverse Repurchase Agreement (Reverse Repo) - An agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date. Rule 2a-7 of the Investment Company Act - Applies to all money market mutual funds and mandates such funds to maintain certain standards, including a 13- month maturity limit and a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00). Safekeeping - Holding of assets (e.g., securities) by a financial institution. Swap - Trading one asset for another. Term Bond - Bonds comprising a large part or all of a particular issue which come due in a single maturity. The issuer usually agrees to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity. Total Return - The sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period. (Price Appreciation) + (Dividends paid) + (Capital gains)::;: Total Return Treasury Bills - Short-term U.S. government non-interest bearing debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends. 26

187 APPENDIXC (Continued) Treasury Notes - Intermediate U.S. government debt securities with maturities of one to 10 years and issued in denominations ranging from $1,000 to $1 million or more. Treasury Bonds - Long-term U.S. government debt securities with maturities often years or longer and issued in minimum denominations of$i,ooo. Currently, the longest outstanding maturity for such securities is 30 years. Uniform Net Capital Rule - SEC Rule ISC3-1 outlining capital requirements for broker/dealers. Volatility - A degree of fluctuation in the price and valuation of securities. Weighted Average Maturity (W AM) - The average maturity of all the securities that comprise a portfolio. According to SEC rule 2a-7, the W AM for SEC registered money market mutual funds may not exceed 90 days and no one security may have a maturity that exceeds 397 days. When Issued (WI) - A conditional transaction in which an authorized new security has not been issued. All "when issued" transactions are settled when the actual security is issued. Yield - The current rate of return on an investment security generally expressed as a percentage of the security's current price. Yield-to-call (YTC) - The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date. Yield Curve - A graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to as a positive yield curve. Yield-to-maturity - The rate of return yielded by a debt security held to maturity when both interest payments and the investor's potential capital gain or loss are included in the calculation of return. Zero-coupon Securities - Security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity. 27

188 Compliance Review of Treasurer s Investment Pool for the County of Fresno September 30, 2013

189 Table of Contents Section Number Executive Summary 1 Compliance Review 2 Appendix 3 A. Portfolio Breakdowns B. Checklists & Pricing Sources C. Portfolio Appraisal D. Glossary & Rating Summary PCA and LDZ Group have been diligent and prudent in the preparation of this report. In doing so, we have relied on numerous sources that we feel are known and reliable.

190 October 25, 2013 I. Executive Summary Introduction This is the Compliance Review of the County of Fresno Treasurer s Investment Pool Portfolio for the period ending September 30, 2013, pursuant to California Government Code The report has two primary objectives: (1) to provide information regarding portfolio holdings as to compliance with California Government Code Sections and 53635, as well as the County Treasurer s Statement of Investment Policy, and (2) to detail portfolio characteristics of the portfolio s investment holdings. Quarterly Overview of Markets U.S. Treasury rates increased during the most recent quarter. The Federal Reserve decided at the September 2013 Federal Open Market Committee meeting to keep the target range for the Federal Funds rate at 0.00%-0.25%. The Committee will maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and will continue rolling over maturing Treasury securities at auction. The Committee anticipates that economic conditions will likely warrant exceptionally low levels of the Federal Funds rate at least as long as (i) the unemployment rate remains above 6.5%, (ii) inflation one to two years ahead is projected to be more than 0.5% above the 2.0% goal and (iii) if longer-term inflation expectations continue to be well anchored. Treasury Yield Curve Changes Source: U.S. Treasury Department Money-Market Statistics (all data in %) Yields 6/30/13 9/30/13 Certificates of Deposit--90-Day 0.22 NA* Certificates of Deposit--180-Day 0.27 NA* Commercial Paper (nonfinancial)--30-day Quarterly Returns Citigroup 3-month Treasury Bills Barclays Capital US Treasuries 1-3 Years Source: Federal Reserve, MPI, Barclays Capital *Data not available, not reported when the number of respondents is too few to be representative 1

191 As indicated on the previous page, during the third quarter of 2013, Treasury yields slightly decreased and increased. The yield on 1-year Treasury Bills decreased five basis points to 0.10%, and the yield on 30-year Treasury Bonds increased 17 basis points to 3.69%. The spread between the 1-year Treasury and the 30-year Treasury ended the quarter at 359 basis points, an increase of 22 basis points compared to last quarter. 2

192 Portfolio Position The County of Fresno Investment Policy (revised December 2012) Section 11.0 recommends a portfolio of securities with a weighted average maturity not to exceed 3.5 years. Keeping the portfolio within this maturity range minimizes its exposure to potential interest rate shifts that can occur in the mid-maturity sectors of the yield curve. As of 9/30/13, the portfolio maintained a weighted maturity of 2.7 years and was oriented towards high quality security, with approximately 82% of the portfolio s assets invested in virtually risk-free instruments. Compliance with California Government Codes & 53635: The Investment Portfolio is compliant with the California Government Codes and Compliance with Treasury Investment Pool Statement of Investment Policy: The Statement of Investment Policy is more stringent than the California Government Code. As of 9/30/13, the Treasurer s Investment Pool portfolio complied with its Statement of Investment Policy. Please refer to the next section of the report for a more detailed evaluation of the portfolio in relation to the California Government Code and the Treasurer s Investment Pool Statement of Investment Policy. Portfolio Characteristics The Treasury Pool s portfolio characteristics are indicative of a plan exhibiting a high degree of quality with short-term maturities. As of 9/30/13, the portfolio had a market value of $2.33 billion with an average dollarweighted quality of Aaa as rated by Moody s. Approximately 82% of the portfolio s assets are invested in securities with virtually no credit risk (i.e. U.S. Treasury, U.S. Agencies, Collateral-backed Money Markets, and Cash). The dollar weighted average life of the pool is 2.7 years. 7.7% of the portfolio at cost matures within 30 days to 90 days, and 2.0% within 180 days. Based on its relative high quality and near-term liquidity, and assuming no significant changes to pool funding policies, the Treasury Investment Pool is well positioned to meet its expenditure requirements over the next six months. 3

193 II. Compliance Review COUNTY OF FRESNO TREASURY INVESTMENT POOL POLICY SUMMARY As of September 30, 2013 (last Policy revision December 4, 2012) AUTHORIZED INVESTMENTS DIVERSIFICATION PURCHASE RESTRICTIONS MATURITY CREDIT QUALITY (S&P/MOODYS/BAUER) 8.1 US Treasury bills, notes, bonds or other certificates of indebtedness No Limit None 5 years NA 8.2 Notes, participations or obligations issued by the agencies of the Federal Government No Limit None 5 years NA 8.3 Bankers Acceptances 40% Issue is eligible for purchase by Federal Reserve. CP rate: 180 days Issuer is among 150 largest banks based on total asset size. A-1+ or P Commercial Paper 40% US organized and operating corporation with total assets of $500mm. A-1+ or P days 10% of issuer s CP / 10% in any one issuer. Debt rate: A 8.5 Negotiable CD s Issued by national- or state-chartered bank or savings association, or a CP rate: 30% state-licensed branch of a foreign bank that is among 150 largest banks 13 months A-1+ or P-1 combined 8.5 and based on total asset size and has CP rate of P-1 or A-1+ OR issuer meets Or Bauer: 4 star rating requirements. / 5% in any one issuer. 8.6 Non-negotiable CD s 50% Issued by national- or state-chartered bank or savings association. / Full CP rate: FDIC insurance OR full collateralization of: 110% govt. securities or 150% 13 months A-1+ or P-1 or mortgages meeting GC / Contract for Deposit in place. / 15% in any Bauer: 4 star one issuer. 15% (30% of 50%); Issued by with national- or state-chartered bank or savings association or Placement CD s 30% credit union that uses a placement entity. / In compliance GC / NA combined 8.5 and Deposit Placement Agreement in place. 8.7 Repurchase Agreements 15% Tri-party agreement in place. / 102% collateralization of: US Treasuries or Overnight Agencies, BA s, CP, Negotiable CD s meeting GC or weekend NA 8.8 Medium-Term Notes 30% US organized and operating corporation or US- or state-licensed depository institution. 5 years A 8.9 Local Agency Investment Fund-CA $50,000,000 None 5 years NA Fund invests in GC approved securities; adviser is registered with SEC, has 5 years experience investing according to GC 53601, and has $500mm under management OR fund meets rating requirements Mutual Funds and Money Market Money market registered with SEC under ICA of 1940; SEC-registered or - 20% Funds exempt adviser with 5 years experience managing money market mutual funds in excess of $500mm OR fund meets rating requirements. Investment does not include payment of commission. / 10% in any one fund. 5 years AAA and Aaa 8.11 ABS / MBS or other mortgagebacked pass thru securities 8.12 Money Held From Pledged Assets No Limit 8.13 External Managers 10% None 5 years Funds Not Needed for Liquidity 8.14 State of California Debt 10% Invest according to statutory provision OR according to entity providing for issuance NA AA or Aa Corp: A Invests per policy NA NA Registered state warrants or CA treasury notes, bonds including bonds payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the state or by a department, board, agency or authority of the state NA 5 years NA 4

194 CA Maximum Code Policy Investment Category Maturity CALIFORNIA GOVERNMENT CODE & COUNTY INVESTMENT POLICY AUTHORIZED INVESTMENTS Government Code Fresno County Investment Policy Actual Portfolio Authorized Limit % Quality S&P/Moodys/ Bauer Maximum Maturity Authorized Limit % Quality S&P/Moodys/ Bauer Allocation at cost (a) LOCAL AGENCY BOND 5 YEARS NO LIMIT NA (b) 8.1 US TREASURY 5 YEARS NO LIMIT NA 5 YEARS --- NA 0.6% (c) (e) 8.14 STATE OF CALIFORNIA DEBT 5 YEARS NO LIMIT NA 5 YEARS 10% NA 0.0% (d) 49 STATE WARRANT 5 YEARS NO LIMIT NA (e) CA LOCAL AGENCY BOND 5 YEARS NO LIMIT NA (f) 8.2 US AGENCY 5 YEARS NO LIMIT NA 5 YEARS --- NA 75.9% (g) 8.3 BANKERS ACCEPTANCE 180 DAYS 40% NA 180 DAYS 40% CP: A-1+ or P (h) and COMMERCIAL PAPER 270 DAYS 40% PRIME 270 DAYS 40% (i) 8.5 NEGOTIABLE CD 5 YEARS 30% w/ NonNeg Placement CD NA 13 MONTHS 30% w/ NonNeg Placement CD (n) 8.6 NON-NEGOTIABLE CD: SECURED 5 YEARS NO LIMIT NA 13 MONTHS 50% NON-NEGOTIABLE CD: PLACEMENT 30% w/ Neg CD NA 15% (30% of 50%); 30% w/ Neg CD A-1+ or P-1 Debt: A or A CP: A-1+ or P-1 or Bauer 4 star CP: A-1+ or P-1 or Bauer 4 star NA --- (j) 8.7 REPURCHASE AGREEMENT 1 YEAR NO LIMIT NA OVERNIGHT or WEEKEND 15% NA --- (j) REVERSE REPURCHASE AGREEMENT 92 DAYS 20% NA (k) 8.8 MEDIUM TERM NOTE 5 YEARS 30% A 5 YEARS 30% A or A 15.4% b 8.9 LOCAL AGENCY INVESTMENT FUND 5 YEARS NO LIMIT NA 5 YEARS $50,000,000 NA 2.2% (l) 8.10 MUTUAL OR MONEY MARKET FUND 5 YEARS* 20% AAA 5 YEARS 20% AAA and Aaa 0.0% (m) 8.12 PLEDGED ASSET Stat. Prov. NO LIMIT NA Stat. Prov. N/A NA --- (o) 8.11 ABS / MBS 5 YEARS 20% AA 5 YEARS 10% AA or Aa Corp: A or A 0.4% CASH NA --- NA % *Mutual Funds maturity may be interpreted as weighted average maturity. 5

195 CALIFORNIA CODE - COMPLIANCE Compliance Category California Quality Maturity %Limit Code Investment Category Yes/No Yes/No Yes/No Comments Section (a) Local Agency Bonds Yes Yes Yes None Section (b) U.S. Treasury Yes Yes Yes None Section (c) California State Warrants Yes Yes Yes None Section (d) Other 49 State Warrants Yes Yes Yes None Section (e) California Local Agency Debt Yes Yes Yes None Section (f) U.S. Agencies Yes Yes Yes None Section (g) Bankers Acceptances Yes Yes Yes None Section (h) and Code Commercial Paper Yes Yes Yes None Section (i) Certificates and Time Deposits Yes Yes Yes None Section (j) Repurchase Agreements Yes Yes Yes None Section (k) Medium Term Notes Yes Yes Yes None Section (l) Mutual or Money Market Funds Yes Yes Yes None Section (m) Pledged Assets Yes Yes Yes None Section (n) Secured Deposits Yes Yes Yes None Section (o) ABS / MBS Yes Yes Yes None 6

196 FRESNO POLICY - COMPLIANCE Compliance Category California Quality Maturity %Limit Code Investment Category Yes/No Yes/No Yes/No Comments Section (a) Local Agency Bonds N/A N/A N/A None Section (b) U.S. Treasury Yes Yes Yes None Section (c) California State Warrants Yes Yes Yes None Section (d) Other 49 State Warrants N/A N/A N/A None Section (e) California Local Agency Debt N/A N/A N/A None Section (f) U.S. Agencies Yes Yes Yes None Section (g) Bankers Acceptances Yes Yes Yes None Section (h) and Code Commercial Paper Yes Yes Yes None Section (i) Certificate and Time Deposits Yes Yes Yes None Section (j) Repurchase Agreements Yes Yes Yes None Section (k) Medium Term Notes Yes Yes Yes None Section (l) Mutual or Money Market Funds Yes Yes Yes None Section (m) Pledged Assets Yes Yes Yes None Section (n) Secured Deposits Yes Yes Yes None Section (o) ABS / MBS Yes Yes Yes None 7

197 County of Fresno Treasury Investment Pool As of September 30, 2013 Portfolio Breakdown by Investment Type (valued at amortized cost) 8.11 ABS / MBS (o) 0.4% 8.10 Mutual/MoneyMkt (l) 0.0% 8.9 LAIF 2.2% 8.14 California ( c) ( e) 0.0% Cash 8.1 US Treasury (b) 5.5% 0.6% 8.8 Corporate (k) 15.4% 8.2 US Agency (f) 75.9% LDZ PENSION REPORTS 8

198 County of Fresno Treasury Investment Pool As of September 30, 2013 Portfolio Breakdown by Maturity Date (valued at amortized cost) Less Than 1 Month 7.7% 1-3 Months 0.0% 3-6 Months 2.0% 6 Months - 1 Year 9.0% Over 1 Year 81.3% LDZ PENSION REPORTS 9

199 County of Fresno Treasury Investment Pool As of September 30, 2013 Portfolio Breakdown by Quality (valued at amortized cost) Not Rated, Cash 7.7% S&P AAA 0.4% S&P A 7.7% S&P AA 7.7% S&P AA+ (gov) / Moodys AAA 76.5% LDZ PENSION REPORTS 10

200 [THIS PAGE INTENTIONALLY LEFT BLANK]

201 APPENDIX H TABLE OF ACCRETED VALUES FOR THE NOTES H-1

202 [THIS PAGE INTENTIONALLY LEFT BLANK]

203 Bond Accreted Value Table Mendota Unified School District neral Obligation Bond Anticipation No Date CAB BAN 08/01/ % 1/28/14 4, /1/14 4, /1/14 4, /1/15 4, /1/15 4, /1/16 4, /1/16 4, /1/17 4, /1/17 4, /1/18 4, /1/18 5,000.00

204 [THIS PAGE INTENTIONALLY LEFT BLANK]

205 APPENDIX I SPECIMEN MUNICIPAL BOND INSURANCE POLICY FOR THE SERIES B BONDS I-1

206 [THIS PAGE INTENTIONALLY LEFT BLANK]

207 MUNICIPAL BOND INSURANCE POLICY ISSUER: [NAME OF ISSUER] Policy No: MEMBER: [NAME OF MEMBER] BONDS: $ in aggregate principal amount of [NAME OF TRANSACTION] [and maturing on] Effective Date: Risk Premium: $ Member Surplus Contribution: $ BUILD AMERICA MUTUAL ASSURANCE COMPANY ( BAM ), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the Trustee ) or paying agent (the Paying Agent ) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. Business Day means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. Due for Payment means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. Nonpayment means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. Nonpayment shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. Notice means delivery to BAM of a notice of claim and certificate, by certified mail, or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. Owner means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that Owner shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

MATURITY SCHEDULES (See inside cover)

MATURITY SCHEDULES (See inside cover) NEW ISSUE - FULL BOOK-ENTRY BANK QUALIFIED RATING: Standard & Poor s: AA- See RATING herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject,

More information

MATURITY SCHEDULE (see inside front cover)

MATURITY SCHEDULE (see inside front cover) NEW ISSUE -- FULL BOOK-ENTRY BANK QUALIFIED RATING: Moody s: A3 See RATING herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however

More information

PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 11, 2018

PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 11, 2018 PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 11, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold

More information

PRELIMINARY OFFICIAL STATEMENT DATED, 2016

PRELIMINARY OFFICIAL STATEMENT DATED, 2016 PRELIMINARY OFFICIAL STATEMENT DATED, 2016 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers

More information

PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 5, 2018

PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 5, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the

More information

$14,600,000 DUBLIN UNIFIED SCHOOL DISTRICT (Alameda County, California) 2016 Refunding General Obligation Bonds

$14,600,000 DUBLIN UNIFIED SCHOOL DISTRICT (Alameda County, California) 2016 Refunding General Obligation Bonds NEW ISSUE - FULL BOOK-ENTRY RATINGS: Moody s: Aa1 Standard & Poor s: AA See RATINGS herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject,

More information

PRELIMINARY OFFICIAL STATEMENT DATED JUNE 15, 2016

PRELIMINARY OFFICIAL STATEMENT DATED JUNE 15, 2016 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to

More information

PRELIMINARY OFFICIAL STATEMENT DATED MAY 8, 2018

PRELIMINARY OFFICIAL STATEMENT DATED MAY 8, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time

More information

PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 18, 2018

PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 18, 2018 PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 18, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold,

More information

PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 7, 2017

PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 7, 2017 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to

More information

$7,200,000 SANTA YNEZ VALLEY UNION HIGH SCHOOL DISTRICT (Santa Barbara County, California) General Obligation Bonds Election of 2016, Series B (2019)

$7,200,000 SANTA YNEZ VALLEY UNION HIGH SCHOOL DISTRICT (Santa Barbara County, California) General Obligation Bonds Election of 2016, Series B (2019) NEW ISSUE BOOK-ENTRY ONLY BANK QUALIFIED RATING: S&P: AA+ See RATING herein. In the opinion of Quint & Thimmig LLP, Larkspur, California, Bond Counsel, subject to compliance by the District with certain

More information

$2,500,000 FAIRFAX ELEMENTARY SCHOOL DISTRICT (Kern County, California) General Obligation Bonds, Election of 2016, Series 2017 (Bank Qualified)

$2,500,000 FAIRFAX ELEMENTARY SCHOOL DISTRICT (Kern County, California) General Obligation Bonds, Election of 2016, Series 2017 (Bank Qualified) NEW ISSUE FULL BOOK-ENTRY INSURED RATING: S&P: AA UNDERLYING RATING: S&P: A+ (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco,

More information

TAHOE-TRUCKEE UNIFIED SCHOOL DISTRICT (Placer, Nevada and El Dorado Counties, California)

TAHOE-TRUCKEE UNIFIED SCHOOL DISTRICT (Placer, Nevada and El Dorado Counties, California) NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa2 ; S&P: AA (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond

More information

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT Board of Trustees Meeting May 15, 2017

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT Board of Trustees Meeting May 15, 2017 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT Board of Trustees Meeting May 15, 2017 RESOLUTION AUTHORIZING THE ISSUANCE OF 17 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT 2017 GENERAL OBLIGATION

More information

ANAHEIM ELEMENTARY SCHOOL DISTRICT (Orange County, California) $61,475,000* General Obligation Bonds, Election of 2010, Series 2016

ANAHEIM ELEMENTARY SCHOOL DISTRICT (Orange County, California) $61,475,000* General Obligation Bonds, Election of 2010, Series 2016 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time

More information

$7,500,000 DENAIR UNIFIED SCHOOL DISTRICT GENERAL OBLIGATION BONDS (Stanislaus County, California) Election of 2007, Series 2008 (Bank Qualified)

$7,500,000 DENAIR UNIFIED SCHOOL DISTRICT GENERAL OBLIGATION BONDS (Stanislaus County, California) Election of 2007, Series 2008 (Bank Qualified) NEW ISSUE - FULL BOOK-ENTRY INSURED RATING: S&P: AAA UNDERLYING RATING: S&P: A+ See RATINGS herein. In the opinion of Garcia Calderon Ruiz, LLP, San Jose, California ( Bond Counsel ), based upon an analysis

More information

PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 20, 2018

PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 20, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time

More information

$3,470,000 ARTESIA REDEVELOPMENT AGENCY HOUSING SET-ASIDE TAX ALLOCATION BONDS (ARTESIA REDEVELOPMENT PROJECT AREA) SERIES 2009

$3,470,000 ARTESIA REDEVELOPMENT AGENCY HOUSING SET-ASIDE TAX ALLOCATION BONDS (ARTESIA REDEVELOPMENT PROJECT AREA) SERIES 2009 NEW ISSUE Book-Entry Only RATING: S&P BBB+ BANK QUALIFIED See CONCLUDING INFORMATION Ratings herein. In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing

More information

EL CAMINO COMMUNITY COLLEGE DISTRICT RESOLUTION NO

EL CAMINO COMMUNITY COLLEGE DISTRICT RESOLUTION NO EL CAMINO COMMUNITY COLLEGE DISTRICT RESOLUTION NO. 2005-1 A RESOLUTION OF THE BOARD OF TRUSTEES OF EL CAMINO COMMUNITY COLLEGE DISTRICT AUTHORIZING THE ISSUANCE OF EL CAMINO COMMUNITY COLLEGE DISTRICT

More information

$4,000,000 CITY OF SELMA (Fresno County, California) SERIES 2017 GENERAL OBLIGATION BONDS (SELMA POLICE STATION CONSTRUCTION PROJECT) (Bank Qualified)

$4,000,000 CITY OF SELMA (Fresno County, California) SERIES 2017 GENERAL OBLIGATION BONDS (SELMA POLICE STATION CONSTRUCTION PROJECT) (Bank Qualified) NEW ISSUE BOOK-ENTRY ONLY RATING: Moody s: A1 (See RATING herein) In the opinion of The Weist Law Firm, Scotts Valley, California, Bond Counsel, subject however to certain qualifications described herein,

More information

$20,000,000 CABRILLO UNIFIED SCHOOL DISTRICT (County of San Mateo, California) General Obligation Bonds Election of 2012, Series C

$20,000,000 CABRILLO UNIFIED SCHOOL DISTRICT (County of San Mateo, California) General Obligation Bonds Election of 2012, Series C NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa2 S&P: AA- (See RATINGS herein) In the opinion of Dannis Woliver Kelley, San Diego, California, Bond Counsel, subject to compliance by the District with certain

More information

Resolution No. Date: 12/7/2010

Resolution No. Date: 12/7/2010 Resolution No. Date: 12/7/2010 Resolution Of The Board Of Supervisors Of The County Of Sonoma, State Of California, Authorizing The Issuance And Sale Of Bonds Of Sonoma Valley Unified School District,

More information

RESOLUTION NO

RESOLUTION NO RESOLUTION NO. 06-33 A RESOLUTION OF THE BOARD OF TRUSTEES OF THE ALLAN HANCOCK JOINT COMMUNITY COLLEGE DISTRICT (SANTA BARBARA, SAN LUIS OBISPO AND VENTURA COUNTIES, CALIFORNIA) AUTHORIZING THE ISSUANCE

More information

$21,170,000 SANTA CRUZ LIBRARIES FACILITIES FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO SPECIAL TAX BONDS

$21,170,000 SANTA CRUZ LIBRARIES FACILITIES FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO SPECIAL TAX BONDS NEW ISSUE - BOOK-ENTRY ONLY RATINGS: INSURED RATING: S&P: AA UNDERLYING RATING: S&P: A+ (See CONCLUDING INFORMATION - Rating on the Bonds herein) In the opinion of Jones Hall, A Professional Law Corporation,

More information

$6,560,000 LA CAÑADA UNIFIED SCHOOL DISTRICT (Los Angeles County, California) 2017 General Obligation Refunding Bonds (Bank Qualified)

$6,560,000 LA CAÑADA UNIFIED SCHOOL DISTRICT (Los Angeles County, California) 2017 General Obligation Refunding Bonds (Bank Qualified) NEW ISSUE FULL BOOK-ENTRY Rating: Moody s: Aa1 (See MISCELLANEOUS Rating herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel

More information

FULLERTON SCHOOL DISTRICT FINANCING AUTHORITY

FULLERTON SCHOOL DISTRICT FINANCING AUTHORITY NEW ISSUE FULL BOOK-ENTRY RATINGS: Series A Bonds S&P: AA- (Insured Bonds Only) Series A Bonds S&P: A (Underlying) Series B Bonds Not Rated (See MISCELLANEOUS Ratings herein) In the opinion of Stradling

More information

$1,799, MCFARLAND UNIFIED SCHOOL DISTRICT (KERN COUNTY, CALIFORNIA) General Obligation Bonds Election of 2004, Series 2006 B

$1,799, MCFARLAND UNIFIED SCHOOL DISTRICT (KERN COUNTY, CALIFORNIA) General Obligation Bonds Election of 2004, Series 2006 B NEW ISSUE -- FULL BOOK-ENTRY BANK QUALIFIED RATING: Standard & Poor s: AAA See Rating herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject,

More information

MATURITY SCHEDULE (see inside front cover)

MATURITY SCHEDULE (see inside front cover) NEW ISSUE -- FULL BOOK-ENTRY RATINGS: Moody s: Aa2 ; S&P: AA- See RATINGS herein In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel

More information

$6,820,000 ST. HELENA UNIFIED SCHOOL DISTRICT (Napa County, California) 2015 General Obligation Refunding Bonds

$6,820,000 ST. HELENA UNIFIED SCHOOL DISTRICT (Napa County, California) 2015 General Obligation Refunding Bonds NEW ISSUE - FULL BOOK-ENTRY BANK QUALIFIED RATING: S&P: AAA See RATING herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to

More information

$40,000,000* LAFAYETTE SCHOOL DISTRICT (Contra Costa County, California) General Obligation Bonds Election of 2016, Series B (2018)

$40,000,000* LAFAYETTE SCHOOL DISTRICT (Contra Costa County, California) General Obligation Bonds Election of 2016, Series B (2018) PRELIMINARY OFFICIAL STATEMENT DATED MAY 3, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may

More information

$5,950,000 MIDDLETOWN UNIFIED SCHOOL DISTRICT (Lake County, California) 2016 General Obligation Refunding Bonds

$5,950,000 MIDDLETOWN UNIFIED SCHOOL DISTRICT (Lake County, California) 2016 General Obligation Refunding Bonds \NEW ISSUE BOOK-ENTRY ONLY BANK QUALIFIED RATINGS: S&P: AA (BAM-Insured) S&P: A+ (Underlying) See RATINGS herein. In the opinion of Quint & Thimmig LLP, Larkspur, California, Bond Counsel, subject to compliance

More information

RESOLUTION NO

RESOLUTION NO ADOPTION COPY RESOLUTION NO. 15-17 A RESOLUTION OF THE BOARD OF EDUCATION OF THE OAK PARK UNIFIED SCHOOL DISTRICT, VENTURA COUNTY, CALIFORNIA, AUTHORIZING THE ISSUANCE OF OAK PARK UNIFIED SCHOOL DISTRICT

More information

$20,170,000 MONTEREY PENINSULA UNIFIED SCHOOL DISTRICT (Monterey County, California) Election of 2010 General Obligation Bonds, Series B

$20,170,000 MONTEREY PENINSULA UNIFIED SCHOOL DISTRICT (Monterey County, California) Election of 2010 General Obligation Bonds, Series B NEW ISSUE FULL BOOK-ENTRY RATING: Moody s: Aa3 (See MISCELLANEOUS Rating herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel

More information

Board of Trustees Agenda August 20, 2012 Page 7

Board of Trustees Agenda August 20, 2012 Page 7 RESOLUTION NO. 07-16-2012-1 A RESOLUTION OF THE BOARD OF TRUSTEES OF THE EL CAMINO COMMUNITY COLLEGE DISTRICT, LOS ANGELES COUNTY, CALIFORNIA, AUTHORIZING THE ISSUANCE OF EL CAMINO COMMUNITY COLLEGE DISTRICT

More information

MATURITY SCHEDULE (See inside cover)

MATURITY SCHEDULE (See inside cover) NEW ISSUE -- FULL BOOK-ENTRY BANK QUALIFIED Insured Rating: Standard & Poor s: AA Underlying Rating: Standard & Poor s: A+ (See RATINGS herein) In the opinion of Jones Hall, A Professional Law Corporation,

More information

DUARTE UNIFIED SCHOOL DISTRICT RESOLUTION NO

DUARTE UNIFIED SCHOOL DISTRICT RESOLUTION NO DUARTE UNIFIED SCHOOL DISTRICT RESOLUTION NO. 21-16-17 A RESOLUTION OF THE BOARD OF EDUCATION OF THE DUARTE UNIFIED SCHOOL DISTRICT, LOS ANGELES COUNTY, CALIFORNIA, AUTHORIZING THE ISSUANCE OF DUARTE UNIFIED

More information

SOLANO COMMUNITY COLLEGE DISTRICT GOVERNING BOARD RESOLUTION NO. 15/16 04

SOLANO COMMUNITY COLLEGE DISTRICT GOVERNING BOARD RESOLUTION NO. 15/16 04 1 1 1 1 1 1 (SOLANO AND YOLO COUNTIES, CALIFORNIA) 1 GENERAL OBLIGATION REFUNDING BONDS WHEREAS, a duly called election was held in the Solano Community College District (the District ), Solano County

More information

OF CALIFORNIA COUNTY OF LOS ANGELES

OF CALIFORNIA COUNTY OF LOS ANGELES NEW ISSUE FULL BOOK-ENTRY RATING: Moody s: Aa2 STATE OF CALIFORNIA COUNTY OF LOS ANGELES In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel,

More information

REDEVELOPMENT AGENCY OF THE CITY OF ROSEVILLE Roseville Redevelopment Project. $3,285,000 Taxable Tax Allocation Bonds, Series 2006A-T

REDEVELOPMENT AGENCY OF THE CITY OF ROSEVILLE Roseville Redevelopment Project. $3,285,000 Taxable Tax Allocation Bonds, Series 2006A-T NEW ISSUE FULL BOOK ENTRY Ratings: Moody's: Aaa Standard & Poor's: AAA Ambac Assurance Insured (See RATINGS herein) Underlying Ratings: Moody s: A3 Standard & Poor s: A- In the opinion of Jones Hall, A

More information

Maturity Schedule (See inside front cover)

Maturity Schedule (See inside front cover) NEW ISSUE -- FULL BOOK-ENTRY Rating: S&P: AA- (See MISCELLANEOUS Rating ) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under

More information

$45,710,000 ANAHEIM CITY SCHOOL DISTRICT (Orange County, California) 2014 General Obligation Refunding Bonds, Series A

$45,710,000 ANAHEIM CITY SCHOOL DISTRICT (Orange County, California) 2014 General Obligation Refunding Bonds, Series A NEW ISSUE BOOK-ENTRY ONLY Ratings: Moody s: Aa3 Standard & Poor s: A+ (See MISCELLANEOUS Ratings herein) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, based upon an

More information

$35,085,000. Refunding Revenue Bonds, Senior Series 2018A (mpower Placer Program) (Green Bonds) (Federally Taxable)

$35,085,000. Refunding Revenue Bonds, Senior Series 2018A (mpower Placer Program) (Green Bonds) (Federally Taxable) NEW ISSUE - FULL BOOK-ENTRY INSURED RATING: S&P: AA UNDERLYING RATING: Moody s: A2 See RATINGS. The interest on the Senior Bonds is not intended by the Authority or County to be excluded from gross income

More information

$14,910,000 TRACY UNIFIED SCHOOL DISTRICT (San Joaquin County, California) 2015 General Obligation Refunding Bonds

$14,910,000 TRACY UNIFIED SCHOOL DISTRICT (San Joaquin County, California) 2015 General Obligation Refunding Bonds NEW ISSUE - FULL BOOK-ENTRY RATING: Moody s: Aa2 See RATING herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications

More information

$7,935,000 MORONGO UNIFIED SCHOOL DISTRICT (San Bernardino County, California) 2012 General Obligation Refunding Bonds

$7,935,000 MORONGO UNIFIED SCHOOL DISTRICT (San Bernardino County, California) 2012 General Obligation Refunding Bonds NEW ISSUE -- FULL BOOK-ENTRY RATING: Moody s: Aa3 See RATING herein In the opinion of Bowie, Arneson, Wiles & Giannone, Newport Beach, California, Bond Counsel, subject, however, to certain qualifications

More information

$28,000,000 Sweetwater Union High School District (County of San Diego, California) General Obligation Bonds, Election of 2006, Series 2018C

$28,000,000 Sweetwater Union High School District (County of San Diego, California) General Obligation Bonds, Election of 2006, Series 2018C NEW ISSUES BOOK-ENTRY ONLY RATINGS: Fitch AAA (See MISCELLANEOUS Rating herein.) In the opinion of Atkinson, Andelson, Loya, Ruud & Romo, A Professional Corporation, Irvine, California, Bond Counsel, subject,

More information

Southwest Securities, Inc.

Southwest Securities, Inc. NEW ISSUE - FULL BOOK-ENTRY INSURED RATING: S&P: AA UNDERLYING RATING: S&P: A- See RATINGS herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel,

More information

$42,230,000 BEVERLY HILLS UNIFIED SCHOOL DISTRICT (Los Angeles County, California) 2012 General Obligation Refunding Bonds

$42,230,000 BEVERLY HILLS UNIFIED SCHOOL DISTRICT (Los Angeles County, California) 2012 General Obligation Refunding Bonds NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa1 S&P: AA See RATINGS herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain

More information

$60,000,000 SANTA MONICA-MALIBU UNIFIED SCHOOL DISTRICT (Los Angeles County, California) Election of 2012 General Obligation Bonds, Series B

$60,000,000 SANTA MONICA-MALIBU UNIFIED SCHOOL DISTRICT (Los Angeles County, California) Election of 2012 General Obligation Bonds, Series B NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa1 ; Standard & Poor s: AA (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco,

More information

PRELIMINARY LIMITED OFFERING MEMORANDUM DATED NOVEMBER 1, 2016

PRELIMINARY LIMITED OFFERING MEMORANDUM DATED NOVEMBER 1, 2016 This Preliminary Limited Offering Memorandum and the information contained herein are subject to change, amendment and completion without notice. Under no circumstances shall this Preliminary Limited Offering

More information

$5,405,000 CITY OF FORTUNA SERIES 2017 WATER REVENUE REFUNDING BONDS (WATER ENTERPRISE PROJECT)

$5,405,000 CITY OF FORTUNA SERIES 2017 WATER REVENUE REFUNDING BONDS (WATER ENTERPRISE PROJECT) NEW ISSUE BOOK-ENTRY ONLY RATINGS: S&P: A+ (Uninsured Bonds / Underlying) S&P: AA (Insured Bonds) (See RATINGS herein) In the opinion of The Weist Law Firm, Scotts Valley, California, Bond Counsel, subject,

More information

UNDERLYING RATING: S&P: A+ See RATINGS herein.

UNDERLYING RATING: S&P: A+ See RATINGS herein. NEW ISSUE - FULL BOOK-ENTRY INSURED RATING: S&P: AA UNDERLYING RATING: S&P: A+ See RATINGS herein. In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, based upon an analysis

More information

Resolution #10/ Mt Diablo USD 2002 Ref Bonds - reso V 2

Resolution #10/ Mt Diablo USD 2002 Ref Bonds - reso V 2 Resolution #10/11-63 RESOLUTION OF THE BOARD OF EDUCATION OF THE MT. DIABLO UNIFIED SCHOOL DISTRICT, AUTHORIZING THE ISSUANCE AND SALE OF ITS GENERAL OBLIGATION REFUNDING BONDS, 2002 ELECTION, SERIES 2011

More information

PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 2, 2018

PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 2, 2018 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time

More information

$10,000,000 SADDLEBACK VALLEY UNIFIED SCHOOL DISTRICT (Orange County, California) General Obligation Bonds, Election of 2004, Series 2013A

$10,000,000 SADDLEBACK VALLEY UNIFIED SCHOOL DISTRICT (Orange County, California) General Obligation Bonds, Election of 2004, Series 2013A NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa2 ; S&P: AA- (See RATINGS herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ),

More information

$250,000,000. Taxable Bonds Series $250,000, % Bonds due November 15, 2045

$250,000,000. Taxable Bonds Series $250,000, % Bonds due November 15, 2045 NEW-ISSUE BOOK-ENTRY ONLY Ratings: Standard & Poor s: AAMoody s: Aa3 Fitch: AA(See RATINGS herein) $250,000,000 Allina Health System Taxable Bonds Series 2015 $250,000,000 4.805% Bonds due November 15,

More information

$24,900,000 WASHINGTON UNIFIED SCHOOL DISTRICT (YOLO COUNTY, CALIFORNIA) GENERAL OBLIGATION BONDS, ELECTION OF 2014, SERIES 2017

$24,900,000 WASHINGTON UNIFIED SCHOOL DISTRICT (YOLO COUNTY, CALIFORNIA) GENERAL OBLIGATION BONDS, ELECTION OF 2014, SERIES 2017 NEW ISSUE DTC BOOK-ENTRY ONLY S&P Insured Rating: AA S&P Underlying Rating: A+ See RATINGS herein In the opinion of Quint & Thimmig, LLP, Larkspur, California, Bond Counsel, subject to compliance by the

More information

$13,331, HAWTHORNE SCHOOL DISTRICT (County of Los Angeles, California) General Obligation Bonds 2008 Election, 2012 Series B

$13,331, HAWTHORNE SCHOOL DISTRICT (County of Los Angeles, California) General Obligation Bonds 2008 Election, 2012 Series B NEW ISSUE BOOK-ENTRY ONLY RATINGS: S&P: (Insured: AA- / Underlying and Uninsured: A+ ) (See RATINGS herein.) In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under

More information

$29,640,000 BURLINGAME ELEMENTARY SCHOOL DISTRICT (San Mateo County, California) $26,000,000 Election of 2012 General Obligation Bonds, Series B

$29,640,000 BURLINGAME ELEMENTARY SCHOOL DISTRICT (San Mateo County, California) $26,000,000 Election of 2012 General Obligation Bonds, Series B NEW ISSUE FULL BOOK-ENTRY Ratings: Moody s: Aa2 ; S&P: AA+ (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California (

More information

LODI PUBLIC FINANCING AUTHORITY

LODI PUBLIC FINANCING AUTHORITY NEW ISSUE - FULL BOOK-ENTRY ONLY Ratings: Moody s: Aa3 S&P: AA- (See Ratings ) In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to

More information

NEW ISSUE BOOK ENTRY ONLY

NEW ISSUE BOOK ENTRY ONLY NEW ISSUE BOOK ENTRY ONLY NO RATING In the opinion of Nossaman LLP, Irvine, California, Bond Counsel, based on existing statutes, regulations, rulings and court decisions and assuming, among other matters,

More information

$49,405,000 MARIN COMMUNITY COLLEGE DISTRICT (Marin County, California) 2017 General Obligation Refunding Bonds

$49,405,000 MARIN COMMUNITY COLLEGE DISTRICT (Marin County, California) 2017 General Obligation Refunding Bonds NEW ISSUE -- FULL BOOK-ENTRY RATINGS: Moody s: Aaa ; S&P: AAA See RATINGS herein In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation ( Bond Counsel ), under existing statutes,

More information

$13,199, Election of 2008 General Obligation Bonds, Series B (Tax-Exempt)

$13,199, Election of 2008 General Obligation Bonds, Series B (Tax-Exempt) NEW ISSUE FULL BOOK-ENTRY INSURED RATINGS (SERIES B BONDS ONLY): Standard & Poor s: AA+ ; Moody s: Aa3 UNDERLYING RATINGS: Standard & Poor s: A+ ; Moody s: Aa3 (See RATINGS herein.) In the opinion of Stradling

More information

$23,736, BALDWIN PARK UNIFIED SCHOOL DISTRICT (Los Angeles County, California) General Obligation Bonds, Election of 2006, Series 2013

$23,736, BALDWIN PARK UNIFIED SCHOOL DISTRICT (Los Angeles County, California) General Obligation Bonds, Election of 2006, Series 2013 NEW ISSUE FULL BOOK-ENTRY INSURED RATING: Standard & Poor s: AA UNDERLYING RATING: Standard & Poor s: A (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional

More information

$60,000,000 * Silicon Valley Clean Water (San Mateo County, California) 2014 Wastewater Revenue Bonds

$60,000,000 * Silicon Valley Clean Water (San Mateo County, California) 2014 Wastewater Revenue Bonds PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 25, 2014 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this

More information

RESOLUTION NO

RESOLUTION NO RESOLUTION NO. 031717-1 A RESOLUTION OF THE BOARD OF TRUSTEES OF THE DESERT COMMUNITY COLLEGE DISTRICT AUTHORIZING THE SALE AND ISSUANCE OF NOT TO EXCEED $145,000,000 AGGREGATE PRINCIPAL AMOUNT OF DESERT

More information

$14,000,000 NEVADA JOINT UNION HIGH SCHOOL DISTRICT (Nevada and Yuba Counties, California) Election of 2016 General Obligation Bonds, Series A

$14,000,000 NEVADA JOINT UNION HIGH SCHOOL DISTRICT (Nevada and Yuba Counties, California) Election of 2016 General Obligation Bonds, Series A NEW ISSUE FULL BOOK-ENTRY RATING: Moody s: Aa2 (See MISCELLANEOUS Rating herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel

More information

$ * DESERT COMMUNITY COLLEGE DISTRICT (Riverside and Imperial Counties, California) 2015 General Obligation Refunding Bonds

$ * DESERT COMMUNITY COLLEGE DISTRICT (Riverside and Imperial Counties, California) 2015 General Obligation Refunding Bonds PRELIMINARY OFFICIAL STATEMENT DATED, 2015 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers

More information

$5,000,000* KERMAN UNIFIED SCHOOL DISTRICT (Fresno County, California) General Obligation Bonds, Election of 2016, Series 2018 (Bank Qualified)

$5,000,000* KERMAN UNIFIED SCHOOL DISTRICT (Fresno County, California) General Obligation Bonds, Election of 2016, Series 2018 (Bank Qualified) This Preliminary Official Statement and the information contained herein are subject to completion and amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to

More information

Maturity Schedule (see inside front cover)

Maturity Schedule (see inside front cover) NEW ISSUE FULL BOOK-ENTRY RATING: Moody s: Aa1 In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under existing statutes, regulations,

More information

$23,555,000 VALLEJO CITY UNIFIED SCHOOL DISTRICT (SOLANO COUNTY, CALIFORNIA) 2017 GENERAL OBLIGATION REFUNDING BONDS

$23,555,000 VALLEJO CITY UNIFIED SCHOOL DISTRICT (SOLANO COUNTY, CALIFORNIA) 2017 GENERAL OBLIGATION REFUNDING BONDS NEW ISSUE DTC BOOK-ENTRY ONLY Fitch Rating: AAA Moody s Rating: A1 See RATINGS herein In the opinion of Parker & Covert LLP, Sacramento, California, Bond Counsel, based upon an analysis of existing statutes,

More information

DESERT COMMUNITY COLLEGE DISTRICT RESOLUTION NO

DESERT COMMUNITY COLLEGE DISTRICT RESOLUTION NO DESERT COMMUNITY COLLEGE DISTRICT RESOLUTION NO. 111815-4 RESOLUTION AUTHORIZING THE ISSUANCE OF THE DESERT COMMUNITY COLLEGE DISTRICT (RIVERSIDE AND IMPERIAL COUNTIES, CALIFORNIA) 2016 GENERAL OBLIGATION

More information

MATURITY SCHEDULE (see inside cover)

MATURITY SCHEDULE (see inside cover) NEW ISSUE - FULL BOOK-ENTRY RATING: Moody s: Aa3 See Rating In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications

More information

$45,425,000 SANTA MONICA-MALIBU UNIFIED SCHOOL DISTRICT (Los Angeles County, California) 2013 General Obligation Refunding Bonds

$45,425,000 SANTA MONICA-MALIBU UNIFIED SCHOOL DISTRICT (Los Angeles County, California) 2013 General Obligation Refunding Bonds NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa1 ; Standard & Poor s: AA (See MISCELLANEOUS Ratings herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco,

More information

$49,995, Oceanside Unified School District

$49,995, Oceanside Unified School District New ISSUE BOOK-ENTRY ONLY RATINGS: Insured: Aa2 / AAA Underlying: A1 / A+ (See BOND INSURANCE and MISCELLANEOUS Ratings herein). In the opinion of Jones Hall, A Professional Law Corporation, San Francisco,

More information

$7,200,000 CITY OF CLAREMONT General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture)

$7,200,000 CITY OF CLAREMONT General Obligation Refunding Bonds, Series 2016 (Johnson s Pasture) NEW ISSUE FULL BOOK-ENTRY RATING: Standard & Poor s: AAA (See RATING herein) In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject, however to certain qualifications described

More information

$100,000,000 PERALTA COMMUNITY COLLEGE DISTRICT (ALAMEDA COUNTY, CALIFORNIA) 2009 GENERAL OBLIGATION BONDS 2006 ELECTION, SERIES C

$100,000,000 PERALTA COMMUNITY COLLEGE DISTRICT (ALAMEDA COUNTY, CALIFORNIA) 2009 GENERAL OBLIGATION BONDS 2006 ELECTION, SERIES C NEW ISSUE BOOK-ENTRY ONLY RATING Standard & Poor s: AA- (See RATING ) In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain

More information

NEW ISSUE BOOK ENTRY ONLY RATING: INSURED RATING: S&P AA

NEW ISSUE BOOK ENTRY ONLY RATING: INSURED RATING: S&P AA NEW ISSUE BOOK ENTRY ONLY RATING: INSURED RATING: S&P AA (stable outlook) UNDERLYING RATING: S&P - A (stable outlook) (See CONCLUDING INFORMATION -- Rating herein) In the opinion of Richards, Watson &

More information

SAN FRANCISCO UNIFIED SCHOOL DISTRICT, CA

SAN FRANCISCO UNIFIED SCHOOL DISTRICT, CA SAN FRANCISCO UNIFIED SCHOOL DISTRICT, CA San Francisco Unified School District (City and County of San Francisco, California) General Obligation Bonds (Proposition A, Election of 2011), Series B (2014),

More information

$14,175,000 STOCKTON UNIFIED SCHOOL DISTRICT San Joaquin County, California 2011 GENERAL OBLIGATION REFUNDING BONDS

$14,175,000 STOCKTON UNIFIED SCHOOL DISTRICT San Joaquin County, California 2011 GENERAL OBLIGATION REFUNDING BONDS NEW ISSUE -- FULL BOOK-ENTRY Standard & Poor s Insured Rating: AA+ (stable outlook) Standard & Poor s Underlying Rating: A Moody s Insured Rating: Aa3 (negative outlook) Moody s Underlying Rating: A2 See

More information

Covina-Valley Unified School District Board of Education Minutes - Regular Meeting. November 1, 2010

Covina-Valley Unified School District Board of Education Minutes - Regular Meeting. November 1, 2010 99. Covina-Valley Unified School District Board of Education Minutes - Regular Meeting November 1, 2010 Meeting was called to order by the presiding chairman, Mary L. Hanes, M.D., at 7:30 p.m. at the District

More information

$159,485,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS Revenue Bonds (Sharp HealthCare), Series 2014A

$159,485,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS Revenue Bonds (Sharp HealthCare), Series 2014A NEW ISSUE BOOK ENTRY ONLY RATINGS: S&P: AAMoodys: A1 See RATINGS herein. In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations,

More information

$46,980,000 REDEVELOPMENT AGENCY OF THE CITY OF OAKLAND SUBORDINATED HOUSING SET ASIDE REVENUE BONDS, SERIES 2011A-T (Federally Taxable)

$46,980,000 REDEVELOPMENT AGENCY OF THE CITY OF OAKLAND SUBORDINATED HOUSING SET ASIDE REVENUE BONDS, SERIES 2011A-T (Federally Taxable) NEW ISSUE - BOOK-ENTRY ONLY RATINGS: Moody s: A2 S&P: A (See Ratings ) In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain

More information

$12,760,000 PUBLIC FINANCE AUTHORITY EDUCATION REVENUE BONDS (CORAL ACADEMY OF SCIENCE LAS VEGAS) SERIES 2017A

$12,760,000 PUBLIC FINANCE AUTHORITY EDUCATION REVENUE BONDS (CORAL ACADEMY OF SCIENCE LAS VEGAS) SERIES 2017A NEW ISSUES FULL BOOK-ENTRY Rating: S&P: BBB- See RATING herein In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations,

More information

$135,000,000* WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (CONTRA COSTA COUNTY, CALIFORNIA) $50,000,000*

$135,000,000* WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT (CONTRA COSTA COUNTY, CALIFORNIA) $50,000,000* This Preliminary Official Statement and the information contained herein are subject to completion or amendment without notice. Under no circumstances shall this Preliminary Official Statement constitute

More information

$22,425,000 FRESNO COUNTY FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, SERIES 2012A

$22,425,000 FRESNO COUNTY FINANCING AUTHORITY LEASE REVENUE REFUNDING BONDS, SERIES 2012A NEW ISSUE - BOOK-ENTRY ONLY RATINGS: Standard & Poor s (Insured): AA- Standard & Poor s (Underlying): AA- (See Ratings herein.) In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the County,

More information

$39,110,000 * BOARD OF TRUSTEES FOR COLORADO MESA UNIVERSITY ENTERPRISE REVENUE AND REVENUE REFUNDING BONDS SERIES 2013

$39,110,000 * BOARD OF TRUSTEES FOR COLORADO MESA UNIVERSITY ENTERPRISE REVENUE AND REVENUE REFUNDING BONDS SERIES 2013 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the

More information

PRELIMINARY OFFICIAL STATEMENT DATED APRIL 10, 2017

PRELIMINARY OFFICIAL STATEMENT DATED APRIL 10, 2017 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the

More information

MATURITY SCHEDULE (See inside front cover)

MATURITY SCHEDULE (See inside front cover) NEW ISSUE BOOK-ENTRY ONLY Insured Rating: S&P AA Underlying Rating: S&P A (See RATING ) In the opinion of Lozano Smith, LLP, Sacramento, California, Special Counsel, under existing law, subject, however

More information

$2,500,000 CINNABAR ELEMENTARY SCHOOL DISTRICT (Sonoma County, California) GENERAL OBLIGATION BONDS, 2014 ELECTION, 2015 SERIES A (Bank Qualified)

$2,500,000 CINNABAR ELEMENTARY SCHOOL DISTRICT (Sonoma County, California) GENERAL OBLIGATION BONDS, 2014 ELECTION, 2015 SERIES A (Bank Qualified) NEW ISSUE BOOK ENTRY ONLY RATINGS: S&P: AA (stable outlook) (Insured)/ A+ (Underlying) (See RATINGS herein.) In the opinion of Dannis Woliver Kelley, Bond Counsel to the District, under existing law, interest

More information

NEW ISSUE BOOK-ENTRY ONLY Moody s: Aa3 S&P: AA- (See MISCELLANEOUS Ratings herein.)

NEW ISSUE BOOK-ENTRY ONLY Moody s: Aa3 S&P: AA- (See MISCELLANEOUS Ratings herein.) NEW ISSUE BOOK-ENTRY ONLY RATINGS: Moody s: Aa3 S&P: AA- (See MISCELLANEOUS Ratings herein.) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, based upon an analysis of

More information

$10,105,000 COMMUNITY FACILITIES DISTRICT NO. 15 OF THE RIVERSIDE UNIFIED SCHOOL DISTRICT (IMPROVEMENT AREA NO. 3) SERIES 2017 SPECIAL TAX BONDS

$10,105,000 COMMUNITY FACILITIES DISTRICT NO. 15 OF THE RIVERSIDE UNIFIED SCHOOL DISTRICT (IMPROVEMENT AREA NO. 3) SERIES 2017 SPECIAL TAX BONDS NEW ISSUE BOOK-ENTRY-ONLY INSURED 2017 BONDS RATING: S&P: AA NO UNDERLYING RATING In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject to certain qualifications described

More information

$75,000,000 SAN LUIS OBISPO COUNTY COMMUNITY COLLEGE DISTRICT (San Luis Obispo and Monterey Counties, California)

$75,000,000 SAN LUIS OBISPO COUNTY COMMUNITY COLLEGE DISTRICT (San Luis Obispo and Monterey Counties, California) NEW ISSUE FULL BOOK-ENTRY RATINGS: Moody s: Aa2 ; S&P: AA- See MISCELLANEOUS Ratings herein In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond

More information

(Placer and Sacramento Counties, California) Election of 2016 General Obligation Bonds, Series A

(Placer and Sacramento Counties, California) Election of 2016 General Obligation Bonds, Series A NEW ISSUE FULL BOOK-ENTRY RATINGS: School District Bonds: Moody s: Aa2 S&P: AA- Improvement District Bonds: Moody s Aa3 (See RATINGS herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional

More information

NEW ISSUE FULL BOOK-ENTRY RATING: S&P: AA- (See MISCELLANEOUS Rating herein)

NEW ISSUE FULL BOOK-ENTRY RATING: S&P: AA- (See MISCELLANEOUS Rating herein) NEW ISSUE FULL BOOK-ENTRY RATING: S&P: AA- (See MISCELLANEOUS Rating herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ( Bond Counsel ), under

More information

$20,370,000 $465, Electric Revenue Refunding Bonds, Series A (Green Bonds)

$20,370,000 $465, Electric Revenue Refunding Bonds, Series A (Green Bonds) NEW ISSUE - FULL BOOK-ENTRY RATING: S & P: AA- See Rating In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications

More information

PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 9, 2015

PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 9, 2015 This is a Preliminary Official Statement and the information contained herein is subject to completion and amendment in a final Official Statement. Under no circumstances shall this Preliminary Official

More information

$15,000,000 LAKE TAHOE COMMUNITY COLLEGE DISTRICT (El Dorado County, California) 2018 GENERAL OBLIGATION BONDS, ELECTION OF 2014, SERIES B

$15,000,000 LAKE TAHOE COMMUNITY COLLEGE DISTRICT (El Dorado County, California) 2018 GENERAL OBLIGATION BONDS, ELECTION OF 2014, SERIES B NEW ISSUE BOOK-ENTRY ONLY RATINGS: Moody s: A1 S&P: AA (See MISCELLANEOUS Ratings herein.) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, based upon an analysis of

More information

THE REFUNDED BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND REGISTRAR AGREEMENT AND

THE REFUNDED BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND REGISTRAR AGREEMENT AND A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF BONDS IN A MAXIMUM AGGREGATE PRINCIPAL AMOUNT OF $9,710,000, FOR THE PURPOSE OF REFUNDING AT A LOWER INTEREST COST CERTAIN OF THE SCHOOL DISTRICT S SCHOOL

More information

SUPPLEMENT DATED DECEMBER 20, 2017 TO OFFICIAL STATEMENT DATED DECEMBER 19, relating to the

SUPPLEMENT DATED DECEMBER 20, 2017 TO OFFICIAL STATEMENT DATED DECEMBER 19, relating to the SUPPLEMENT DATED DECEMBER 20, 2017 TO OFFICIAL STATEMENT DATED DECEMBER 19, 2017 relating to the $14,035,000 City of Sunnyvale Wastewater Revenue Refunding Bonds, Series 2017A $10,585,000 City of Sunnyvale

More information

Each Series of Bonds is secured by a pledge of the full faith, credit, and taxing power of the State of South Carolina.

Each Series of Bonds is secured by a pledge of the full faith, credit, and taxing power of the State of South Carolina. NEW ISSUE BOOK-ENTRY-ONLY Ratings: Fitch Ratings: AAA Moody s Investors Service, Inc.: Aaa Standard & Poor s Credit Market Services: AA+ In the opinion of Parker Poe Adams & Bernstein LLP, Special Tax

More information