UNIFIED SCHOOL DISTRICT NO. 259, SEDGWICK COUNTY, KANSAS (WICHITA) $6,450,000 $100,000,000 GENERAL OBLIGATION

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1 NEW ISSUE BOOK-ENTRY ONLY RATINGS: Moody s Aa3 Standard & Poor s AA In the opinion of Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the Code ), the interest on the Series 2010-A 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. The Series 2010-A Bonds have not been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. In the opinion of Bond Counsel, interest on the Bonds is excluded from computation of Kansas adjusted gross income. The stated interest on the Series 2010-B Bonds is included in gross income as interest for federal income tax purposes. See TAX MATTERS - Opinion of Bond Counsel herein. UNIFIED SCHOOL DISTRICT NO. 259, SEDGWICK COUNTY, KANSAS (WICHITA) $6,450,000 $100,000,000 GENERAL OBLIGATION TAXABLE GENERAL OBLIGATION SCHOOL REFUNDING BONDS BUILDING BONDS (BUILD AMERICA BONDS- DIRECT PAYMENT TO ISSUER) SERIES 2010-A SERIES 2010-B Dated: March 1, 2010 Due: October 1, As shown on inside cover The General Obligation Refunding Bonds, Series 2010-A (the Series 2010-A Bonds ) and the Taxable General Obligation School Building Bonds (Build America Bonds Direct Payment to Issuer), Series 2010-B (the Series 2010-B Bonds, and together with the Series 2010-A Bonds, the Bonds ) will be issued by Unified School District No. 259, Sedgwick County, Kansas (Wichita) (the Issuer ), as fully registered bonds, without coupons, and, when issued, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denominations of $5,000 or any integral multiple thereof (the Authorized Denomination ). Purchasers will not receive certificates representing their interests in Bonds purchased. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the Bond owners or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (as herein defined) of the Bonds. Principal will be payable upon presentation and surrender of the Bonds by the registered owners thereof at the office of the Treasurer of the State of Kansas, Topeka, Kansas, as paying agent and bond registrar (the Paying Agent and Bond Registrar ). Interest payable on each Bond shall be paid to the persons who are the registered owners of the Bonds as of the close of business on the fifteenth day (whether or not a business day) of the calendar month preceding each interest payment date by check or draft of the Paying Agent mailed to such registered owner or, in the case of an interest payment to a registered owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer. So long as DTC or its nominee, Cede & Co., is the Owner of the Bonds, such payments will be made directly to DTC. DTC is expected, in turn, to remit such principal and interest to the DTC Participants (herein defined) for subsequent disbursement to the Beneficial Owners. Principal of the Bonds will be payable on October 1 in the years set forth on the inside cover hereof. Semiannual interest on the Bonds will be payable on April 1 and October 1, beginning on October 1, The Bonds and the interest thereon will constitute general obligations of the Issuer, payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. MATURITY SCHEDULES LISTED ON INSIDE COVER PAGE The Bonds will be subject to redemption prior to maturity, as further described herein. See THE BONDS - Redemption Provisions. The Bonds are offered when, as and if issued by the Issuer, subject to the approval of legality by Gilmore & Bell, P.C., Wichita, Kansas, Bond Counsel. Certain other legal matters will be passed upon by Thomas R. Powell, Esq., counsel for the Issuer. It is expected that the Bonds will be available for delivery through the facilities of DTC in New York, New York, on or about March 3, THE COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. THE COVER PAGE IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL APPENDICES ATTACHED HERETO TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. APPENDIX C - SUMMARY OF FINANCING DOCUMENTS CONTAINS DEFINITIONS USED IN THIS OFFICIAL STATEMENT. The date of this Official Statement is February 17, 2010.

2 UNIFIED SCHOOL DISTRICT NO. 259, SEDGWICK COUNTY, KANSAS (WICHITA) $6,450,000 $100,000,000 GENERAL OBLIGATION TAXABLE GENERAL OBLIGATION SCHOOL REFUNDING BONDS BUILDING BONDS (BUILD AMERICA BONDS- DIRECT PAYMENT TO ISSUER) SERIES 2010-A SERIES 2010-B MATURITY SCHEDULES Stated Maturity October 1 SERIES 2010-A BONDS CUSIP (1) Base: Principal Amount Interest Rate Yield Price 2012 $ 50, % 1.00% % KY , % 1.25% % KZ , % 1.50% % LA ,900, % 1.90% % LB ,900, % 1.90% % LC 8 Stated Maturity October 1 SERIES 2010-B BONDS CUSIP (1) Base: Principal Amount Interest Rate Yield Price 2022 $10,000, % 4.96% % LD ,000, % 5.12% % LE ,000, % 5.29% % LF ,000, % 5.39% % LG 9 (All plus accrued interest, if any) (1) CUSIP numbers have been assigned to this issue by Standard & Poor's CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the Owners of the Bonds. Neither the Issuer nor the Underwriter shall be responsible for the selection or correctness of the CUSIP numbers set forth above.

3 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE BONDS ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE GUARANTEED OR PASSED UPON THE SAFETY OF THE BONDS AS AN INVESTMENT, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS OFFICIAL STATEMENT CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING STATEMENTS AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF WHEN USED IN THIS OFFICIAL STATEMENT, THE WORDS ESTIMATE, INTEND, EXPECT AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.

4 UNIFIED SCHOOL DISTRICT NO. 259, SEDGWICK COUNTY, KANSAS (WICHITA) Alvin Morris Administrative Center 201 N. Water Wichita, Kansas (316) ELECTED OFFICIALS Barbara Fuller, President Connie Dietz, Vice President Kevass J. Harding, Board Member Betty J. Arnold, Board Member Jeff Davis, Board Member Lanora Nolan, Board Member Lynn W. Rogers, Board Member ADMINISTRATIVE OFFICERS SUPERINTENDENT John Allison CHIEF OPERATIONS OFFICER Martin Libhart CLERK OF THE BOARD Mike Willome CHIEF FINANCIAL OFFICER/TREASURER Linda Jones ISSUER'S COUNSEL Thomas R. Powell, Esq. UNDERWRITER George K. Baum & Company Wichita, Kansas BOND COUNSEL Gilmore & Bell, P.C. Wichita, Kansas CERTIFIED PUBLIC ACCOUNTANTS Allen, Gibbs & Houlik, L.C. Wichita, Kansas (i)

5 No dealer, broker, salesman or other person has been authorized by the Issuer or the Underwriter to give any information or to make any representations with respect to the Bonds other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein concerning the Issuer has been furnished by the Issuer and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness. 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. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof. This Official Statement does not constitute a contract between the Issuer or the Underwriter and any one or more of the purchasers, Owners or Beneficial Owners of the Bonds. TABLE OF CONTENTS INTRODUCTION... 1 THE BONDS... 2 THE DEPOSITORY TRUST COMPANY... 6 THE BUILDING PROGRAM... 7 THE REFUNDING PLAN...8 SOURCES AND USES OF FUNDS... 8 RISK FACTORS AND INVESTMENT CONSIDERATIONS... 9 BOND RATINGS ABSENCE OF LITIGATION LEGAL MATTERS TAX MATTERS VERIFICATION OF ESCROW UNDERWRITING AUTHORIZATION OF OFFICIAL STATEMENT APPENDIX A INFORMATION CONCERNING THE ISSUER...A-1 General... A-1 Economic Information... A-2 Financial Information... A-4 Debt Structure... A-11 APPENDIX B FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (FOR THE FISCAL YEAR ENDED 6/30/2009)...B-1 APPENDIX C SUMMARY OF FINANCING DOCUMENTS...C-1 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] Page (ii)

6 OFFICIAL STATEMENT UNIFIED SCHOOL DISTRICT NO. 259, SEDGWICK COUNTY, KANSAS (WICHITA) $6,450,000 $100,000,000 GENERAL OBLIGATION TAXABLE GENERAL OBLIGATION SCHOOL REFUNDING BONDS BUILDING BONDS (BUILD AMERICA BONDS- DIRECT PAYMENT TO ISSUER) SERIES 2010-A SERIES 2010-B General Matters INTRODUCTION The purpose of this Official Statement is to furnish information relating to Unified School District No. 259, Sedgwick County, Kansas (Wichita) (the Issuer or the District ), and the Issuer s General Obligation Refunding Bonds, Series 2010-A (the Series 2010-A Bonds ), and the Taxable General Obligation School Building Bonds (Build America Bonds-Direct Payment to Issuer), Series 2010-B (the Series 2010-B Bonds, and together with the Series 2010-A Bonds, the Bonds ), dated March 1, The Appendices to this Official Statement are integral parts of this document, to be read in their entirety. The Issuer is a unified school district duly organized and existing under the laws of the State of Kansas. Additional information regarding the Issuer is contained in APPENDIX A to this Official Statement. The materials contained on the cover page, in the body and in the Appendices to this Official Statement are to be read in their entirety. All financial and other information presented herein has been compiled by George K. Baum & Company (the Underwriter ). Except for the information expressly attributed to other sources deemed to be reliable, all information has been provided by the Issuer. The presentation of information herein, including tables of receipts from various taxes, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the Issuer. No representation is made that past experience, as might be shown by such financial or other information, will necessarily continue or be repeated in the future. Bond Counsel has not assisted in the preparation nor reviewed this Official Statement, except to the extent described under the section captioned LEGAL MATTERS and accordingly Bond Counsel expresses no opinion as to the accuracy or sufficiency of any other information contained herein. Build America Bonds The American Recovery and Reinvestment Act of 2009 (the Recovery Act ) authorizes the Issuer to issue taxable bonds known as Build America Bonds to finance capital expenditures for which it could otherwise issue tax-exempt bonds and to elect to receive a subsidy payment from the United States Treasury equal to 35% of the amount of each interest payment on the Build America Bonds. This U.S. Treasury subsidy for Build America Bonds, if issued, will be paid directly to the Issuer and does not constitute security for the payment of principal of or interest on any Build America Bonds. Additionally, no holder of any Build America Bonds issued by the Issuer would be entitled to any federal income tax credits associated with those Build America Bonds. The Issuer has designated the Series 2010-B Bonds as Build America Bonds. Definitions Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in APPENDIX C SUMMARY OF FINANCING DOCUMENTS THE BOND RESOLUTION DEFINITIONS. Continuing Disclosure The Securities and Exchange Commission (the SEC ) has promulgated amendments to Rule 15c2-12 (the Rule ), requiring continuous secondary market disclosure. In the Bond Resolution, hereinafter defined, the Issuer has covenanted to provide annually certain financial information and operating data and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board via the Electronic Municipal Market Access system. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Bonds. The Issuer has complied with all previous undertakings under the Rule. For more information regarding the Issuer's continuing disclosure undertaking, see APPENDIX C SUMMARY OF FINANCING DOCUMENTS THE CONTINUING DISCLOSURE INSTRUCTIONS. 1

7 Additional Information Additional information regarding the Issuer or the Bonds may be obtained from the Clerk of the Issuer at the address set forth in the preface to this Official Statement, or from the Underwriter, George K. Baum & Company, 100 N. Main, Suite 810, Wichita, Kansas, 67202, (316) , Fax No. (316) , Attention: Stephen E. Shogren or Charles M. Boully Authority for the Bonds THE BONDS The Bonds are being issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas (the State ), including K.S.A to , inclusive, K.S.A et seq., K.S.A et seq., K.S.A (f); K.S.A ; and K.S.A et seq., as amended and supplemented from time to time (the Act ) and a resolution adopted by the governing body of the Issuer on February 22, 2010 (the Bond Resolution ). Security for the Bonds The Bonds shall be general obligations of the Issuer payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. Description of the Bonds The Bonds shall consist of fully registered book-entry-only bonds in the denomination of $5,000 or any integral multiples thereof (the Authorized Denomination ) and shall be numbered in such manner as the Bond Registrar shall determine. All of the Bonds shall be dated March 1, 2010, shall become due in the amounts, on the Stated Maturities, subject to redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Bonds shall bear interest (computed on the basis of twelve 30-day months) from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. Designation of Paying Agent and Bond Registrar The Issuer will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond Resolution. The Issuer reserves the right to appoint a successor paying agent or bond registrar. No resignation or removal of the paying agent or bond registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or bond registrar. Every paying agent or bond registrar appointed by the Issuer shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the Bond Registrar and Paying Agent ) has been designated by the Issuer as paying agent for the payment of principal of and interest on the Bonds and bond registrar with respect to the registration, transfer and exchange of Bonds. Method and Place of Payment of the Bonds The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. 2

8 Notwithstanding the foregoing, any Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The Issuer shall notify the Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Paying Agent) and shall deposit with the Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Paying Agent shall notify the Issuer of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Bond entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO., REMAINS THE REGISTERED OWNER OF THE BONDS, THE PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See THE BONDS Book-Entry Bonds; Securities Depository. Payments Due on Saturdays, Sundays and Holidays In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Book-Entry Bonds; Securities Depository The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds. It is anticipated that during the term of the Bonds, the Securities Depository will make bookentry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraphs. The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the Issuer determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice from Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(1) or (a)(2) of this paragraph, the Issuer, with the consent of the Bond Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns and the Issuer, the Bond Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Bond Registrar shall authenticate and cause delivery of Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely on information from the Securities Depository and its Participants as to the names of 3

9 the Beneficial Owners of the Bonds. The cost of printing, registration, authentication, and delivery of Replacement Bonds shall be paid for by the Issuer. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the Issuer may appoint a successor Securities Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Bond Registrar upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of the Bonds to the successor Securities Depository in appropriate denominations and form as provided in the Bond Resolution. Registration, Transfer and Exchange of Bonds As long as any of the Bonds remain Outstanding, each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as hereinafter provided. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The Issuer shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The Issuer and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice from the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Mutilated, Lost, Stolen or Destroyed Bonds If (a) any mutilated Bond is surrendered to the Bond Registrar or the Bond Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Bond, and (b) there is delivered to the Issuer and the Bond Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the Issuer or the Bond Registrar that such Bond has been acquired by a bona fide purchaser, the Issuer shall execute and, upon the Issuer's request, the Bond Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new Bond of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, the Issuer, in its discretion, may pay such Bond instead of issuing a new Bond. Upon the issuance of any new Bond, the Issuer may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent) connected therewith. Nonpresentment of Bonds If any Bond is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Bond have been made available to the Paying Agent all liability of the Issuer to the Owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Bond, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Bond Resolution or on, or with respect to, said Bond. If any Bond is not presented for payment within four (4) years following the date when such Bond becomes due at Maturity, the Paying Agent shall repay to the Issuer the funds theretofore held by it for payment of such Bond, and such Bond shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Issuer, and the Owner thereof shall be entitled to look only to the Issuer for payment, and then only to the extent of the amount so repaid to it by the Paying Agent, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. 4

10 Redemption Provisions Optional Redemption. The Series 2010-A Bonds shall not be subject to optional redemption prior to their Stated Maturity. At the option of the Issuer, the Series 2010-B Bonds maturing in the years 2022 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2020, and thereafter as a whole or in part (selection of maturities and the amount of Series 2010-B Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Selection of Bonds to be Redeemed. Bonds shall be redeemed only in an Authorized Denomination. When less than all of the Bonds are to be redeemed and paid prior to their Stated Maturity, such Bonds shall be redeemed in such manner as the Issuer shall determine, Bonds of less than a full Stated Maturity shall be selected by the Bond Registrar in minimum Authorized Denomination in such equitable manner as the Bond Registrar may determine. In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than a minimum Authorized Denomination are then Outstanding, then for all purposes in connection with such redemption each minimum Authorized Denomination of face value shall be treated as though it were a separate Bond of a minimum Authorized Denomination. If it is determined that one or more, but not all, of the minimum Authorized Denomination value represented by any Bond is selected for redemption, then upon notice of intention to redeem such minimum Authorized Denomination, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of such minimum Authorized Denomination value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the minimum Authorized Denomination value called for redemption (and to that extent only). Notice and Effect of Call for Redemption. Unless waived by any Owner of Bonds to be redeemed, if the Issuer shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the Bond Registrar and the Purchaser. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the Owners of said Bonds. Each of said written notices shall be deposited in the United States first class mail not less than 30 days prior to the Redemption Date. All official notices of redemption shall be dated and shall contain the following information: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective principal amounts) of the Bonds to be redeemed; (d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after the Redemption Date; and (e) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the Issuer shall deposit with the Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and from and after the Redemption Date (unless the Issuer defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. In addition to the foregoing notice, the Issuer shall provide such notices of redemption as are required by the Disclosure Instructions. The Paying Agent is also directed to comply with any mandatory or voluntary standards then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. 5

11 THE DEPOSITORY TRUST COMPANY General. The Bonds are available in book-entry only form. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Ownership interests in the Bonds will be available to purchasers only through a book-entry system (the Book-Entry System ) maintained by The Depository Trust Company DTC ), New York, New York. The following information concerning DTC and DTC s book-entry system has been obtained from DTC. The Issuer takes no responsibility as to the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each scheduled maturity of the Bonds, and will be deposited with DTC. DTC and its Participants. DTC, the world s largest 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 2.2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of Ownership Interests. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the bookentry system for the Bonds is discontinued. Transfers. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6

12 Redemption notices will be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal, Redemption Price and Interest. Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Issuer or Paying Agent, on the 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, the Paying Agent, or the Issuer, 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 the Issuer or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry System. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed, registered in the name of DTC s partnership nominee, Cede & Co. (or such other name as may be requested by an authorized representative of DTC), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Bonds from DTC (or such successor securities depository), Bond certificates may be delivered to Beneficial Owners in the manner described in the Bond Resolution. THE BUILDING PROGRAM Voters approved a bond issue in the amount of $370 million on November 4, The building program, which was developed with participation from the entire community, accomplishes the following: Provide approximately 275 classrooms for growth, overcrowding, special programs, class size reduction, to support the end of busing for desegregation, and to replace the remaining 11 portable classrooms. Provide storm shelters at 60 schools in partnership with FEMA (54 existing schools, 6 new schools), and add FEMA shelter restrooms at 3 additional schools. Build 2 new 800-student comprehensive high schools in northeast and southeast Wichita. Build 2 new 800-student kindergarten 8 th grade schools in northeast and southeast Wichita. Replace 2 elementary schools in west and northeast Wichita. Provide technical education upgrades in 7 high schools. Add a magnet high school technical education program. Upgrade auditoriums at 6 high schools and 11 middle schools. Provide new auditoriums at 1 high school, 1 middle school. Upgrade and/or expand art and music classrooms at 6 high schools and 5 middle schools. Build 2,000-seat gymnasiums at 5 high schools. Expand and renovate swimming pools at 6 high schools. Provide upgraded multi-purpose fields with all-weather turf at 7 schools and seating for 1,000 at 4 high schools. Provide all-weather tracks at 3 high schools, 6 middle schools. Provide second gyms for physical education and athletic teams at 7 middle schools and 1 high school. Replace existing 8 tennis courts at 7 high schools. Upgrade baseball, softball, and soccer facilities at 7 high schools. Add or expand libraries at 12 schools. 7

13 Add and/or upgrade student support spaces in 29 schools. Add cafeterias at 9 elementary schools and 1 middle school, and enlarge cafeterias at 2 middle schools. Add multi-purpose rooms to 15 schools. The following cost estimates are by high school district and include costs of improvements to all school facilities with that district: Feeder System Amount New northeast quadrant $ 58,000,000 New southeast quadrant 58,000,000 East 41,975,000 Heights 29,545,000 North 43,645,000 Northwest 23,350,000 South 31,045,000 Southeast 25,930,000 West 40,625,000 Land acquisition/inflation 7,885,000 High school magnet technical education program 10,000,000 Total proposal $ 370,000,000 The Issuer has previously issued three series of general obligation bonds (the Series 2009-A Bonds, Series 2009-B Bonds, and Series 2009-C Bonds) in an aggregate principal amount of $220,000,000 to finance a portion of the Building Program. THE REFUNDING PLAN The Issuer has heretofore issued its General Obligation Bonds, Series 2002, dated September 15, 2002 (the Series 2002 Bonds ), which remain Outstanding in the principal amount of $59,485,000. A portion of the Series 2002 Bonds described below will be refunded with the proceeds of the Series 2010-A Bonds (the Refunded Bonds ): Maturity Maturity Interest Redemption Redemption Amount Date Rate Date Price $6,300,000 10/01/ % October 1, % An Escrow Fund will be established for the Refunded Bonds pursuant to the terms of the Escrow Trust Agreement dated as of March 1, 2010, by and between the Issuer and UMB National Bank of America, Wichita, Kansas (the Escrow Agent ). See APPENDIX C SUMMARY OF FINANCING DOCUMENTS THE ESCROW TRUST AGREEMENT for a discussion of the manner in which the Escrow Fund is administered. SOURCES AND USES OF FUNDS The following table itemizes the sources and uses of funds available for the Refunded Bonds and the Building Program, including the proceeds from the sale of the Bonds, exclusive of accrued interest. Series 2010-A Bonds Series 2010-B Bonds Sources of Funds: Principal Amount of the Bonds $6,450, $100,000, Original Issue Premium 389, , Total $6,839, $100,744, Uses of Funds: Deposit to Improvement Fund $ 0.00 $100,040, Deposit to Escrow Fund 6,803, Costs of Issuance 20, , Underwriter s Discount 15, , Total $6,839, $100,744,

14 RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE BONDS DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE BONDS WHICH MUST BE RECOGNIZED. THE FOLLOWING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE BONDS. PROSPECTIVE PURCHASERS OF THE BONDS SHOULD ANALYZE CAREFULLY THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND ADDITIONAL INFORMATION IN THE FORM OF THE COMPLETE DOCUMENTS SUMMARIZED HEREIN, COPIES OF WHICH ARE AVAILABLE AND MAY BE OBTAINED FROM THE ISSUER OR THE UNDERWRITER. Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Bonds. There is no assurance that there will not be any change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the Issuer or the taxing authority of the Issuer. Limitations on Remedies Available to Owners of Bonds The enforceability of the rights and remedies of the owners of Bonds, and the obligations incurred by the Issuer in issuing the Bonds, are subject to the following: the federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain unusual situations, of the police power inherent in the State of Kansas and its governmental subdivisions in the interest of serving a legitimate and significant public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy and otherwise, and consequently may involve risks of delay, limitation or modification of their rights. State Aid As described in APPENDIX A FINANCIAL INFORMATION PROPERTY TAX LEVIES AND COLLECTIONS School District Funding Formula. and the sections following in APPENDIX A, the State of Kansas provides a substantial portion of the money for the operation of school districts in the State. As with other states, declining State revenues have resulted in reductions in the amount of State aid to school districts for operating purposes. However, the District is obligated to levy unlimited ad valorem taxes to provide for debt service payments on the Bonds regardless of the amount of State aid received. Federal Subsidy Payment Series 2010-B Bonds The Issuer intends to elect to designate the Series 2010-B Bonds as Build America Bonds for the purposes of the Recovery Act and to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the Series 2010-B Bonds. The interest subsidy payments from the U.S. Treasury will be made directly to the Issuer and are not security for the payment of principal of or interest on the Series 2010-B Bonds. The priority of the U.S. Treasury making the interest subsidy payment is the same as the U.S. Treasury refunding overpayments of tax. In the event that the Issuer does not receive the interest subsidy payment from the U.S. Treasury in a timely fashion to pay 35% of the stated interest on each Interest Payment Date for the Series 2010-B Bonds, then the Issuer is obligated to pay such amounts from other available funds, including ad valorem taxes that may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, located within the territorial limits of the Issuer. Under current procedures of the U.S. Internal Revenue Service, the Issuer must submit in a timely manner a separate written request for payment of each interest subsidy payment. Failure to comply with these procedures may result in late payment of one or more interest subsidy payments. In addition, under Sections 6401 and 6402 Internal Revenue Code of 1986, as amended (the Code ), the interest subsidy payments are treated as overpayments of tax, and the U.S. Internal Revenue Service may offset all or a portion of one or more interest subsidy payments against any outstanding tax liability of the Issuer, including unpaid federal payroll taxes, debts owed to other federal agencies, and other federal taxes due. The Issuer may levy ad valorem taxes only in accordance with the requirements of its adopted budget. Ad valorem property tax levies are based on the adopted budget of the Issuer and the assessed valuations provided by the County appraiser. The budget of the Issuer for the next succeeding fiscal year is adopted prior to August 25 of each year. In adopting its annual budget, the Issuer will anticipate that the interest subsidy payments will be received by the Issuer from the 9

15 U.S. Treasury on a timely basis. Accordingly, if any interest subsidy payment is not received by the Issuer on timely basis, the Issuer may not have sufficient cash resources to make the full interest payment on that date. Any such shortage may not be able to be raised until the next budget cycle. See APPENDIX A FINANCIAL INFORMATION Accounting, Budgeting and Auditing Procedures for a discussion of the budget process and APPENDIX A FINANCIAL INFORMATION Property Tax Levies and Collections Tax Collections for a discussion of the tax collection process. Therefore, there can be no assurance that the Issuer will have sufficient cash resources to make on a timely basis the full interest payment on the Series 2010-B Bonds if the Issuer does not receive the interest subsidy payments on a timely basis. Taxation of Interest on the Series 2010-A Bonds An opinion of Bond Counsel will be obtained to the effect that interest earned on the Series 2010-A Bonds is excludable from gross income for federal income tax purposes under current provisions of the Internal Revenue Code of 1986, as amended (the Code ), and applicable rulings and regulations under the Code; however, an application for a ruling has not been made and an opinion of counsel is not binding upon the Internal Revenue Service. There can be no assurance that the present provisions of the Code, or the rules and regulations thereunder, will not be adversely amended or modified, thereby rendering the interest earned on the Series 2010-A Bonds includable in gross income for federal income tax purposes. The Issuer has covenanted in the Bond Resolution and in other documents and certificates to be delivered in connection with the issuance of the Series 2010-A Bonds to comply with the provisions of the Code, including those which require the Issuer to take or omit to take certain actions after the issuance of the Series 2010-A Bonds. Because the existence and continuation of the excludability of the interest on the Series 2010-A Bonds depends upon events occurring after the date of issuance of the Series 2010-A Bonds, the opinion of Bond Counsel described under TAX MATTERS assumes the compliance by the Issuer with the provisions of the Code described above and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Series 2010-A Bonds in the event of noncompliance with such provisions. The failure of the Issuer to comply with the provisions described above may cause the interest on the Series 2010-A Bonds to become includable in gross income as of the date of issuance. Premium on Bonds The initial offering prices of certain maturities of the Bonds that are subject to optional redemption are in excess of the respective principal amounts thereof. Any person who purchases a Bond in excess of its principal amount, whether during the initial offering or in a secondary market transaction, should consider that the Bonds are subject to redemption at par under the various circumstances described under THE BONDS Redemption Provisions. No Additional Interest or Mandatory Redemption upon Event of Taxability The Bond Resolution does not provide for the payment of additional interest or penalty on the Series 2010-A Bonds or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, the Bond Resolution does not provide for the payment of any additional interest or penalty on the Bonds if the interest thereon becomes includable in gross income for Kansas income tax purposes. Suitability of Investment The tax exempt feature of the Series 2010-A Bonds is more valuable to high tax bracket investors than to investors who are in low tax brackets, and so the value of the interest compensation to any particular investor will vary with individual tax rates. Each prospective investor should carefully examine this Official Statement, including the Appendices hereto, and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Bonds are an appropriate investment. Market for the Bonds Bond Rating. The Bonds have been assigned the financial ratings set forth in the section hereof entitled BOND RATINGS. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally establishing such rating, circumstances so warrant. Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Bonds. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Bonds. It is the present practice of the Underwriter, however, to make a secondary market as dealers in issues of municipal bonds which the Underwriter distributes. The Underwriter intends to continue this practice with respect to the Bonds, but is not obligated to do so. Prices of bonds traded in the secondary market, though, are subject to adjustment upward and downward in response to changes in the credit markets. From time to time it may be necessary for the Underwriter to suspend indefinitely secondary 10

16 market trading in the Bonds as a result of the financial condition or market position of the Underwriter, prevailing market conditions, lack of adequate current financial information about the Issuer, or a material adverse change in the financial condition of the Issuer, whether or not the Bonds are in default as to principal and interest payments, and other factors which in the opinion of the Underwriter may give rise to uncertainty concerning prudent secondary market practices. BOND RATINGS Moody's Investors Service has assigned a rating of Aa3 to the Bonds and Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc. has assigned a rating of AA to the Bonds and all outstanding general obligation bonds of the Issuer. Such ratings reflect only the view of such rating agency, and an explanation of the significance of such rating may be obtained therefrom. No such rating constitutes a recommendation to buy, sell, or hold any bonds, including the Bonds, or as to the market price or suitability thereof for a particular investor. The Issuer furnished such rating agencies with certain information and materials relating to the Bonds that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions by the rating agencies. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally establishing such rating, circumstances so warrant. Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Bonds. ABSENCE OF LITIGATION The Issuer, in the ordinary course of business, is a party to various legal proceedings. In the opinion of management of the Issuer, any judgment rendered against the Issuer in such proceedings would not materially adversely effect the financial position of the Issuer. The Issuer certifies that there is no controversy, suit or other proceeding of any kind pending or threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the Issuer or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act or the constitutionality or validity of the indebtedness represented by the Bonds or the validity of said Bonds, or any of the proceedings had in relation to the authorization, issuance or sale thereof, or the levy and collection of a tax to pay the principal and interest thereof. Approval of Bonds LEGAL MATTERS All matters incident to the authorization and issuance of the Bonds are subject to the approval of Gilmore & Bell, P.C., Wichita, Kansas, Bond Counsel. The factual and financial information appearing herein has been supplied or reviewed by certain officials of the Issuer and its certified public accountants, as referred to herein. Bond Counsel has participated in the preparation of the matters appearing in the sections of this Official Statement captioned THE BONDS, LEGAL MATTERS, TAX MATTERS and APPENDIX C SUMMARY OF FINANCING DOCUMENTS. Payment of the legal fee of Bond Counsel is contingent upon the delivery of the Bonds. Certain legal matters have been passed on for the Issuer by Thomas R. Powell, Esq. Certain Relationships Bond Counsel has represented the Underwriter in transactions unrelated to the issuance of the Bonds, but is not representing the Underwriter in connection with the issuance of the Bonds. General TAX MATTERS The following is a summary of the material federal and state income tax consequences of holding and disposing of the Bonds. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to 11

17 change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of holders subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Bonds as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Kansas, does not discuss the consequences to an owner under state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Bonds in the secondary market at a premium or a discount. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Bonds. Opinion of Bond Counsel Kansas Tax Exemption. The interest on the Bonds is excluded from computation of Kansas adjusted gross income. Federal Tax Exemption Series 2010-A Bonds. In the opinion of Bond Counsel, under existing law, the interest on the Series 2010-A Bonds is excluded from gross income for federal income tax purposes. Interest on the Series 2010-A Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions set forth in this paragraph are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ) that must be satisfied subsequent to the issuance of the Series 2010-A Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Series 2010-A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2010-A Bonds. The Series 2010-A Bonds have not been designated as qualified tax-exempt obligations for purposes of Code 265(b). Tax Matters Applicable to All Bonds Sale, Exchange or Retirement of Bonds. Upon the sale, exchange or retirement (including redemption) of a Bond, an owner of the Bond generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Bond (other than in respect of accrued and unpaid interest) and such owner s adjusted tax basis in the Bond. To the extent the Bonds are held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Bond has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on Bonds, and to the proceeds paid on the sale of Bonds, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner s federal income tax liability. Bonds Purchased at a Premium. If the Bonds have initial offering prices that exceed the stated redemption prices of such Bonds at maturity, the excess of the purchase price of a Bond over its stated redemption price at maturity constitutes premium on the Bond, and these Bonds are referred to in this discussion as Premium Bonds. Under Section 171 of the Internal Revenue Code of 1986, as amended (the Code ), the purchaser of a Premium Bond may elect to amortize any premium over the Bond s term using constant yield principles, based on the purchaser s yield to maturity. A holder of a Premium Bond that is a Series 2010-B Bond amortizes bond premium by offsetting the qualified stated interest allocable to an accrual period with the bond premium allocable to that accrual period. This offset occurs when the holder takes the qualified stated interest into income under the holder s regular method of accounting. If the bond premium allocable to an accrual period exceeds the qualified stated interest for that period, the excess is treated by the holder as a deduction under Section 171(a)(1) of the Code. For a holder of Premium Bond that is a Series 2010-A Bond, the amortization of bond premium has no impact on the tax-exempt treatment of the interest on that Series 2010-A Bond. But the purchaser s adjusted tax basis in the Premium Bond is reduced by the amount of bond premium amortized, whether the Bond is a Series 2010-A Bond or a Series 2010-B Bond. The reduction in adjusted tax basis will increase the gain (or decrease loss) realized for federal income tax purposes upon a sale, exchange, redemption, or other disposition of a Premium Bond. Tax Matters Regarding the Series 2010-B Bonds BOND COUNSEL IS NOT RENDERING ANY OPINION WITH RESPECT TO THE TREATMENT OF INTEREST ON THE SERIES 2010-B BONDS FOR PURPOSES OF FEDERAL INCOME TAXATION, AND SUCH INTEREST IS EXPECTED TO BE INCLUDED IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES. 12

18 Other Tax Consequences Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds. However, prospective purchasers of the Bonds should be aware that there may be tax consequences of purchasing the Bonds other than those discussed under the caption Opinion of Bond Counsel, including the following: (a) Code 265 denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Series 2010-A Bonds or, in the case of a financial institution, that portion of such institution's interest expense allocable to interest on the Series 2010-A Bonds; (b) with respect to insurance companies subject to the tax imposed by Code 831, Code 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Series 2010-A Bonds; (c) interest on the Series 2010-A Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Code 884; (d) passive investment income, including interest on the Series 2010-A Bonds, may be subject to federal income taxation under Code 1375 for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year, if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income; and (e) Code 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, receipts or accruals of interest on the Series 2010-A Bonds. Purchasers of the Bonds should consult their own tax advisors as to the applicability of these tax consequences. VERIFICATION OF ESCROW The accuracy of (a) the mathematical computations of the adequacy of cash and certain Escrowed Securities to be held by the Escrow Agent pursuant to the Escrow Agreement, together with the interest to be earned thereon, to pay the principal of, premium if any, and interest due and to become due on the Refunded Bonds to and including the applicable optional redemption date, and (b) the computations supporting the conclusion of Bond Counsel that the Series 2010-A Bonds are not arbitrage bonds under Section 148 of the Code, will be verified by Robert Thomas CPA, LLC, Shawnee Mission, Kansas. Such verification of the accuracy of the computations shall be passed upon from information supplied by the Underwriter and on interpretations of the Code provided by Bond Counsel. UNDERWRITING The Series 2010-A Bonds are being purchased for reoffering by George K. Baum & Company, Wichita, Kansas (the Underwriter ) at a price equal to 100% of the principal amount of the Series 2010-A Bonds, plus accrued interest from the Dated Date to the Issue Date, less an underwriting discount of $15,017.26, plus an original issue premium of $389,173. The Series 2010-B Bonds are being purchased for reoffering by the Underwriter at a price equal to 100% of the principal amount of the Series 2010-B Bonds, plus accrued interest from the Dated Date to the Issue Date, less an underwriting discount of $600,000, plus an original issue premium of $744,740. The Bond Purchase Agreement provides that the Underwriters will purchase all of the Bonds if any are purchased. The obligation of the Underwriters to accept delivery of the Bonds is subject to various conditions contained in the Bond Purchase Agreement. The Bonds will be offered to the public initially at the prices determined to produce the yield to maturity set forth on the inside cover page of this Official Statement. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) at prices other than the price stated on the inside cover page hereof and may change the initial offering price from time to time subsequent to the date hereof. In connection with the offering, the Underwriters may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter has previously acted as financial advisor to the Issuer for the Bonds and has terminated its financial advisory relationship with the Issuer with regard to the proposed issuance of the Bonds. The Issuer has consented to the participation in the purchase of the Bonds by the Underwriter and acknowledges the receipt of the appropriate disclosures in accordance with Rule G-23 of the Municipal Securities Rulemaking Board. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 13

19 AUTHORIZATION OF OFFICIAL STATEMENT The preparation of this Official Statement and its distribution has been authorized by the governing body of the Issuer as of the date on the cover page hereof. This Official Statement is submitted in connection with the issuance of the Bonds and may not be reproduced or used as a whole or in part for any other purpose. This Official Statement does not constitute a contract between the Issuer or the Underwriter and any one or more of the purchasers, Owners or Beneficial Owners of the Bonds. UNIFIED SCHOOL DISTRICT NO. 259, SEDGWICK COUNTY, KANSAS (WICHITA) By /s/ Barbara Fuller Barbara Fuller, President [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 14

20 APPENDIX A INFORMATION CONCERNING THE ISSUER GENERAL Size and Location Unified School District No. 259, Sedgwick County, Kansas (Wichita) (the Issuer or the District ) is located in and around Wichita, Kansas. The District encompasses approximately 152 square miles and has a current estimated population of 361,420 persons and a current student population of 49,146. The District consists of more than 100 schools and other centers. Government and Organization of the District The District was established on July 1, A seven member Board of Education governs the District. The Board members, one elected at large and six from districts, serve staggered four year terms. District Facilities The District operates 56 elementary schools, 16 middle schools, 2 K-8 schools, 11 high schools, 6 special education centers, 1 early childhood center, 4 support centers, and 9 other programs. The improvements and additions which will be financed from the proceeds received from the sale of the Bonds will include constructing and equipping new buildings and additions and improvements to buildings throughout the district. The following table lists the history of enrollment in the District's schools for the years indicated Total Enrollment 48,865 48,770 48,705 49,146 50,042 Elementary school enrollment 24,047 24,271 24,348 24,926 25,290 Middle school enrollment 10,198 9,921 9,730 9,588 9,844 High school enrollment 12,823 12,763 12,766 12,771 12,627 Alternative and special school enrollment 1,797 1,815 1,861 1,861 2,281 Source: USD 259 CAFR and Budget Book Other Educational Facilities There are 10 parochial schools located in the District with an estimated annual enrollment of 5,335. Post-secondary education is accessible to residents of the District through Wichita State University, Friends University, Newman University, University of Kansas School of Medicine and Wichita Area Vocational-Technical School in Wichita, Kansas Municipal Services and Utilities Aquila Networks and Kansas Gas Service supply natural gas, and Aquila Networks and Westar supply electricity to the area. Telephone service is provided by 18 local carriers and 50 long distance carriers. Cox Communications operates a cable television system in the District. Fire and police protection are provided by the county and city governments in the District. Sedgwick County operates an emergency ambulance service for the area. Transportation Facilities The area is served by two major highways: US Highway 54 (400), Interstate Highway 35 and the Kansas Turnpike. Regularly scheduled air service is available at Wichita Mid-Continent Airport, located in the southwest part of Wichita. Medical and Health Facilities Health care providers, including hospitals, family physicians, medical specialists, dentists, chiropractors, and optometrists are readily available and accessible in the City of Wichita. There are 25 adult care homes with 2,207 beds currently located in the area. A-1

21 Recreational, Cultural and Religious Facilities Wichita has developed into a civic center that offers many cultural and recreational opportunities. The Wichita Center for the Arts, Whittier Fine Arts Gallery, Edwin A. Ulrich Museum of Art and the Wichita Art Museum all house fine art collections. Quality theater groups such as the Wichita Community Theater, Music Theater of Wichita, Wichita Children s Theater, and Music Theater for Young People visit the Wichita stages throughout the year. Interesting museums such as the Wichita/Sedgwick County Historical Museum, the Mid-America All-Indian Center, the Old Cowtown Museum, the Kansas Aviation Museum, the Museum of World Treasures, the Kansas Sports Hall of Fame, and the Kansas African American Museum each reveal their own view of the past. Exploration Place, the $62 million science center and museum, opened in The nearby Wichita Art Museum completed a $10.5 million renovation in June Within the City of Wichita are 117 municipal parks and greenways covering more than 4,300 acres. At least 160,000 trees are planted on Wichita s public grounds. The Lake Afton Observatory features astronomy displays and spacerelated phenomena. Botanica, the Wichita Gardens, is the city s living museum of plants and flowers. The Sedgwick County Zoo is nationally acclaimed in natural habitat design and has become one of the top zoos in the world. Century II is the convention headquarters downtown. The $30 million Hyatt Regency hotel in downtown Wichita has added to the large selection of hotels in the city. A 128-room Courtyard by Marriott opened in Old Town December Wichita is the leading convention and tourism center in Kansas. In November 2004, the citizens of Sedgwick County approved a one-cent sales tax increase to fund the construction of a new downtown regional events center. Construction on the $133 million INTRUST Bank arena was completed in late The Kansas Coliseum is located just north of the city and is currently available for a variety of activities. Professional baseball, hockey and indoor football are additional examples of other major attractions in the Wichita area. The twin-sheet ice skating arena, Wichita Ice Center, is available for sporting events. Wichita has City-owned golf courses, four other golf courses for public play and six membership-only courses. Water sports and fishing are available on two federal reservoirs and one county lake that are within 30 minutes of Wichita. Additionally, eighteen recreational areas are within a 200-mile radius of the City. Because Wichita lies within the central waterfowl flyway, huge flocks of waterfowl are a common sight in our area during the spring and fall. Deer, pheasant, quail, wild turkey and ducks are just a few examples of wild game that may be hunted in the area. ECONOMIC INFORMATION Wichita, the largest city in Kansas with a population of 361,420, is the county seat of Sedgwick County. Major highways, including the Kansas Turnpike and Interstate I-35, link Wichita with a large trade area that encompasses a population of more than 1 million people within a 100-mile radius. The nearest large cities are Denver, Colorado to the West, Kansas City, Missouri to the northeast and Oklahoma City, Oklahoma and Tulsa, Oklahoma to the south and southeast, respectively. Wichita area manufacturers, numbering approximately 687, produce a wide variety of products from computers to aircraft. Wichita is a growing manufacturing city with a diverse economic base. About 81 percent of all establishments are small firms employing less than 50 workers. Local aircraft companies are important to the economic mix in Wichita and combine to produce a significant number of the world s general aviation and commercial aircraft. Service-related firms, particularly regional health care firms, are also an important sector of Wichita s long-term growth. These strengths, combined with a skilled labor force and the city s central location, provide for Wichita s prominence as a regional market. Major Employers Listed below are the major employers located in the Wichita area and the number employed by each: Major Employers Product/Service Number of Full- & Part-time Employees 1. Cessna Aircraft Co. Aircraft manufacturer 11, Spirit AeroSystems, Inc. Commercial aircraft 10, USD 259 (Wichita) Public school district 9,240 A-2

22 4. Hawker Beechcraft Corp. Aircraft manufacturer 6, Via Christi Health Systems Health system 6, State of Kansas State government 4, City of Wichita Municipal government 3, Boeing IDS Wichita Aircraft development 3, Sedgwick County County government 2, United States Government Federal government 2,721 Source: Wichita Metro Chamber of Commerce Labor Force The following table sets forth labor force figures for Sedgwick County and the State of Kansas: Average For Year Sedgwick County Total Labor Force Employed Unemployed , ,925 15, % , ,472 13, % , ,670 11, % , ,909 10, % , ,153 10, % Average For Year Source: Kansas Department of Labor Retail Sales Tax Collections State of Kansas Unemployed Rate Total Labor Force Employed Unemployed ,460,900 1,380,000 80, % ,465,900 1,391,400 74, % ,470,800 1,407,100 63, % ,478,800 1,418,700 60, % ,496,943 1,431,340 65, % Unemployed Rate The following table lists State of Kansas sales tax collections for the years indicated for sales occurring in Sedgwick County, Kansas: Source: Kansas Statistical Abstract Population Trends Year Sales Tax Collections Per Capita Sales Tax 2004 $337,593,529 $ ,093, ,501, ,863, ,352, The following table shows the approximate population of District and Sedgwick County in the years indicated: Year Wichita Population Sedgwick County Population , , , , , , , , , ,863 A-3

23 The median age of persons in Sedgwick County and the State of Kansas is 33.6 and 35.2, respectively, per the 2000 Census. Source: Kansas Statistical Abstract, Kansas Division of the Budget Personal Income Trends Sedgwick County personal income (in thousands of dollars) and per capita income and the State of Kansas per capita income are listed for the years indicated, in the following table. Source: Bureau of Economic Analysis Sedgwick County Personal Income Sedgwick County Per Capita Income State of Kansas Per Capita Income Year 2003 $14,267,019 $30,950 $29, ,313,398 33,153 30, ,116,703 34,703 32, ,941,720 38,318 34, ,916,121 39,811 36,525 Accounting, Budgeting and Auditing Procedures FINANCIAL INFORMATION The District follows a modified accrual basis of accounting for all tax supported funds of the District, including the General Fund. The District's fiscal year is mandated to run from July 1 to June 30. An annual budget is required to be prepared by the District, for all funds not exempt from the budget requirement. A computation of estimated receipts and disbursements is prepared and presented to the governing body of the District prior to August 1. A public hearing is held and a final budget adopted prior to August 25th. Kansas law prohibits governmental units from creating indebtedness unless there are funds on hand in the proper accounts and unencumbered by previous action with which to pay such indebtedness. An exception to this cash-basis operation is made where provision has been made for payment of obligations by bonds or other specific debt obligations authorized by law. The financial records of the District are audited annually by a firm of independent certified public accountants in accordance with generally accepted auditing standards. In recent years, the annual audit has been performed by Allen, Gibbs & Houlik, L.C., Wichita, Kansas. Copies of the audit reports for the past five (5) years are on file in the Clerk's office and are available for review. The audit for the Fiscal Year ended June 30, 2009, is attached hereto as APPENDIX B. The District will prepare a Comprehensive Annual Financial Report, which includes audited financial statements and other pertinent credit information. The financial information contained in the Appendices to this Official Statement are an integral part of this document and are intended to be read in conjunction herewith. Sources of Revenue The District finances its general operations through the local property tax levy, and other miscellaneous sources as indicated below for the current Fiscal Year: Source: USD 259 Source Percent Local property tax 24.6% State of Kansas 62.4% Federal Aid 10.1% Other 2.9% A-4

24 Property Valuations The determination of assessed valuation and the collection of property taxes for all political subdivisions in the state of Kansas is the responsibility of the various counties under the direction of state statutes. The Sedgwick County Appraiser's office determines the assessed valuation that is to be used as a basis for the mill levy on property located in the District. In conjunction with the November, 1992 general election, Kansas voters approved a proposition to modify the state constitution with respect to classification of property for ad valorem taxation. The modified classification provisions shall be effective for assessment and taxation of property on and after January 1, 1993 and each year thereafter. Property is divided into two classes, real property and personal property. Real property is divided into seven subclasses; there are six subclasses of personal property. The real property (Class 1) subclasses are: (i) real property used for residential purposes including multi-family mobile or manufactured homes and the real property on which such homes are located, assessed at 11.5%, (ii) agricultural land, valued on the basis of agricultural income or productivity, assessed at 30%, (iii) vacant lots, assessed at 12%, (iv) real property, owned and operated by a not-for-profit organization not subject to federal income taxation, pursuant to 501 of the Internal Revenue Code, assessed at 12%, (v) public utility real property, except railroad real property, assessed at the average rate that all other commercial and industrial property is assessed, assessed at 33%, (vi) real property used for commercial and industrial purposes and buildings and other improvements located on land devoted to agricultural use, assessed at 25%, and (vii) all other urban and real property not otherwise specifically classified, assessed at 30%. Tangible personal property (Class 2) subclasses are: (i) mobile homes used for residential purposes, assessed at 11.5%, (ii) mineral leasehold interests, except oil leasehold interests, the average daily production from which is 5 barrels or less, and natural gas leasehold interests, the average daily production from which is 100 mcf or less, which shall be assessed at 25%, assessed at 30%, (iii) public utility tangible personal property, including inventories thereof, except railroad personal property, including inventories thereof, which shall be assessed at the average rate all other commercial and industrial property is assessed, assessed at 33%, (iv) all categories of motor vehicles not defined and specifically valued and taxed pursuant to law enacted prior to January 1, 1985, assessed at 20%, (v) commercial and industrial machinery and equipment which if its economic life is 7 years or more, shall be valued at its retail cost, when new, less seven-year straight-line depreciation, or which, if its economic life is less than 7 years, shall be valued at its retail cost when new, less straight-line depreciation over its economic life, except that, the value so obtained for such property, notwithstanding its economic life and as long as such property is being used, shall not be less than 20% of the retail cost when new of such property, assessed at 25%, and (vi) all other tangible personal property not otherwise specifically classified, assessed at 30%. All property used exclusively for state, county, municipal, literary, educational, scientific, religious, benevolent and charitable purposes, farm machinery and equipment, merchants' and manufacturers' inventories, other than public utility inventories included in subclass (3) of class 2, livestock, and all household goods and personal effects not used for the production of income, shall be exempted from property taxation. The 2006 Kansas Legislature exempted from all property or ad valorem property taxes levied under the laws of the State all commercial, industrial, telecommunications and railroad machinery and equipment acquired by qualified purchase or lease after June 30, 2006 or transported into the State after June 30, 2006 for the purpose of expanding an existing business or creation of a new business. Assessed Valuation The following table shows the assessed valuation of the taxable tangible property within the District for the following years: Personal State Assessed Motor Total Year Real Estate Property Utilities Vehicles Valuation 2000 $1,482,719,992 $301,430,165 $124,760,934 $279,128,281 $2,188,039, ,563,350, ,993, ,330, ,606,064 2,261,281, ,635,462, ,026, ,231, ,071,249 2,323,791, ,776,376, ,845, ,894, ,763,545 2,466,879, ,837,435, ,403, ,301, ,153,659 2,531,294, ,918,080, ,024, ,598, ,983,192 2,617,685, ,036,564, ,058, ,268, ,793,961 2,738,685, ,185,182, ,127, ,828, ,624,387 2,858,763, ,322,494, ,441, ,933, ,268,835 2,965,493, ,340,441, ,036,315 97,345, ,561,667 2,944,384,932 Source: County Clerk A-5

25 School District Funding Formula Overview. In 1992 the Kansas Legislature made significant changes to the method of funding primary and secondary public education in the state. These changes were made in response to a lawsuit brought forth by several school districts. The Governor of the State of Kansas signed this legislation (the Kansas School Finance Plan or the Plan ) into law in early A number of modifications were made to the Plan in subsequent sessions of the Kansas Legislature. The primary effects of the Plan were to shift the majority of responsibility for funding primary and secondary public education to the state, equalize statewide property tax rates for education, and equalize the per-pupil spending of school districts. The Plan provided for state aid to assist districts with principal and interest payments on voted general obligation bond issues; however, it did not impact a school district s obligation to provide for the payment of the principal of and interest on its existing and future general obligation bonded indebtedness. Various amendments to the Plan have been made by the Kansas Legislature. Litigation was instituted in 1999 against the State, which resulted in various court decisions and subsequent legislative changes to the Plan. The Plan, including amendments adopted by the 2008 and 2009 Kansas Legislature, is summarized below. Funding for the Plan. Funding for the Plan involved implementing a number of changes to the property, sales and income tax structures in the state. The following is a brief summary of these changes. Local Effort Property Taxes. In an effort to provide a uniform property tax rate for education across the state, a fixed general fund mill levy was implemented. Each district was required to levy taxes for its general fund at the following rates: School Year(s) Mill Levy 1992/ / / The Plan was also modified to exclude the first $20,000 of appraised valuation of each parcel of residential property from the general fund mill levy. All other taxable tangible property within a district is subject to this uniform tax rate. The District's Bond and Interest Fund, from which principal and interest payments are financed, is exempt from this tax limitation. The effect of the Plan s property tax equalization effort was to cause the majority of districts to experience significant declines in their property tax rates. To make up the revenue lost by lowering property taxes in the majority of Kansas school districts, several revenue enhancements were adopted or increased to provide a source of funds for state financial aid to school districts, including changes to State sales and income taxes. Sales and Use Tax. The statewide sales and use tax was increased from 4.25% to 4.90% effective July 1, Additionally, several goods and services which had previously been exempt were now made subject to the tax or taxed at a reduced rate of 2.50%. Effective July 1, 2002, the statewide sales and use tax was increased to 5.30%. Income Taxes. Several changes were made to individual and corporate income tax rates and levels of income at which the taxes became effective. The net effect of these changes was to slightly decrease individual income taxes in the lower income levels while increasing rates for higher levels of income. Additionally, certain deductions to taxable income that had previously been allowed, such as federal income taxes, were removed. General Fund Operations. The Plan, as amended, provides that all school districts are permitted to spend a base of $4,433 per pupil in their general fund for the school year (the Base State Aid ). The Base State Aid increases to $4,492 in school year and thereafter. Subsequent legislation passed in 2009 reduced these pupil amounts to $4,400 for the school year and $4,218 for the school year. This will reduce the amount of Base State Aid to the District in the approximate amount of $12,000,000 for school year. Revenue to support this spending is provided to districts through state financial aid ( SFA ). Total SFA is calculated each year by multiplying the Base State Aid by the weighted number of pupils in the district. The weighted number of pupils is calculated by adding certain weighting factors to the district's full-time enrollment. The weighting factors modify the number of pupils, thereby adjusting the SFA. Generally, weighting factors are available for special education students; the opening of new facilities; students considered at-risk and non-proficient ; students transported over certain distances; students in districts with very low, very high, or declining enrollments; and students in special programs such as bilingual and vocational education, virtual education and preschool. A-6

26 The amount of SFA that a district actually receives each year from the State is offset by the district s local revenue generating effort. The local effort generally includes the fixed general fund property tax levy, motor vehicle tax collections and any remaining general fund balances. If the local effort is insufficient to generate the Base State Aid, then the balance of funds needed is provided by the state. If the local effort generates in excess of the Base State Aid, then the surplus must be remitted to the state. The district's general state aid entitlement is paid monthly from the state school district finance fund during July through May according to the amount needed to meet operating expenses with the balance paid in June. Any amount not so paid in June shall be paid on July 1 or as soon thereafter as funds are available for such payment, which shall be recorded and accounted by the district as received on June 30. Funds and Accounts. Several different fund categories are created and authorized by the Plan, including: (a) the general fund from which operating expenses are paid, (b) the supplemental general fund (Local Option Budget), (c) the contingency reserve fund, which may not exceed 10% of the general fund budget for school years through and 6% of the general fund budget thereafter (d) program-weighted funds for expenditures for program-weighted items such as vocational education and bilingual education, (e) categorical funds such as special education, food service, driver training, virtual school, etc., (f) a special liability expense fund, (g) a special reserve fund, (h) a textbook and student materials revolving fund, and (i) tuition reimbursement fund. Transfers made from the general fund to any other fund is considered an operating expense. The district may transfer money from the general fund to any categorical fund of the district and may transfer money in the general fund to a program weighted fund, subject to certain conditions. Supplemental General Fund. In order to provide additional funding for operations, the Plan also allows a district to create a supplemental general fund. The supplemental general fund can be used for the same purposes as the general fund. The supplemental general fund is financed through a local option budget ( LOB ) which may equal up to 31% of the District s General Fund Budget Authority (as calculated prior to the 2009 legislative budget adjustments using $4,433 state financial aid authorized in 2008, times the weighted enrollment, plus state special education aid). The LOB represents an ad valorem tax on all taxable tangible property in the District. Additional state aid is available, based on relative levels of assessed valuation, to assist districts in funding the supplemental general fund. If a district adopts a LOB in excess of 25%, and the resolution authorizing the LOB so provides, monies attributable to the LOB in excess of 25% may be transferred to the district s capital improvement fund and capital outlay fund. In each school year, a district that has adopted a LOB is eligible for entitlement to an amount of supplemental general state aid determined by a formula that takes into account the district's assessed value per pupil ( AVPP ) and other factors. Amounts in the supplemental general fund may not be expended nor transferred to the general fund for the purpose of making payments under lease-purchase agreement involving the acquisition of land or buildings. Any district that has adopted a LOB in excess of 30% may also, subject to notice and protest, make a cost of living adjustment to such levy. Each LOB must be approved by the District s governing body and may, under circumstances, be subject to notice and protest and/or referendum. Any LOB in excess of 30% of the state financial aid of the district in the current school year shall not be effective unless approved by a majority of the qualified electors of the district. The District has a LOB in an amount of 30% of its General Fund which generates approximately $100,000,000 of revenues annually. Capital Outlay Funds. The Plan authorizes any district to initiate a capital outlay levy in an amount not to exceed 8 mills (exception for existing levies in greater amounts) for a period not to exceed 5 years upon all taxable tangible property within the district. Prior to instituting such capital outlay levy, the board of education of the district shall adopt a resolution declaring an intent to institute the levy, which resolution shall be published and is subject to protest petition. A capital outlay levy may be reauthorized in the same manner during the last levy period. Funds generated by such levy, and funds transferred from the general fund of the district, are deposited into a capital outlay fund. Moneys in the capital outlay fund may be expended for land acquisition, making capital improvements and acquisition of school buses and equipment for the district. A district may issue general obligation capital outlay bonds in an amount determined by formula that will be repaid from funds derived from the current capital outlay levy. The District has a current capital outlay levy of 7 mills for a remaining period of 1 year, which generates approximately $20,000,000 of revenues annually. In addition, there is established in the State treasury the school district capital outlay state aid fund. Any district that levies a capital outlay levy is eligible to receive moneys from the school district capital outlay state aid fund based on a state aid percentage factor determined on a formula inversely related to the AVPP as compared to the median AVPP of all districts in the State. Each year, the State Board of Education determines the AVPP of each district, rounded to the nearest $1,000. The median AVPP for all districts is calculated and a percentage factor (the state aid computation percentage ) is assigned to the AVPP. For each $1,000 AVPP above or below the state median AVPP, the factor changes by 1.0 percentage point inversely to AVPP. The state computation percentage for USD 259 for fiscal year ending June 30, 2009 is 25%. The district's state aid computation percentage is multiplied by the district's capital outlay mill levy, not to exceed 8 mills legislation eliminated funding for school district capital outlay state aid for the school year. A-7

27 Lease Purchase Agreements. K.S.A authorizes school districts to enter into lease purchase agreements for a term not to exceed 10 years, subject to annual appropriation requirements of the cash-basis law. Any lease purchase agreement entered into by a school district which involves the acquisition of land or buildings, is for a term exceeding the current fiscal year and provides for annual payments which in the aggregate exceed $100,000, requires that the district publish a resolution declaring its intent to enter such agreement once each week for two consecutive weeks in a newspaper of general circulation within the district. An election shall be required if 5% of the qualified voters in the district file a petition with the county election officer within 30 days of the last publication of the resolution. Capital Improvement Fund. There is established in the State Treasury the school district Capital Improvement Fund ( CIF ). The CIF is intended to assist districts on making principal and interest payments on voted general obligation bond issues. Each school district that is obligated to make payments from its bond and interest fund is entitled to receive state aid from the CIF in an amount inversely related to its AVPP. Each year the State Board of Education determines the AVPP of each district, rounded to the nearest $1,000. The median AVPP for all districts is calculated and a percentage factor (the state aid computation percentage ) is assigned to the AVPP. For each $1,000 AVPP above or below the state median AVPP, the factor changes by 1.0 percentage point inversely to AVPP. The percentage assigned to a district is its state aid percentage factor. The factor may not exceed 100%. The state aid computation factor for USD 259 for fiscal year ending June 30, 2010 is 25% for contractual bond obligations incurred after July 1, Any school district that receives payments from the CIF and has experienced at least a five percent per year or 50 pupil decline in enrollment (whichever is greater) for the previous three years must seek a recommendation from the Joint Committee on State Building Construction prior to issuing bonds for the construction of a new building. If the Joint Committee recommends against the issuance of bonds and the district proceeds to issue bonds, the district is not entitled to receive payments from the CIF for those bonds. Since USD 259 experienced an enrollment growth in , permission from the Joint Committee on State Building Construction is not required. The District's entitlement of state aid from the CIF each year is determined by applying the state aid percentage factors to the bond and interest fund payment obligation for that year. It is anticipated that this source of state funding will pay approximately 25% of the District's debt service on the Bonds for the school year No assurance can be given that state assistance will continue in future years. However, the District is obligated to levy unlimited ad valorem taxes to provide for debt service payments on the Bonds, regardless of any State aid. Additional Recovery Act Revenues The American Recovery and Reinvestment Act of 2009 (the Recovery Act ) authorizes the distribution of various types of funds to assist primary and secondary education. The Issuer has been awarded approximately $20,000,000 in Recovery Act Title IA funds for expenditures during this and the following fiscal years. Tax Collections Tax statements are mailed in November each year and may be paid in full or one-half on or before December 20 with the remaining one-half due on or before May 10 of the following year. Taxes that are unpaid on the due dates are considered delinquent and accrue interest at a per annum rate established by State law until paid or until the property is sold for taxes. Real estate bearing unpaid taxes is advertised for sale on or before August 1 of each year and is sold by the County for taxes and all legal charges on the first Tuesday in September. Properties that are sold and not redeemed within two years after the tax sale are subject to foreclosure sale, except homestead properties which are subject to foreclosure sale after three years. Personal taxes are due and may be paid in the same manner as real estate taxes, with the same interest applying to delinquencies. If personal taxes are not paid when due, and after written notice, warrants are issued and placed in the hands of the Sheriff for collection. If not paid on or before October 1, legal judgment is entered and the delinquent tax becomes a lien on the property. Unless renewed, a non-enforced lien expires five years after it is entered. Motor vehicle taxes are collected periodically throughout the year concurrently with the renewal of motor vehicle tags based upon the value of such vehicles. Such tax receipts are distributed to all taxing subdivisions, including the State of Kansas, in proportion to the number of mills levied within each taxpayer's tax levy unit. The District may levy taxes in accordance with the requirements of its adopted budget and within the restrictions of the State school finance formula. Property tax levies are based on the adopted budget of the District and the assessed valuations provided by the county appraiser. The following table shows the District s mill levies by fund (per $1000 of assessed valuation) for each of the years indicated and the current year: A-8

28 Special Capital Outlay Bond & Interest Fund Adult Education Fund Assessment Collection General Supplemental Total Year Year Fund General Other Levy Source: Clerk; County Clerk (2009/2010 amounts) Aggregate Tax Levies The aggregate tax levies (per $1000 assessed valuation) of the District and overlapping jurisdictions for the years indicated are included in the following table: Assessment Year Collection Year USD No. 259 City of Wichita Wichita State University, State of Kansas, and Sedgwick County Total Levy Source: USD 259 CAFR; County Clerk (2009/2010 amounts) Assessment Year Tax Collection Record The following table sets forth tax collection information for the District for the years indicated: Percentage of Levy Collected Delinquent Tax Collections Percentage of Total Taxes Collected Collection Year Total Tax Levy Current Tax Collections Total Taxes Collected $ 62,019,200 $ 59,789, % $1,121,064 $ 60,910, % ,353,496 78,674, % 1,129,648 79,803, % ,673,868 98,061, % 1,431,714 99,493, % ,561,740 95,503, % 1,579,207 97,503, % ,394, ,876, % 3,009, ,885, % ,582, ,354, % 2,879, ,233, % ,246, ,905, % 2,311, ,217, % ,198, ,338, % 2,488, ,827, % ,846, ,900, % 2,757, ,658, % ,711, ,630, % 3,451, ,081, % ,504,346 In process In process In process In process In process Source: County Clerk A-9

29 Major Taxpayers The following table sets forth the ten largest taxpayers in the District for taxes levied in the most recent tax collection period: Taxpayer Assessed Valuation Taxes Paid 1. Wesley Medical Center LLC $32,852,959 $1,557, Southwestern Bell Telephone Co 32,072,019 1,498, Kansas Gas & Elec-A Western Resources Co 31,444,881 1,490, Simon Property Group LP 31,131,602 1,475, Cessna Aircraft Co 29,534,298 1,400, City of Wichita 26,156,583 1,185, Kansas Gas Service-Div of Oneok 16,810, , Hawker Beechcraft Corp 15,561, , Raytheon Aircraft Co 14,609, , Bradley Fair One LLC 10,514, , Source: County Clerk Risk Management The District has adopted self-insurance plans for workers compensation, disability, health and dental. The selffunded plans are internal service funds of the District. Each program is funded by a monthly contribution made by the District for each eligible employee. History of Employment The following table indicates the history of the Issuer's employment for the years indicated. Source: USD 259 Employee Type Instruction 5,124 5,354 5,544 5,619 5,652 Instructional Support Operations Capital Outlay Construction Leadership Total 6,255 6,501 6,701 6,784 6,794 Employee Relations Employee relations are characterized as good. Pension and Employee Retirement Plans The District participates in the Kansas Public Employees Retirement System (KPERS) established in 1962, as an instrumentality of the State, pursuant to K.S.A et seq., to provide retirement and related benefits to public employees in Kansas. KPERS is governed by a board of trustees consisting of nine members, including four members appointed by the Governor subject to confirmation by the State Senate, one appointed by the President of the Senate, one appointed by the Speaker of the House of Representatives, two elected by members and retirants of the retirement system, which must be members of such system, and the State Treasurer. Members of the board of trustees serve four-year terms and elect a chairperson annually. The board of trustees appoints an Executive Director to serve as the managing officer of KPERS and employs a staff of approximately 95 people. As of June 30, 2009, KPERS served nearly 270,000 members and more than 1,490 participating employers, including the State, school districts, counties, cities, public libraries, hospitals and other governmental units. KPERS administers the following three statewide, defined benefit retirement plans for public employees: (a) (b) (c) Kansas Public Employees Retirement System; Kansas Police and Firemen s Retirement System; and Kansas Retirement System for Judges. A-10

30 These three plans are separate and distinct with different membership groups, actuarial assumptions, experience, contribution rates and benefit options. The Kansas Public Employees Retirement System is the largest of the three plans, accounting for more than 95% of the members. The Kansas Public Employees Retirement System is further divided into two separate groups, as follows: (a) State/School Group - includes members employed by the State, school districts, community colleges, vocational-technical schools and educational cooperatives. The State of Kansas makes all employer contributions for this group, 85% of which comes from the State General Fund. State legislation enacted in 2003 made certain pre-1962 Board employees (which are part of a small group of pre-1962 Board and University of Kansas Hospital Authority employees known as the TIAA Group ), special members of the State/School Group. (b) Local Group - all participating cities, counties, library boards, water districts and political subdivisions are included in this group. Local employers contribute at a different rate than the State/School Group rate. State legislation enacted in 2003 made certain pre-1962 employees of the University of Kansas Hospital Authority (which are a part of a small group of pre-1962 Board and University of Kansas Hospital Authority employees known as the TIAA Group ), special members of the Local Group. KPERS is a qualified, governmental, 401(a) defined benefit pension plan, and has received IRS determination letters attesting to the plan s qualified status dated October 14, 1999 and March 5, KPERS is also a contributory defined benefit plan, meaning that employees make contributions to the plan. This contrasts it from noncontributory pension plans (more common in the private sector), which are funded solely by employer contributions. The District's employees annually contribute 4% of their gross salary to the plan. The State's contribution for school employees varies from year to year based upon the annual actuarial valuation and appraisal made by KPERS, subject to legislative caps on percentage increases. For the period beginning July 1, 2009, through June 30, 2010, the State's contribution is 8.57% of the employee s gross salary. Effective July 1, 2010, the rate increases to 9.17%. Debt Summary DEBT STRUCTURE The following table summarizes certain key statistics with respect to the Issuer's general obligation debt, including the Series 2010-A Bonds, Series 2010-B Bonds, and excluding the Refunded Bonds: Debt Summary (As of March 11, 2010) Estimated Actual Fair Market Value of Tangible Property 1... $16,857,044,691 Equalized Assessed Valuation of Tangible Valuation for Computation of Bonded Debt Limitations 2... $2,944,384,932 Legal limitation of Bonded Debt 3... $412,213,890 Outstanding General Obligation Debt... $499,725,000 Direct Debt Per Capita (Population = 361,420)... $1,383 Direct and Overlapping Debt... $883,437,719 Direct and Overlapping Debt Per Capita... $2,444 Direct Debt as a Percentage of Assessed Valuation % Direct and Overlapping Debt as a Percentage of Assessed Valuation % Direct Debt as a Percentage of Actual Fair Market Value % Direct and Overlapping Debt as a Percentage of Actual Fair Market Value % 1 See Property Valuations infra. 2 The 2009 assessed valuation of taxable tangible property within the District, including the 2009 taxable value of motor vehicles. See K.S.A and K.S.A K.S.A et seq. On September 9, 2008, the Kansas State Board of Education issued an order granting authority for the District to exceed the general obligation debt limitations for state school districts. A-11

31 Current Indebtedness of the Issuer The following table sets forth as of the date of issuance of the Bonds all of the outstanding obligations of the Issuer including the Series 2010-A Bonds and the Series 2010-B Bonds, and excluding the Refunded Bonds: GENERAL OBLIGATION BONDS Category of Indebtedness Date of Indebtedness Final Maturity Original Principal Amount Amount Outstanding GO Bonds Series /15/00 09/01/17 $ 94,833,000 $ 19,215,000 GO Bonds Series /15/01 09/01/19 94,835,000 25,805,000 GO Bonds Series /15/02 10/01/18 94,830,000 53,185,000 GO Refunding Bonds Series /01/04 09/01/15 31,990,000 31,990,000 GO Refunding Bonds Series /15/05 09/01/17 36,470,000 36,470,000 GO Refunding and School Building Bonds, 05/01/09 10/01/21 58,760,000 58,760,000 Series 2009-A Taxable GO School Building Bonds (BAB), 05/01/09 10/01/28 132,500, ,500,000 Series 2009-B GO School Building Bonds (QSCB), 12/15/09 09/15/24 32,000,000 32,000,000 Series 2009-C GO Refunding Bonds, Series 2009-D 12/15/09 10/01/11 3,350,000 3,350,000 GO Refunding Bonds, Series 2010-A 03/01/10 10/01/15 6,450,000 6,450,000 (THIS ISSUE) Taxable GO School Building Bonds (BAB), 03/01/10 10/01/25 100,000, ,000,000 Series 2010-B (THIS ISSUE) Total $499,725,000 1 These figures are net of $33,085,000 for Series 2000 and $37,790,000 for Series 2001 which represents the amount of securities held by the escrow trustee to retire these bonds in 2010 and 2011, respectively. 2 Amount outstanding excludes amount refunded from proceeds of the Series 2010-A Bonds. History of General Obligation Indebtedness The following table sets forth general obligation debt information pertaining to the Issuer as of the end of each of the fiscal years indicated: Source: USD 259 CAFR Year Net Bonded Debt Debt As Percentage of Assessed Value Debt Per Capita 2004/05 $213,651, % $ /06 205,776, % /07 194,506, % /08 180,695, % /09 351,176, % 985 The District has never in its history defaulted on the payment of any of its debt obligations. General Obligation Debt Service Requirements The following debt service schedule shows the yearly principal and interest requirements for all outstanding general obligation indebtedness of the Issuer, including the Bonds and excluding the Refunded Bonds: A-12

32 Debt Service Schedule Series 2010-A Bonds Series 2010-B Bonds Year Current Debt Service 1, 2 Principal Interest Principal Interest 1 Total $39,837,009 - $113,313 - $ 2,024,234 $41,974, ,815, ,250-3,452,410 37,462, ,494,570 $ 50, ,250-3,452,410 36,191, ,783, , ,250-3,452,410 36,529, ,134, , ,250-3,452,410 37,278, ,289,895 5,800, ,250-3,452,410 36,723, ,368, ,452,410 37,821, ,954, ,452,410 38,406, ,125, ,452,410 39,577, ,109, ,452,410 32,562, ,720, ,452,410 29,172, ,730, ,452,410 29,183, ,788, $ 10,000,000 3,452,410 21,241, ,788, ,000,000 3,120,910 44,909, ,788, ,000,000 1,938,560 45,727, ,138, ,000, ,700 46,839, ,679, ,679, ,398, ,398, ,825, ,825,847 Total $561,774,579 $6,450,000 $1,067,563 $100,000,000 $49,213,324 $718,505,466 1 Series 2009-B Bonds were issued, and Series 2010-B Bonds will be issued, as Build America Bonds. Net total of debt service on Series 2009-B Bonds and Series 2010-B Bonds included herein assumes receipt of Federal interest subsidy at 35% of stated interest. 2 Current Debt Service amount reflects mandatory debt service fund deposits related to the principal of the Series 2009-C Bonds (Qualified School Construction Bonds). 3 Net total to be reduced by State aid currently 25%. See FINANCIAL INFORMATION School District Funding Formula Capital Improvement Fund herein. Source: Clerk Lease Obligations In addition to the foregoing debt obligations, the District has entered into the following lease obligation. Lease obligations of the District constitute valid and binding obligations of the District in accordance with their terms subject to funds budgeted and appropriated for that purpose during the District's current budget year or funds made available from any lawfully operated revenue producing source as per K.S.A b. Source: Clerk Purpose of Dated Final Original Amount Indebtedness Date Payment Date Principal Amount Outstanding Copier Lease/Xerox 02/10/09 02/10/14 $550,522 $489,006 A-13

33 Overlapping Indebtedness The following table sets forth overlapping indebtedness as of the Issue Date of the Bonds, and the percent attributable (on the basis of assessed valuation) to the District: 2009 Assessed Valuation 2009 Assessed Valuation (District s Portion) Outstanding General Obligation Indebtedness Percent Applicable to Issuer Amount Applicable to Issuer Taxing Jurisdiction City of Wichita $3,160,050,252 $2,132,601,220 $413,669, % $279,170,022 Sedgwick County 4,251,315,758 2,630,399,118 83,035, % 51,373,755 City of Bel Aire 44,437,260 43,131,766 29,365, % 28,502,304 City of Kechi 15,383,477 11,258,061 6,290, % 4,603,199 City of Park City 55,742,740 40,611,860 27,510, % 20,043,786 City of Valley Center 42,474,575 63,527 13,140, % 19,653 Total $573,009,134 $383,712,719 Future Indebtedness The Issuer anticipates issuing the remaining authorized $50,000,000 principal amount of general obligation bonds authorized by the November 2008 election in one or more series during the next three years. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] A-14

34 APPENDIX B FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (FOR THE FISCAL YEAR ENDED 6/30/2009)

35 Comprehensive Annual Financial Report of the Wichita Public Schools Unified School District 259 Wichita, Sedgwick County, Kansas For the Year Ended June 30, 2009 Prepared by:. Financial Services Department

36 WICHITA PUBLIC SCHOOLS MISSION STATEMENT "The mission ofthe Wichita Public Schools Unified School District 259, where diversity is valued, is to ensure all students learn the skills and acquire the knowledge necessary for success at the continuing stages oftheir lives."

37 CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal 1 Strategic Plan 8 Government Finance Officers Association Certificate of Achievement.. 11 Association of School Business Official Certificate of Excellence 12 Organizational Chart 13 Board of Education 14 FINANCIAL SECTION Independent Auditors' Report 15 Management's Discussion and Analysis 17 Basic Financial Statements District-wide Financial Statements: Statement of Net Assets 27 Statement of Activities 28 Fund Financial Statements: Balance Sheet - Governmental Funds 29 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 30 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 31 Reconciliation of the Statement of Revenues, Expenditures, and Changes In Fund Balances of Governmental Funds to the Statement of Activities 32 Statement of Net Assets - Proprietary Funds 33 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 34 Statement of Cash Flows - Proprietary Funds 35 Statement of Assets and Liabilities - Fiduciary Funds 36 Notes to the Financial Statements 37 Required Supplementary Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 59 Fund Balances - Budget and Actual - Supplemental General Fund 60 Fund Balances - Budget and Actual- Special Education Fund 61 Fund Balances - Budget and Actual- State Intervention Fund (K-12) 62 Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds 63 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - All Nonmajor Governmental Funds 66 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: Adult Education - Regular Fund 69 Four Year Old State Intervention Fund 70 Bilingual Education Fund 71 Wichita Public Schools

38 CONTENTS eschool Virtual Education Fund 72 Driver Education Fund 73 Nontraditional School Program Fund 74 Nutrition Services Fund 75 Professional Development Fund, 76 Parents As Teachers Fund 77 Summer School Fund 78 Vocational Education Fund 79 Special Liability Expense Fund 80 Special Assessment Fund 81 KPERS Retirement Contributions Fund 82 Bond and Interest Fund 83 Capital Outlay Fund 84 Combining Statement of Net Assets - Internal Service Funds 85 Combining Statement of Revenues and Expenses and Changes in Fund Net Assets - Internal Service Funds 86 Combining Statement of Cash Flows - Internal Service Funds 87 Combining Statement of Assets and Liabilities - Fiduciary Funds 88 Combining Statement of Changes in Assets and Liabilities - Fiduciary Funds 89 STATISTICAL SECTION Financial Trends Changes in Fund Balances, Governmental Funds - Last Ten Fiscal years 92 Fund Balances, Governmental Funds - Last Ten Fiscal years 94 Schedule of Changes in Net Assets - Last Eight Fiscal years 95 Net Assets By Component - Last Eight Fiscal Years 96 State Revenue by Source, Governmental Funds - Last Ten Fiscal years 97 Revenue Capacity Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal years 98 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 99 Principal Property Tax Payers - Current Year and Eight Years Ago 100 Property Tax Levies and Collections - Last Ten Fiscal years 101 Debt Capacity Computation of Direct and Overlapping Debt - For the Year Ended June 30, Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita - Last Ten Fiscal years 103 Legal Debt Margin Information - Last Ten Fiscal years 104 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total Current Governmental Expenditures - Last Ten Fiscal Years 105 Demographic and Economic Information Demographic Statistics - Last Ten Fiscal years 106 Principal Employers 107 Miscellaneous Statistics - Last Ten Fiscal years 108 Operating Information Operating Statistics - Last Ten Fiscal years 109 Teacher Salary Schedule - Current year 110 Supplemental Salary Schedule - Current year 111 District School Feeder System - Current year 112 District School Building Square Footage and Acreage - Current Year. 113 Wichita Public Schools

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40 :JUA"':JUUA ----,..-- WICHITA PUBLIC SCHOOLS John Allison Superintendent November 16, 2009 To the Board of Education and the Citizens of Unified School District No. 259 The Comprehensive Annual Financial Report (CAFR) for the Wichita Public Schools, Unified School District No. 259 (District) for the fiscal year ended June 30, 2009, is submitted herewith. Generally accepted accounting principles require that these financial statements present the District (the primary government) and its component units, if any. A component unit is a separate entity for which the District is financially accountable or the nature and significance of the relationship between the District and entity are such that exclusion would cause the District's financial statements to be misleading or incomplete. The District has determined that it does not have any component units. The District's financial services department prepared this report. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the District's administrative team and, ultimately, with the Board of Education (Board). We believe the data presented in this report is accurate in all material aspects, presents fairly the financial position and results of operations as measured by the financial activity of the various funds, and includes all footnotes and disclosures necessary to gain an understanding of the District's financial activity. This report conforms to the Governmental Accounting Standards Board financial reporting principles. All disclosures necessary to enable the reader to gain maximum understanding of the District's financial activity have been included. The notes to the financial statements are considered to be an integral part of the financial statements and contain certain information not shown on the face of the financial statements that is required to be disclosed under generally accepted accounting principles. Readers of the financial statements are encouraged to thoroughly review the information contained in the notes in connection with their overall review of the financial statements. The District is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act Amendments of 1996 and the U.S. Office of Management and BUdget's Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations." Information related to this single audit is included in a separately issued single audit report. This report consists of three major sections: 1. Introductory Section - which contains a Table of Contents, Letter of Transmittal, List of the Board of Education members, the Strategic Plan, the Governmental Finance Officers Association (GFOA) Certificate of Achievement, the Association of School Business Officials (ASBO) Certificate of Excellence, and the District's organizational chart. Wichita Public Schools Page 1

41 Introductory Section 2. Financial Section - which begins with the Independent Auditors' Report and includes Management's Discussion and Analysis, the Basic Financial Statements and Notes that provide an overview of the District's financial position and operating results, the combining statements for nonmajor funds, and other schedules that provide detailed information relative to the Basic Financial Statements. 3. Statistical Section - presents social and economic data, financial trends, and demographic data about the district for the last ten years. School District General Description The District is in Sedgwick County located in south central Kansas. The major city within the District is Wichita with a population of more than 350,00, where approximately 97% of the students reside. The District covers more than 152 square miles and serves more than 48,000 students. The District consists of more than 100 schools and other centers. The District is the largest school district in the State of Kansas (State). The District provides a full range of school programs and services authorized by state statutes. For the 2009 fiscal year, these services include educational programs for grades K-12, Special Education, Title One, Even Start, pre-kindergarten, vocational education and other educational programs, transportation, nutrition services, health services, support services, and professional development activities for educators. Also, under supervision of the District, individuals and groups may utilize district facilities for community functions. The District was established on July 1, A seven-member elected Board of Education (Board) governs the District. The District receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the District is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board. The Board of Education members are elected by the public and have policy setting authority, the ability to significantly influence operations, and primary responsibility for fiscal matters. Reporting Entity The District is organized under the laws of the State and as mentioned before, is governed by an elected seven-member board. Accounting principles generally accepted in the United States of America (GAAP) require these financial statements present the District (the primary government) and its component units. There are no component units for which the District is considered to be financially accountable. Economic Outlook and Conditions At the 2009 Wichita Economic Outlook Conference, Jeremy Hill, Director for Economic Development and Business Research at Wichita State University shared that for 2008, Wichita's employment grew 1.9 percent while the nation declined 0.4 percent. The employment rate through 2009 is estimated to decline by 1.7 percent. The aircraft industry has seen a decline in backlog orders which forced the need to layoff a significant number of workers. The labor market continues to falter, but at a slower rate than the nation. Director Hill stated that Wichita's housing market has fared better than the nation as a whole. It has been slow but steady. In 2010 Wichita employment is projected to decrease 1.2 percent, losing nearly 3,550 jobs. The production sectors will drive Wichita's decline with a decrease of Wichita Public Schools Page 2

42 Introductoty Section 5.3 percent for a loss of 4,125 jobs, followed by the trade sectors which are expected to decrease 0.9 percent for a net loss of 450 jobs. Major Initiatives Important educational initiatives continued or implemented were: In 2004 the Wichita Public Schools developed a Suitable Education Plan. The 2004 Suitable Education Plan identified $137 million of additional resources needed to provide a suitable education to all district students. Since that time, the legislature has provided over $100 million in additional funding to the District. Some of the items included in the 2004 plan which have now been funded are lower class sizes, more competitive salaries, increased technology, all-day kindergarten, pre-school programs, teacher training, and a longer school year. With the increased funds, the District continued to support instruction by adding 61 new positions including the following: 38 new K-8 school staff 2 elementary assistant principals 4 high school counselors 4 elementary instructional staff 7 middle school instructional staff 4 high school instructional staff 2 equity and accountability staff Implement and maintain a scheduled plan to upgrade district technology. Upgrade and maintain facilities to support and enhance student achievement. Design and implement a plan that reduces the burden of desegregation from anyone segment of the community. Community engagement and development of a facility master plan which culminated in the passage of a $370 million bond issue on November 4, 2008, which will: add 6 new schools to meet current and projected student population growth add 275 new classrooms to reduce class sizes and support the end of busing for desegregation build 60 storm shelter safe rooms upgrade technical education renovate or rebuild physical education, athletic and fine art facilities Financial Information, Management, and Control The accounts of the District are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. Fund descriptions have been provided where applicable. Wichita Public Schools Page 3

43 Introductory Section Management Responsibilitv This report consists of management's representations concerning the finances of the District. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. The management of the District is also responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that the assets of the government are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that federal and state financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Legislation Below is a brief description of the most significant school finance legislation: 1. The spending level of the general fund is set by the State. The formula used by the State to determine individual school district's general fund budgets used $4,433 per full-time equivalent student plus additional weighting factors. However a state revenue shortfall resulted in an ultimate funding level of $4,400 per student. Additional weighting was allowed for the following: vocational students--50%, bilingual students--39.5%, students transported over 2% miles--11%, and low income students--55.6%. An additional 3.5% weighting was allowed for school districts with enrollments more than 1, Since 1992, school districts have not had control over the level of ad valorem taxes levied for their general fund. The State sets the general fund tax levy for all school districts. That levy has varied peaking at 37 mills in 1995, and is currently set at 20 mills. However, the first $20,000 of a personal residence is exempt from the general fund tax levy. 3. School districts are authorized to create a supplemental general fund (a special revenue fund) which enables school districts to spend above the level dictated by the State for the general fund. The school finance statute limited the supplemental general fund to 31 percent of the general fund. The District's supplemental general fund budget was 30 percent of the general fund. 4. The major revenue source for the supplemental general fund is local ad valorem property taxes. However, districts with assessed valuations per pupil below the 81.2 percentile of the State's median qualify for state funding as well. For the supplemental general fund budget for the District was funded 60 percent by ad valorem taxes and 40 percent by state aid. 5. Because a year-end unencumbered cash balance in the general fund becomes a deduction from the following year's state aid, the State authorized the establishment of a contingency reserve fund. As of June 30, 2009 the fund balance of the contingency reserve fund was 4.3% of the general fund budget. Budgetary Control In developing and evaluating the District's accounting control system, consideration is given to the adequacy of internal accounting controls. Accounting control comprises the plan of organization and the procedures and records that are concerned with the safeguarding of assets and the reliability of financial records. Wichita Public Schools Page 4

44 Introductory Section State statutes require that budgets be legally adopted for all funds, unless exempted by a specific statute. All legal operating budgets are prepared using the modified accrual basis of accounting, modified further by the encumbrance method of accounting. Revenues are recognized when cash is received. Expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year-end. Encumbered appropriations are not reappropriated in the ensuing year's budget but are carried forward until liquidated or canceled. Accordingly, the data presented in the budgetary comparison statements differ from the data presented in the financial statements prepared in accordance with GAAP. The budget is prepared by location and function. Once the Board adopts the budget, budgetary control is maintained through an online accounting system that includes encumbering estimated expenditures prior to the release of purchase orders to vendors. Purchase orders that exceed available budgeted funds are not released until additional appropriations are made. Monthly budget reports showing orders outstanding and funds available are provided to each manager of a specific location, function, or program. Financial Condition In accordance with Governmental Accounting Standards Board (GASB) Statement 34, management is responsible for preparing a Management Discussion and Analysis of the District. This discussion follows the Independent Auditors' Report, providing an assessment of District finances for Cash Management State statues permit investments of idle cash only in certain specified securities, including time deposits, repurchase agreements, the state investment pool, and United States Government obligations. The District attempts to maximize investment earnings on cash temporarily not required for operations. Idle cash from all funds is pooled and invested. Risk Management The District has adopted self-insurance plans for workers' compensation, disability, and health and dental. The self-funded plans are internal service funds of the District. Each program is funded by a monthly contribution made by the District for each eligible employee. The District has also adopted a self-insurance program to provide legal defense and pay claims against the Board when an incident occurs during the course of employment. There is a $500,000 limitation based on government immunity law. The financial policies listed below outline a general framework of budgetary goals and objectives regarding the operating budget, debt service, capital expenditures, and financial reporting. These policies include: Operating Budget Policy Current revenues will be sufficient to support current operating expenditures. Financial systems will be maintained to monitor expenditures, revenues, and program performance on an ongoing basis. Wichita Public Schools PageS

45 Introductory Section o The financial services department will estimate annual revenues by an objective, analytical process. The District will not include revenue in the budget that cannot be verified with documentation of its source and amount. o The District where approved by law, sets fees and user charges at a level that fully supports the total direct and indirect costs of the activity. o The District will seek to obtain and maintain the Distinguished Budget Presentation Award from the Governmental Financial Officers Association. Debt Policv o The District will confine long-term borrowing as required by law. o The District will not use long-term debt for current operations. o The District will meet all debt service obligations when due. o The District will maintain communication with bond rating agencies about its financial condition. o The District will follow a policy of full disclosure in every financial report and official statement. Capital Improvement Budget Policv o The District will develop and administer a multi-year plan for capital improvements and update it annually. o The District will budget for major capital projects in accordance with the priorities of the Board. o The District will coordinate development of the capital improvement budget with development of the operating budget. Future operating costs associated with new capital improvement will be projected and included in operating budgets. o The District will restrict any new or replacement construction to be consistent with state guidelines for school building utilization. o The District will determine the least costly financing method for all new projects. Accounting. Auditing. and Financial Reporting Policies o The accounting system will report financial information, on a basis consistent for state reporting and with GMP, as established by the GASB. o Regular monthly and annual financial reports will present a summary of financial activity by fund. o An independent public accounting firm will be selected by the Board and will perform an annual audit, and will publicly issue their opinion on the District's financial statement. o The District will seek to obtain and maintain a Certificate of Achievement for Excellence in Financial Reporting from ASBO and GFOA. Independent Audit The District is required under state law to have an annual audit of the books of accounts, financial records, and transactions by an independent certified public accounting firm. This requirement has been complied with, and the auditors' report is presented in the financial section of this report. The auditors' report related specifically to the single audit of federal financial assistance programs is available by separate cover. Wichita Public Schools Page 6

46 Introductory Section Awards The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the District for its' Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June This certificate of achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. The same CAFR also earned the ASBO Certificate of Excellence Award. Both certificates are awarded only to governmental units, which publish an easily readable and efficiently organized CAFR. Such a CAFR must comply with both generally accepted accounting principles and applicable legal requirements. Both a Certificate of Achievement and a Certificate of Excellence are valid for a period of one year only. We believe our current report continues to conform to the requirements of both certificate programs, and we will again submit it for recognition. Acknowledgments The timely preparation of this CAFR could not have been completed without the dedicated efforts of the financial services department. We would like to express our gratitude to everyone who assisted in its preparation. We also extend our appreciation to our independent auditors, Allen, Gibbs & Houlik, L.C., for their assistance and the professional manner in which the audit was accomplished. We also commend the Board for their interest and support in planning and conducting the financial operations of the District in a responsible and progressive manner. Respectfully submitted, John Allison Superintendent of Schools r Linda Jones Chief Financial Officer Wichita Public Schools Page 7

47 IntroductorySection Wichita Public Schools PageS

48 IntroductorySection Wichita Public Schools Unified School District 259 Board of Education Strategic Goal Targets Based on State AYP Targets School Years through The VIIIchitaPubllc5chools Board ofeducalfon Identlflesthe following areas and targets forcurrent Bq)hasls: 1. Increase Student Achievolllant: READING AVPGoaI fol Mel Goal AVPgoal br Mel Goal M!tGoaI AVPGoaI fol Grade Oijedlve Measure 2006<]6 2006<] oB w'rec:lass w'o reclass'" 3' 63.4% Yes (65.7'lAi 69.5% No 67.6% No (68.7%l 75.6% 4" 63.4% YesnLSOAl 69.5% Yes (70.7'l1a) Yes (71.6% 75.6% StOOenl.s Y.41 be poficient.. Percent d stu::lents that 5" 63.4% Yesf70.0%' 69.5% Yes (71.0%\ Yes (721%\ 75.6% al the Ka1sas Slate met a e:ceeded the g:jai % Yesl67.1% 69.5% No 63.4%) No (65.O%l 75.6% ReairgAssessmenr: in reacirg 7" 63.4% Yes (69.5"/0 69.5% Yes ao.s%) Yes 1724% 75.6% 6" 63.4% Yes ' % Nof63.8"k\ No 165.8%\ 75.6% H.SOTL 5&0% Yes 1.2% 65.0% No 63.4% Yes 5.0% 72.0% Perc:ertages <ixne aretre C{J1JeQat3 ofad stu:i'entsv.tio met thestarni:fd a atme.. MA.11iEMAllCS AVPGoaI fol Mel Goal AYPgoal br MelGoaI...1Goal AVPGoaI for Grade Oijedlve Measwe 2006<]6 2006<] oa w'rec:iass " wo reclass'" 3' 60.1% Yes (68.0% 66.8% Yes f74.soia\ Yes (74.3% 73.4% % Yes 68.8"/0\ 66.8% Yes (13.8% Yes 3.8% 73.4% Students Vtil be (:rolx:ienl.. Percenl ci si1j:lerts that 5" 60.1% Yes 67.4%) 66.6% Yes (75.9% Yes (76.0% 73.4% 00 theka1sas StateMath met a e:or:ee:le:l the gjai % Yes (60.2%) 68.8% No 59.7%) No (60.4%) 73.4% AsseS911ent in math 7" 60.1% Yes (61.70/0) 66.8% No (62.0'%) No (62.70/0) 73.4% 60.1% No 57.6%) 66.8% No tss.90/o\ No '56.70/0' 73.4% H.SOlL." 46.8% Yes 48,7" % Yes &9% Yes ao% 64.6%. Percenages <:bow are the lj"el9cte ofad stu::lentsy.tiomet thestarxiatl a al:oje. Grade WRITING StateGoai Mel Goal SlateGoai Mel Goal SlateGoaI Mel Goal ObIedlve Me",we for2dl&07 200= for B.()Q for Stu::lerns wll be J)'Cficient Pm::ent sbjdenls that 5" ry 66.2% 67.0% CIl the Ka1sas Stale met a e:or:ee:le:l the goal." ry' 63.1% 67.0% Witirg Assessmenl in'miting H.S. ry. 84.0% 76.0% ATTENDANCE AYPGoaI for Grade OhIedlve Measure,m""" Mel Goal,m""" AVPgoal tor,m..m Attendan:::e..wl inaease Averfq3 Daijy AttenlD100 Ban. 90.0% Yes 95.2%' 90.0% Yes tq4.6% 00.0% M<tle 90.0% Yes 94.5%) 90.0% Yes c1l4.0% 00.0% a'lrljally (!'DA) H.S. 90.0% Yes 92.5%) 00.0% ni. oo.co/o r:...' A":,.:.fol r:,;.: GRADUATION AYPGoaI for Mel Goal AVPgoallOr Mel Goal AVPGoaifor Mel Goal OhIedlve Grade Measure 2006<]6 2006<] Gra:fuaoon rate fa Thegra:ilation rate...n CCI'I'Ip"ehensive I'i!tl H.S. 75.0% Yes [17.7"/0) 75.0% Yes (76. 9"1c) 75.CO/o increase a1rually..... ColunTIS offojres Iabele:l wth reclassificatioo aciuda sane stu::lent.s v.to sccred prdic:ienl a better 01 the Kalsas Assessment ci MLJtiple Measures (KPIv'lM) assessments btl: roljd net be cantedtoyad thedisbidgjais. UrderNCLB a listrd C3'l lxlllltupto 2%c:lsbJdents Y.tIoscored (l"cl1dert 01 thakamji assessments tov,ard rneetirg their AYP g::als. My re!il'leirirg I70ficient K.AIvl.M lest takers al:>cwe ttis reclassifjcal.ion limit c:a1oot be counle:l al:i are effectively "reclassified" as oot cienl ard exch.rl9d fa the JXlrposecl AYP c:nd NCLB ao::a.jrml::ilily. In the cdtrnns ci fig..res IMlhout reclassificatioo all &u:i9nls WlJ sccred p-oficientor belter, indulirg all prdic:ienl a better, irduirg all p"dk:ient KMIIM lest U*ers, Ere irdudedin the fig.res Wichita Public Schools Page 9

49 Introductory Section Wichita Public Schools Unified School District 259 Board of Education Strategic Goal Targets Based on State AYP Targets School Years through Aa-IlEVEMenGAP.Achleve- D1strtct Goal Met Goal Met Goal DIsb1ct Goal District Goal Grade "..",Gap 200& < < < OIlje<tlve Measure 2OOS-W Yiredass- WO recla<>s" 'jg Reacina 24.1% 21% fob /21.3% No 122.0%' 18% 15% The Aca::lemic The difjererce il the Malh 24.0% 21% Yes (16.9% Yes f17.o'% 18% 15% Adliewment Gap between percentage (/ African 4 Readina 25.6% Zl% Yesf20.3%\ Yes l'20.3% 20% 17% Mrority ard Ncrl-Mnarity Arreri::anard Cau::asim 4 V1 Malh 27.2% 24% Ves f 1&3%' Yes f1&3%\ 21% 18% shj:fents wi be efirrinated. stljjents scaiiii as proli::lent on the Kansas ff' Rea:lino 25.7% 23% Yesl21.2'1o Yes 120.4% 20% 17%!f'MaIh Stale As93ssmErts Vvl % Zl% Yes '20.JO\ Yesr.W.6% 20% 17'% COltinll3 to deaease Ulti it ff'rea::::liln 24.0% 21% 1\10/22.6% No 22.9%\ 18% 15"10 is eijrrincted. fl"maih 30.4% 27% t>bl27.9%\ No 127.8%\ 24% 21%. FgLl'E!S are the dfference In the pa-cent ofstuderts sconng proficlelrt or better bemeeri the Mo golps. Smlara::Iievenent gapdecrea.ses a-e expected fa ad slai:eidenlified SlJ:gl'OJps. 1"_,," 25.1% 22% Yes (22.0'%\ Yes /'21.1% 19% 16% 1"MaIh 29.8% 27% f'b 29.0%\ No 29.0% 24% 21% ff' Rea:tino 226% 20% No 25.0% No 24.1% 17% 14% ff'maih 26.6% 24% No 24.7% No % 18% HS. Read 220% 19% No 34.8% No 32.3% 16% 13% H.S. Wslh 26.7% 24% No 27.5% No 27.2% 21% 18% PERCENT OF SnDENTS TAKIOO TlE KANSAS STATE ASSESSMENTS AVPGoaI for Met Goal AYPgoal br MElGoaI AVPGoaifor Met Goal Grade ObIe<t1ve Measure 200S<l6 200S<l < < tl8 2OO7-oS R«ld", 95% Yes 99.1%) 95% Yes (98.4%) 95% AD stu::lenls., Gra:fes 3 Pen::ent:ge ofstudertsin 'jdmalh 95% Yes 99.8%\ 95% Yes 198.4% 95% trough 8 ald High SctOO tested (Jades completirg 4 f11 Rea:li'la 95% Yes 99.00/0) 95% Ves 8.8"10 95%...1lake thekamas State the Kalsas State 4 MaIh 95% Yes 99.6%\ 95% Yes (98.0% 95% Asse..,...11s Assessrnerts'Mlh a \laid Readina 95% Yes 99.3%\ 95% Yes 19S.f"l1o score. 95% Impacted b{ the avactillyci facility Y.eJghtirg furds from the stte. MaIh 95% Yes 99.9"10) 95% Yes (98.8% 95% Rea:lina 95% Yes 99.0%\ 95% Yes 198.4% 95% 6 MaIh 95% Yes 199.0"10\ 95% Yes 1Q8.2%\ 95% Rea:lina 95% Yes 99.1%1 95% Yes (98.6%1 95% Mah 95% Yes 99.2%\ 95% Yes re8.sojo 95% fi"_"n 95% Yes f9b. f"l/o\ 95% Yes 1Q7.7% 95% fl"maih 95% Yes 99.1%\ 95% Yes 197.5% 95% H.S. Reaci 95% Yes 95.f"l1o 95% Ves 9.3% 95% H.S. Yath 95% Yes 95.5% 95% Ves 9.3% 95% 2. TechnoloavlnD'errentaUon Taraet: Ac1lJ.. Actual Goal Goal Goal Goal ObIe<t1ve Measure 200S<l6 200& Q8 20m Achiew at least a 2:1 IStiO Ratio ci sbjdenls to d stu:lents 'hith ax:ess to o::mjx.lters less than :1 2.68:1 2.75:1 2.5:1 2.25'.1 2:1 miti-meciacorrputers Ie than 5yea-sold. a crsold.. 3. Sound financial SteWiYdshl Ta et: e<tive Instlllctional sites will be Mystaffed at Ha begrtirg cllheyear...th ti a1ified teailers Instlllctional sites Wli mail1ain appl)!xiate class sizes Measure Number ci c:ensed Va:a'lQes CJ1 September 201h Oass si2b: raio ci c1assoan tea:hers to stu:lents Actual 2006 Adual FTE FTE 20FTE 10FTE OFTE Wichita Public Schools Page 10

50 Introductory Section Certificate of Achievement for Excellence in Financial Reporting Presented to Unified School District No. 259, Kansas For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 A Certificate ofachievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association ofthe United States and Canada to government units and public employee retirement systems whose comprehensive annual flllllilcial reports (CAFRs) achieve the highest standards in govenunent accounting and financial reporting. President Executive Director The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Wichita Public Schools for the Comprehensive Annual Financial Report for the fiscal year ended June 30, This was the fifteenth consecutive year that the District has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must comply with both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting to the GFOA to determine its eligibility for another certificate. Wichita Public Schools Page 11

51 Introductory Section This Certificateof Excellence in Financial Reporting is presented to USD NO. 259 WICHITA PUBLIC SCHOOLS, WICHITA, KS For its Comprehensive Annual Financial Report (CAFR) For the Fiscal Year Ended June 30,2008 Upon recommendation ofthe Association's Panel of Review which has judged that the Report substantially conforms to principles and standards of ASBO's certificate ofexcetlence Program President Executive Director The Association of School Business Officials (ASBO) awarded a Certificate of Excellence in Financial Reporting to the Wichita Public Schools for the Comprehensive Annual Financial Report for the fiscal year ended June 30, The Certificate of Excellence is an award of recognition granted by the Association of School Business Officials of the United States and Canada. The award certifies that the recipient school system has presented its comprehensive annual financial report to the ASBO Panel of Review for critical review and evaluation and that the report was judged to have complied with the principles and practices of financial reporting recognized by ASBO. The Certificate of Excellence is issued for a period of one year. ReceiVing the award is recognition that a school system has met the highest standards of excellence in school financial reporting. We believe the current report continues to conform to Certificate of Excellence program requirements, and we are submitting it to the ASBO to determine its eligibility for another certificate. Wichita Public Schools Page 12

52 Introductory Section WICHITA PUBLIC SCHOOLS DISTRICT ADMINISTRATION ORGANIZATIONAL CHART Board of Education Superintendent Chief Operations Officer Chief Academic Officer Division Director of Facilities Division Director of Operations Chief Financial Officer Ass!. Superintendent of Elementary Schools ('2 posnions.) Ass!. Superintendent of Middle Schools Ass!. Superintendent of High Schools I"I District Offices Chief Infonmation Officer Division Director of Special Education Division Director of Marketing and Communications Director of Governmental Relations Ass!. Superintendent of Human Resources Board Council Wichita Public Schools Page 13

53 Introductory Section WICHITA PUBLIC SCHOOLS District Administration Organizational Chart WICHITA BOARD OF EDUCATION To contact Board of Education members, feel free to call the Clerk of the Board's office at District 1 Betty Arnold 5311 Pembrook Wichita, KS District 2 Connie Dietz 8310 Greenbriar Lane Wichita, KS District 3 Barbara Fuller 6900 E. Zimmerly Wichita, KS District 4 Jeff Davis P.O. Box Wichita, KS District 5 Lanora Nolan 1664 Melrose Lane Wichita, KS District 6 Lynn W. Rogers 912 Spauiding Wichita, KS At-Large Kevass Harding 5816 E. 48 Circle N. Wichita, Kansas OFFICERS OF THE BOARD President.. Lynn Rogers Vice Presiden!.. Barbara Fuller Treasurer Linda Jones Clerk of the Board Michael Willome SUPERINTENDENT OF SCHOOLS John Allison Wichita Public Schools Page 14

54 - tj) CD o_. r+ o

55 AGI-I Allen. Gibbs & Houlik. L.C. CPA' & Advisors The Board of Education Wichita Public Schools Unified School District No. 259 INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Wichita Public Schools Unified School District No. 259 (District) as of and for the year ended June 30, 2009, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofamerica, the Kansas Municipal Audit Guide, and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the District as of June 30, 2009, 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. In accordance with Government Auditing Standards, we have also issued our report dated November 16, 2009 on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit N. Main, Suite 1700 Wichita, Kansas (316) (316) fax.

56 The management's discussion and analysis and required supplementary information listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The information in the introductory and statistical sections has not been subjected to the procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on them. November 16, 2009 Wichita, Kansas 4ae.n, (Jibbs & J/ou.l.ilc., L.c!... CERTIFIED PUBLIC ACCOUNTANTS 16

57 Financial Section Management's Discussion and Analysis It is a privilege to present to you the financial picture of the Wichita Public Schools Unified District 259 (District). This discussion and analysis of the District's financial performance provides an overall review of the District's financial activities for the fiscal year ended June 30, The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the transmittal letter, notes to the basic financial statements and financial statements to enhance their understanding of the District's financial performance. The Management Discussion and Analysis (MD&A) is an element of the reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. Certain comparative information between the current year and the prior year is required to be presented in the MD&A. Financial Highlights During the fiscal year , the District experienced another year of significant increases in the costs for special education instruction--6%, self-insured health premiums for employees- 7%, staffing--2%, and salary increases--2. 9%. The board of education was able to balance the budget with 5% increased state aid, and 4% growth in assessed valuation. Overview of the Financial Statements This annual report consists of the three parts: management's discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District:./ The first two statements are district-wide financial statements that provide both shortterm and long-term information about the District's overall financial status../ The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District's operations in more detail than the district-wide statements../ The governmental funds statements tell how basic services such as regular and special education were financed in the short term as well as what remains for the future spending../ The proprietary funds statements provide information on internal service activities which management multiple types of risk for the District../ Fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. District-Wide Statements The district-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets Wichita Public Schools Page 17

58 Financial Section includes all of the District's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two district-wide statements report the District's net assets and how they have changed. Net assets - the difference between the District's assets and liabilities - are one way to measure the District's financial health or position../ Over time, increases or decreases in the District's net assets are an indicator of whether its financial position is improving or deteriorating, respectively../ To assess the District's overall health, you need to consider additional non-financial factors such as changes in the District's property tax base and the condition of school buildings and other facilities. In the district-wide financial statements, the District's activities are divided into two categories:./ Governmental activities: All of the District's basic services are included here, such as regular and special education, transportation, and administration. Property taxes and state aid finance most of these activities../ Business-type activities: The District does not have any business-type activities. Fund Financial Statements The fund financial statements provide more detailed information about the District's funds, focusing on its most significant or "major" funds - not the District as a whole. 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 state law and by bond covenants../ The District establishes other funds to control and manage money for particular purposes (such as repaying long-term debts) or to show proper use of restricted revenues (such as federal grants). The District has three kinds of funds:./ 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, that can readily be converted to cash, flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's programs. Because this information does not encompass the additional long-term focus of the district-wide statements, reconciliations have been provided with the governmental funds statements to explain the relationship (or differences) between them../ Proprietary funds: Services for which the District charges a fee are generally reported in proprietary funds. Proprietary funds are reported in the same way as the district-wide statements. The District internal service funds report activities that provide supplies and services for its other programs and activities. The District currently has four internal service funds, the workers' compensation fund, the disability fund, the health fund, and the risk management fund../ Fiduciary funds: The District is the trustee, or fiduciary, for assets that belong to others, such as the student activities funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to Wichita Public Schools Page 18

59 Financial Section whom the assets belong. The District excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations. The District as a Whole The District's total net assets at June 30, 2008 and 2009, respectively, were $284,964,674 and $302,393,217. Table 1 As of June 30 Governmental Activities Net Assets Assets Current and Other Assets Capital Assets Total Assets Liabilities Current and Other Liabilities Long-Term Liabilities: Due Within One Year Due in More than One Year Total Liabilities Net Assets Invested in Capital Assets Net of Related Debt Restricted: Capital Projects Debt Service Self-insurance claims Special Education Food Service Federal and State Grant Programs Other programs Unrestricted Total Net Assets Change increase(decrease) $278,064,839 $484,320,664 $206,255, ,063, ,603, ,703 $673,128,752 $879,924,280 $206,795,528 $30,878,091 $32,739,926 $1,861,835 46,632,279 48,304,575 1,672, ,653, ,486, ,832,854 $388,164,078 $577,531,063 $189,366,985 $187,115,043 $196,865,922 $9,750,879 45,950,586 45,465,264 (485,322) 17,740,086 22,024,806 4,284,720 21,335,065 35,507,219 14,172,154 6,133,161 4,760,509 (1,372,652) 7,752,836 7,991, ,601 4,169,193 3,708,684 (460,509) 3,830,003 4,053, ,908 (9,061,299) (17,984,535) (8,923,236) $284,964,674 $302,393,217 $17,428,543 The district's current and other assets increased primarily due to the sale of bonds in the amount of $188,174,270 and accumulated cash reserves in the internal service fundsthe self insurance reserve funds. Capital assets increased due to the completion of the construction of two elementary schools. The district's increase in long-term liabilities due within one year is due to increased costs of the early retirement plan. The district's long-term liabilities due in more than one year increased due to the May 2009 $188 million bond sale. Wichita Public Schools Page 19

60 Financial Section The increase to net assets invested in capital assets net of related debt is due to capital outlay construction on two elementary schools and debt service payments made in 2009 on outstanding bonds. The increase in net assets restricted for self-insurance claims is due to increased health premiums combined with reduced benefits. The results of this year's operations as a whole are reported in the Statement of Activities on page 28. All expenses are reported first. Specific charges, grants, revenues and subsidies that directly relate to specific expense categories are represented to determine the final amount of the District's activities that are supported by other general revenues. The two largest general revenues are the state aid provided by the State, and the local taxes assessed to community taxpayers. Table 2 takes the information from the Statement of Activities and rearranges it slightly, so you can see total revenues for the year. Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenue: Property Taxes State and federal aid not restricted to specific purpose Other Total Revenues Program Expenses Instruction Student and instructional support Administration Operations and maintenance Student transportation service Nutrition selvices Interest on long-tenn debt Table 2 Fiscal Years ended June 30 Changes in Net Assets Governmental Activities $5,561, ,716, ,635, ,060,471 14,872,579 $561,846,545 $302,662,754 74,397,253 37,438,148 66,225,149 20,280,150 17,608,651 12,305,156 Change increase(decrease) $6,492, , ,872,905 1,156, , , ,769,888 4,134, ,520,092 17,459,621 8,714,168 (6,158,411) $579,588,206 $17,741,661 $311,741,071 $9,078,317 80,905,216 6,510,963 43,170,671 5,732,523 72,110,571 5,885,422 22,040,131 1,759,981 19,661,902 2,053,251 12,530, ,945 Total Expenses Increase in Net Assets $530,917,261 $30,929,284 $562,159,663 $31,245,402 $17,428,543 ($13,503,741) Net assets-beginning $254,035,390 $284,964,674 $30,929,284 Net assets-ending $284,964,674 $302,393,217 $17,428,543 Wichita Public Schools Page 20

61 Financial Section Property tax revenues increased due to four percent growth in assessed valuations related to new construction and property reappraisals. State and federal aid increased primarily due to funding for larger numbers of lowincome students. Other revenues primarily decreased due to a decreased in earnings on investments. Governmental Activities Functional Expenses for Fiscal Years 2008 and 2009 Instruction Studentand inslructionalsupport Administration Operations and maintenance Sludenllransportalion serviae Food service Intereston long-term debt o in millionsofdollars Increases in program expenses are primarily driven by 3% increases in employee salaries and 2% increased employment. Increases in the instructional area were also due to adding instructional staff including 42 elementary teachers, 4 high school teachers, 7 middle school teachers, 4 high school counselors, and 35 special education staff. The School District's Funds At June 30, 2009, the District governmental funds reported a combined fund balance of $409,711,044, which is an increase of $188 million from This increase is primarily due to the sale of bonds. General Fund Budgeting Highlights The District's budget is prepared according to State statutes and used the statutory basis of accounting, in which revenues are recognized when cash is received and expenditures include disbursements, accounts payable, and encumbrances. The most significant budgeted fund is the General Fund. Kansas Statutes permit transferring budgeted amounts from one object or purpose to another within the same fund; however, such statutes prohibit creating expenditures in excess of the Wichita Public Schools Page 21

62 Financial Section total amount of the adopted budget of expenditures of individual funds. Management may amend the amount of a specific object or purpose appropriation without obtaining authorization from the Board providing the amendments or transfers do not create a total budgeted expenditure amount for a specific fund in excess ofthe amount originally adopted by the Board. General Fund Revenue, Expenditures, and Other Sources Budgetand Actual Taxes In terg Qvernmental- state Instruction Stud en tan d instructional support Administration Operations and maintenance Transfers (to) otherfunds - Special Revenue Funds a in millions of dollars _Budget _Actual I Yearly the District budgets for expected enrollment adjustments within the budget. amount is reported as part of instructional costs. This dollar The actual expenditures reflect how the final enrollment audit amount was spent. These dollars are spent on instructional costs, but maybe shown as a transfer to a special revenue fund. These transfer dollars were spent on textbook purchases, special education and health costs. The District's ending unobligated cash balance in the general fund was $133,771 above the final budgeted amount due to cancellation of purchase orders carried over from prior fiscal years. Special Education Fund Special education expenditures increased by $5.1 million in fiscal year ending June 30, 2009, primarily due to additional demand for services and rising costs of employee salaries and benefits. State Intervention Fund (K-12) The 2005 Kansas State Legislature created a new fund to provide for the District's at risk population with additional educational opportunities and instructional services to assist in closing the achievement gap. With the creation of this fund, any expenditure that the District had previously reported in the general fund, non-traditional fund, or summer school fund for intervention programs now must be reported in this new fund. Wichita Public Schools Page 22

63 Financial Section Bond Capital Projects Construction related to the $284.5 million April 2000 bond election has been substantially completed. Voters approved a bond issue in the amount of $370 million on November 4, 2008, to: add 6 new schools to meet current and projected student population growth add 275 new classrooms to reduce class sizes and support the end of busing for desegregation build 60 storm shelter safe rooms upgrade technical education renovate or rebuild physical education, athletic and fine art facilities Capital Outlay fund The capital outlay fund is used for the purpose of acquisition, construction, repair, remodeling, additions to, furnishing, and equipment needs of the district. The district published a five year resolution, starting school year, providing authority to levy up to 7 mills in this fund. Bond and Interest fund This fund is used to make principal and interest payments on the long-term debt obligations of the District authorized by the 2000 bond election. In 2004 and 2005, the district issued crossover refunding bonds in the total amount of $68.5 million to advance refund $70.9 million in bonds from the 2000 and 2001 issues which are callable in 2011 and 2012, respectively. Bonds totaling $188 million were sold in May 2009 relative to the November 4, 2008, $370 million election; the remainder is expected to be sold over the next three years. Capital Assets and Debt Administration Capital Assets At the end of the fiscal 2008 and 2009 years, the District had $395,063,913 and $395,603,616, respectively invested in land, buildings and equipment. The decrease in land and improvements was attributable to retirements of land that are no longer property of the district. The buildings and improvements increase was attributable to the completion of the construction of two elementary schools. The mill levy is expected to increase by 3.5 mills starting in 2009 to fund the 2008 bond election. Land and improvements Buildings and improvements Machinery and equipment Total capital assets - net of depreciation Table 4 Governmental Activities Capital assets - net of depreciation 2008 $32,666, ,489,274 9,907,921 $395,063,913 Change 2009 increase(decrease) $23,643,545 ($9,023,173) 358,353,190 5,863,916 13,606,881 -"3"',6""98"",9"'6"'0 $395,603,616 $539,703 Wichita Public Schools Page 23

64 Financial Section Debt At June 30, 2009, the District had $452,040,000 in bonds and notes outstanding, $13,955,000 due within one year. Table 5 summarizes bonds and notes outstanding. Government Obligation Bonds Table 5 Governmental Activities Outstanding Debt, at Year End 2008 $276,855,000 $276,855,000 Change 2009 increase(decrease) $ , c;:$-;-:17;;:5o.;, 1:;;85,,,,,00;;;;0 $452,040,000 $175,185,000 In April 2000 the voters approved the million bond issue to build two new schools, replace five schools, replace most of the district's 280 portables, build 19 new multi-purpose rooms, build nine new libraries, upgrade middle school science labs, upgrade technology, and upgrade infrastructure in 79 school buildings. In November 2008 the voters approved $370 million in bond improvements of which $188 million were issued in May The remaining $179 million will be issued later in 2009 and At June 30, 2009, the overall legal debt margin was $208,153,995. See page 102 in the Statistical Section for additional details on the District's legal debt margin. The District maintains an Aa3 and AA Moody's and Standard and Poor's financial ratings, respectively. For more information on the districts capital assets and debt administration please refer to the footnotes. (See notes 104, 106, IIiB and mc). State of Kansas Education Funding The General fund budget per pupil is determined by the legislature and was set at $4,433 for Due to a state revenue shortfall the per pupil allocation was reduced mid-year to $4,400. In 1999, a lawsuit was filed on behalf of students, parents and administrators in the Dodge City and Salina school districts alleging that the state's school finance system was constitutionally flawed. The plaintiffs alleged that the state was not putting enough money into the system and that the money that was going into the system was not distributed fairly. Specifically, the plaintiffs argued that the districts that had the highest number of hard-to-educate students those with disabilities, limited English proficiency or living in poverty - were not receiving enough funds to adequately address the challenges presented by those students. On January 3, 2005 the Kansas Supreme Court found the Kansas school funding formula to be unconstitutional because the Kansas Legislature failed to make suitable provisions for the financing of public schools. The Court ruled that midsize and large school districts with high proportions of minority and/or at-risk and special education students were not receiving a suitable education. The Court also found that school funding had been based upon past funding levels and political compromises rather than actual costs. The Court indicated that increased funding was required and a cost study was needed. Cost studies were subsequently performed. As a result, the legislature appropriated additional funding. Of this, Wichita Public Schools received over $100 million ofadditional funding over the next three years. Wichita Public Schools Page 24

65 Financial Section For the Future The Wichita Public School District remains a financially strong, growing component of the Sedgwick County. District enrollment remains strong, increasing slightly over the past 10 years. The District's increased employment continues to help stimulate the local economy as will bond construction related to the $370 million bond projects over the next five years. Local employment grew 1.9 percent in 2008 and is expected to decline 1.7 percent in 2009, and 1.2 percent in The Wichita Public School District has committed itself to financial excellence for many years. The District has received the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting since 1993 and from the Association of School Business Officials (ASBO) Certificate of Excellence in Financial Reporting since Contacting the School District's Financial Management Budgeting Web Page: Contact Budgeting by budgetoffice@usd259.net Write the Budgeting Office: Unified School District #259 Attention: Ronda Goode 201 N Water Suite 603 Wichita, KS Contact Budgeting by Phone: Linda Jones, Chief Financial Officer (316) Ronda Goode, Budgeting Director (316) Elizabeth Sanborn, Budget Analyst (316) Fax: Attention: Ronda Goode (316) Wichita Public Schools Page 25

66 Financial Section Wichita Public Schools Page 26

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68 Financial Section Wichita Public Schools Unified School District No. 259 Statement of Net Assets June 30, 2009 Governmental Activities Assets Cash, cash equivalents and investments $ 166,978,047 Restricted cash, cash equivalents and investments 262,173,240 Receivables: State aid 50,565,960 Interest 50,324 Intergovernmental 882,582 Inventory 2,359,487 Cost of issuance 1,311,024 Capital assets: Land and construction in progress 15,413,085 Other capital assets, net ofdepreciation 380,190,531 Total assets 879,924,280 Liabilities Accounts payable 5,124,457 Accrued payroll 22,014,497 Interest payable 4,840,050 Unearned revenue 760,922 Long-term liabilities, including claims payable Due within one year 48,304,575 Due in more than one year 496,486,562 Total liabilities 577,531,063 Net Assets Invested in capital assets, net of related debt 196,865,922 Restricted for: Capital projects 45,465,264 Debt service 22,024,806 Self-insurance claims 35,507,219 Special education 4,760,509 Nutrition service 7,991,437 Federal and state grant programs 3,708,684 Other 4,053,911 Unrestricted (17,984,535) Total net assets $ 302,393,217 The accompanying notes are an integral part ofthe basic financial statements. Wichita Public Schools Page 27

69 :; ill'.., Qr ;p tt ::::- 1'1' g iii' FunctionslPrograms Governmental activities: Instruction Student and instructional support Administration Operations and maintenance Student transportation service Nutrition services Interest on long-term debt Total primarygovemment Wichita Public Schools Unified School District No. 259 Statement of Activities For the Year Ended June 3D, 2009 Expenses $ 311,741,071 80,905,216 43,170,671 72,110,571 22,040,131 19,661,902 12,530,101 $ 562,159,663 General revenues: Property taxes levied for. General purposes Debt service Capital outlay State and federal aid not restricted to specific purposes Earnings on investments Sale of property Miscellaneous Total general revenues aoo special items Change innet assets Charges for Services Program Revenues Operating Grants and Contributions Capital Grants and Contributions Net(Expense) Revenue and Changes in NetAssots Total Governmental Activities $ 2,020,077 $ 66,689,610 $ 218,597 $ (242,812,787) 536,238 27,300,306 4,671,085 3,761,648 (53,068,672) (38,499,586) (68,348,923) 13,363,921 (8,676,210) 3,936,241 15,317,290 1, (408,371) (10,761,056) $ 6, $ 132,872,905 $ (422,575,605) ":s' 104,914,577 17,326,543 20,528, ,520,092 5,950, ,592 2, , ,428,543 1'1 Qi'... f&l 1'1 Q' ::I Netassets-beginning Net assets-ending 284,964,674 $ 302,393,217 The accompanying notes are an integral part ofthe basic financiar statements. Q? N CD

70 i Wichita Public Schools n' Unified School Oisbict No. 259 ::t.., 6l' ;p ti' ::::- Balance Sheet Governmental Funds June 30, 2009 n' State Other Total Supplemental Special Intel'V8ntlon Bond capital capital Bond and Gowmmental G:lVemmental General General Educatlon (K-12) Projects Outlay Interest Funds Funds ::t Assets: Cash, cash equivalents and inwstrnents 0 $ $ $ $ $ $47,683,095 $ 26,864,855 $ 47,015,264 $ 121,563,214 Restricted cash, cash equivalents Cii' and investments 188,174,270 73,998, ,173,240 Inlergowmmenlal receivables 194, , ,582 Slate aid receivable 42,451,247 7,840, ,626 50,565,960 Interest receivable 50,324 50,324 Due from olllerfunds 492,706 19,275,970 6, ,693,598 29,440,565 Inventory 1,431, ,570 2,359,487 Total Assets $ 43,883,164 $ 8,332,793 $ 19,470,628 $ 6,978,291 $ 188,174,270 $47,733,419 $100,863,825 $ 51,598,982 $ 467,035,372 n Qi' Liabilities and Fund Balances: liabilities: Accounts payable $ 260,761 $ 742,491 $ 603,444 $ 4,083 $ 472,982 $ 2,253,652 $ $ 770,931 $ 5,108,344 h:crued pa)'"oll 10,801, ,714 3,847,673 4,339,116 14,503 2,654,275 22,014,497 0' Deterred rewnue 760, ,922 Due 10 olherfunds 29,440,565 29,440,565 Total Liabilities 40,502,542 1,100,205 4,451,117 4,343, ,982 2,268,155 4,186,128 57,324,328 I... IW III Fund Balances: Reserwdfor., Encumbrances 1,940,108 3,189,377 1,183, ,533 8,606,606 8,916,445 7,509,431 31,737,882 Inwntory 1,431, ,570 2,359,487 Crossowr refunded bonds 73,998,970 73,998,970 UnreseMd 8,597 4,043,211 13,836,129 2,242, ,094,682 36,548,819 26,864, ,638,852 Unreserwd, reported in nonmajor. Special rewnue funds 38,975,853 38,975,853 Total fund balances 3,380,622 7,232,588 15,019,511 2,635, ,701,288 45,465, ,863,825 47,412, ,711,044 Total liabilities and fund balances $ 43,883,184 $ 8,332,793 $ 19,470,628 $ 6,978,291 $ 188,174,270 $47,733,419 $100,863,825 $ 51,598,982 $ 467,035,372 N II The accompanying notes are an integral part ofthe basic financial statements.

71 Financial Section Wichita Public Schools Unified School District No. 259 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2009 Amounts reported for govemmental activities in the statement ofnet assets are different because: Total fund balance - governmental funds $ 409,711,044 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Cost Accumulated Depreciation Long-lenn liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. General Obligation Bonds Payable Premium on Bonds Payable Discount on Bonds Payable Deferred Refunding on Bonds Payable. Accrued Interest Payable on the Bonds Special Assessments Early Retirement Program Compensated Absences Liability for Arbitrage Other Post Employment Obligations Environmental Liability Cost of issuing debt is not a financial resource and, therefore, is not reported in the funds Intemal service funds are used by management 10 charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities ofintemal service funds are included in governmental activities in the statement of net assets. Total netassets - governmental activities $ 610,783,623 (215,180,007) 395,603,616 (452,040,000) (9,911,397) 28, ,541 (4,840,050) (168,454) (54,058,020) (11,915,000) (190,000) (4,959,187) (2,050,000) (539,739,686) 1,311,024 35,507,219 $ 302,393,217 The accompanying notes are an integral part ofthe basic financial statements. Wichita Public Schools Page 30

72 C\' ::t I.., 6l' Wichita Public Schools Unified School District No. 259 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Forthe Year Ended June 30, 2009 ;p Stato 0Iho< Total Supplemental Special Intervention Bond Capital capital Bond and Governmental Governmental a- ::::- General General Education (K 121 Projects Outlay Inlerest FundS Funds Revenues: C\' T",os $ 45,193,733 $ 59,697,472 $,, $ 20,528,768 $ 17, S 23,372 $ 142,769,888 Intergowmmental - State 287,838,074 39,200,439 4,843,407 5,702,065 24,255, ,839,622 ::t Intergo..emmenlal Federal 13,104,982 45,694, ,705 Q Charges for sel\ices 68,041 6,424, ,556 Q Earnings on in..estrnems 351 1,237,165 3,821, ,694 5, iii' Sale of properly 519, ,592 Other 22' 2,243,711 2,243,939 Conlributions 972, ,267 Total re..enues 333,031, ,911 13,104,982 68,041 57" , , , , ExpendlbJres: Current: Instruction 114,259,215 1,994,223 59,644, ,987 50,704, ,195,270 Student andlnstruclional support 31,750,881 56,931 20,731,475 1,068,169 25,781,611 79,389,067 Administration 31,019, ,822 4,551,483 1,459,237 5,380,504 42,609,103 C\ Operations and maintenance ,026 24,238,680 1,163, ,541 8,002, ,157 Studenl transportation ser'\ice 49,435 12,900,007 8,466,087 93, , Qi' Nutrition sel\ices 19,342, ,146 Sub-total ClJJnlnt expenditures 213,547,614 39, ,556,955 67, ,364,410 ' 524,395,776 Facility acquisition and construction ser.ice 2,135,946 29, ,119 31,360,422 DeblSeroice: Principal retirement 13,075,000 13,075,000 Q' Interesl ,847 12, :::. Other 363, "" Total expenditures 213,547,614 39,388,863 94,556,955 67,537,934 2, ,098, , , , :S' " rr C\ l!' Excess (deficiency) of re..enues mer (under) ex:pendilures 119, ,048 (81,451,973) (67,469,893) (2,498,907) (1.969,425) 1,231,494 (29,233,610) (2, ) Other financing lsources (Ul58S): Bond issuance ,003 3,472, ,260,000 Premium on bond issuence 5,336,620 5,336,620 Discounl on bond issuance (29,083) (29,083) Payment on refunded bonds (3,OOO,OOO) (3,OOO,OOO) TransfelS In 80,964,347 67,216,813 1,484,103 33,077, ,742,671 Transfers oul. ( ,045) (62,114,543) (182,874,588) II Tolal other financing sources (uses) (120,760,045) (62,114,543) 80,964,347 67,216, ,094, ,103 3, ,077, ,435,620 II Net change in funcl balances (1,275,852) (2,605,495) (487,626) (253,080) 187,595,633 (485,322) 4,704,491 3,843, ,036,547 II Fund balancssat beginning of year 4,692,355 9,838,083 15,507,137 2,688, ,655 45, ,159,334 43,444, ,586,019 Change In reser.e for in..enlory (35,881) 124,359 88,478 Fund balances at end of year..!...!...380,822, 7,232,588 $ 15,019,511, 2,635,092 $ 187,701,288 $ ,264 $ 100,863,825 $ 47,412,854 $ 409,711,044 The accompanying notes are an integral part ofthe basic financial statements.

73 Financial Section Wichita Public Schools Unified School District No. 259 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2009 Amounts reported for governmental activities in the statement of activities are different because: Net change In fund balances - total governmental funds Governmental funds report capital outlays as expenditures. However, in the statement ofactivities, the cost ofthose assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded the amount ofassets capitalized in the current period. Depreciation e:><pense $ Capital assets capitalized In the statement ofactivities, the gain or loss from the sale ofcapital assets is reported, whereas in the governmental turds. only any proceeds from the sale increase financial resources. Thus, the change in netassts differs from the change in fund balances by the cost ofcapital assets sold. Bond proceeds provide current financial resources to gowmmental funds. but issuing debt increases long-term liabilities in the statement ofnet assets. Bond premium proceeds provide current financial resources to governmental funds, but do not increase long-term liabilities in the statement of net assets. Bond discounts decrease the current financial resources to governmental funds, but do not decrease long-tenn liabilities in the statement ofnet assets. (16,104,443) 16,866,435 $ 191,036, ,992 (222,290) (191,260,000) (5,336,620) 29,083 Deferred refunding on bonds payable decrease the current financial resources to governmental funds but do not decrease long-term liabilities in the statement of net assets. The amortization ofbond premiums and discounts decrease the long term liabilities in the statement of net assets but do not provide current financial resources to the governmental funds 363, ,457 Repayment ofbond principal is an expenditure inthe gowmmental funds, but the repayment reduces Iong-tenn liabilities in the statement ofnet assets. General obligation bonds Refunded bonds Special assessments In the statement ofactivities, interest is accrued on outstanding bonds, whereas in gowmmental funds, an interest expenditure is reported when due. In the statement ofactivities, certain operating expenses - compensated absences, earlyretirement benefits, and arbitrage liabilities - are measured by the amounts eamed during the year. In the gowmmental funds, however, expenditures for these itemsare measured by the amount offinancial resources used (essentially, the amounts actually paid). This year, the following differences were noted: Compensated absences earned exceeded benefits paid Early retirement benefits earned e:xceeded benefits paid Environmental liabilities incurred in e)(c8ss of amounts paid Internal service funds are used by management to charge the costs ofcertain activities, such as insurance, to individual funds. The net revenue (expense) of certain internal service funds is reported with govemmental activities. In the statement ofactivities, an asset is incurred for the cost ofbond issuance, whereas in golj8mmental funds, the cost of bond issuance expenditure is reported when paid. 13,075,000 3,000,000 31,679 (498,000) (5,142,717) (410,000) 16,106,679 (723,711) (6,050,717) 14,172,154 1,311,024 In the statement ofactivities, a liability is accrued for other post employment benefits, whereas in governmental funds, other postemployment benefits expenditure is reported when paid. In the statement ofactivities, consumption ofinventory is reported as an e>lpense, whereas in govemmental funds, changes in inventory are adjustments to fund balance. Change in netassets of governmental activities (3,585,074) 88,478 $ 17,428,543 The accompanying notes are an integral part ofthe basic financial statements. Wichita Public Schools Page 32

74 Financial Section Wichita Public Schools Unified School District No. 259 Statement of Net Assets Proprietary Funds June 30, 2009 Assets: Current assets: Cash, cash equivalents and investments Total current assets Liabilities: Current liabilities: Accrued liabilities Accrued salaries Current portion - claims payable Total current liabilities Internal Service Funds $ 45,414,833 45,414,833 2,086 14,028 6,184,500 6,200,614 Noncurrent liabilities Long-term claims payable Total liabilities Net Assets: Total net assets restricted for self-insurance claims 3,707,000 9,907,614 $ 35,507,219 The accompanying notes are an integral part ofthe basic financial statements. Wichita Public Schools Page 33

75 Financial Section Wichita Public Schools Unified School District No. 259 Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2009 Internal Service Funds Operating revenues: Charges for services $ 55,580,829 Other insurance reimbursements 82,626 Total operating revenues 55,663,455 Operating expenses: Contractual services 41,871,912 Total operating expenses 41,871,912 Operating income 13,791,543 Nonoperating revenues: Interest 248,694 Total nonoperating revenues 248,694 Income before transfers 14,040,237 Transfers in 131,917 Change in net assets 14,172,154 Total net assets-beginning ofyear 21,335,065 Total net assets-end of year $ 35,507,219 The accompanying notes are an integral part ofthe basic financial statements. Wichita Public Schools Page 34

76 Financial Section Wichita Public Schools Unified School District No. 259 Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2009 Cash flows from operating activities: Cash received from services Cash received from insurance companies Cash payments for claims Net cash flow from operating activities Cash flows from non-capital financing activities: Transfers from other funds Net cash flow from non-capilal financing activities Cash flows from investing activities: Interest on investments Net cash flow from investing activities Net change in cash and cash equivalents Cash and cash equivalents-beginning of the year Cash and cash equivalents-end ofthe year Internal Service Funds $ 55,580,829 82,626 (43,360,279) 12,303, , , , ,694 12,683,787 32,731,046 $ 45,414,833 Reconciliation ofoperating income to net cash flow from operating activities: Operating income Adjustments to reconcile operating income to net cash flow from operating activities: Change in accrued liabilities Change in claims payable Net cash flow from operating activities $ 13,791,543 2,133 (1,490,500) $ 12,303,176 Wichita Public Schools Page 35

77 Financial Section Wichita Public Schools Unified School District No. 259 Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2009 Assets: Cash and cash equivalents Total assets Liabilities: Due to others Total liabilities Agency Funds $ 5,095,838 $ 5,095,838 $ 5,095,838 $ 5,095,838 The accompanying notes are an integral parl ofthe basic financial statements. Wichita Public Schools Page 36

78 Financial Section WICHITA PUBLIC SCHOOLS UNIFIED SCHOOL DISTRICT NO. 259 NOTES TO THE FINANCIAL STATEMENTS INDEX I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity B. District-wide and Fund Financial Statements C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation D. Assets, Liabilities, and Equity 1. Deposits and Investments 2. Receivables 3. Inventories 4. Capital Assets 5. Compensated Absences 6. Long-Term Obligations 7. Fund Equity 8. Net Assets 9. Estimates II. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary Information III. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments B. Capital Assets C. Long-Term Debt D. Interfund Receivables and Payables E. Interfund Transfers IV. OTHER INFORMATION A. Risk Management B. Environmental Matters C. Contingent Liabilities D. Construction Commitments E. Defined Benefit Pension Plan F. Postemployment Healthcare Plan G. Pending Governmental Accounting Standards H. Subsequent Events Wichita Public Schools Page 37

79 Financial Section WICHITA PUBLIC SCHOOLS UNIFIED SCHOOL DISTRICT NO. 259 NOTES TO THE FINANCIAL STATEMENTS June 30, 2009 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Wichita Public Schools, Unified School District No. 259, (District) is organized under the laws of the State of Kansas (Kansas) and is governed by an elected seven-member board. Accounting principles generally accepted in the United States of America (GAAP) require these financial statements present the District (the primary government) and its component units. There are no component units for which the District is considered to be financially accountable. B. District-wide and Fund Financial Statements District-wide Financial Statements - The statement of net assets and the statement of activities report information on all of the nonfiduciary activities of the primary government. The effect ofinterfund activity has been eliminated from these statements unless immaterial. The statement of net assets presents the financial condition of the governmental activities of the District at year-end. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Fund Financial Statements - The fund financial statements include separate financial statements that are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the district-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column. Expenditures in the financial statements are grouped by function. of the District's functions. Following are descriptions Wichita Public Schools Page 38

80 Financial Section Instruction - Activities dealing directly with the interaction between teachers and students, and contracted instructional services. Student and Instruction Support - Activities designed to assess, improve the well-being of students, supplement the teaching process, and assist the instructional staff of learning experiences for students. Includes staff in attendance and social work services, substance abuse, guidance, health, psychology, curriculum improvement services, counseling and guidance services, library and media support, speech pathology, and audiology. Administration - Activities concerned with establishing and administering policy for operating the local education agency. Includes only board of education staff, special education staff, school administration, board secretary/clerk staff, staff relations and negotiation staff, the superintendent's staff, assistant superintendents, area directors, and the superintendent. Operations and Maintenance - Activities concerned with the paying, transporting, exchanging, maintaining goods and services for the local education agency, and other supplemental services. Includes the Chief of Financial, and business support staffs; includes the staff for supervisors of fiscal services, budgeting, payroll, financial accounting, purchasing, warehousing, printing and duplication staff. Other supporting staffs that support each of the other instructional and supporting services programs include planning, research, development, evaluation, information, and data processing services. Other supplemental services includes operations and maintenance supervisor, operations staff (heating, lighting, ventilation, repairing and replacing facilities and equipment), care and upkeep of grounds and equipment staff, and vehicle operations and maintenance staff and security services staff. Student Transportation Services - Activities concerned with conveying students to and from school, as provided by State and Federal law. This includes trips between home and school, and trips to and from school activities. Nutrition Services - Activities concerned with providing food to students and staff in a school or local education agency. This service area includes preparing and serving regular and incidental meals, lunches, or snacks in connection with school activities and food delivery. Facilitv Acquisition and Construction Service - Activities concerned with acquiring land and buildings, remodeling buildings, constructing buildings, additions to buildings, initially installing or extending service systems and other built-in equipment, and improving sites. Debt Service - Servicing the debt of the local education agency, including payments of both principal and interest. Wichita Public Schools Page 39

81 Financial Section c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation District-wide Financial Statements - The district-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements, except for agency funds, which have no measurement focus. All assets and liabilities associated with the operation of the District are included on the statement of net assets. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the budget year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Entitlements and state aid are recorded at the time of receipt or earlier if the susceptible to accrual criteria is met. Expenditure-driven grants are recognized as revenues when the qualifying expenditures have been incurred and all other grant requirements have been met. Other receipts become measurable and available when cash is received by the government and is recognized as revenue at that time. The District reports the following major governmental funds: General fund - this is the District's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Supplemental General - created by Kansas statute in 1992 to allow individual school districts to spend above the per student amount provided by the state in the general fund weighting formula. Special Education - used to account for programs which deliver educational services to special needs students. State Intervention (K-12) - used to account for programs for the District's population by providing educational opportunities and instructional services to assist in closing the achievement gap. Wichita Public Schools Page 40

82 Financial Section Bond Capital Projects - used to account for the acquisition or construction of major capital facilities funded from general obligation bond proceeds. Capital Outlay - used to account for the acquisition and construction of major capital facilities other than those financed from general obligation bond proceeds. Bond and Interest - used for payment of principal and interest on the District's general obligation bonds when such bonds are outstanding. Additionally, the District reports the following fund types: Internal service funds - these funds account for the District's self-insurance programs provided to other departments or agencies of the government, on a cost reimbursement basis. Fiduciary funds - the District has three agency funds which are used to account for assets held by the District as an agent for others. The funds include assets held for activities such as student organizations and athletics, and funds held for employee payroll withholdings and flexible spending accounts. They are custodial in nature, and do not involve measurement of results of operations. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the District's internal services funds are charges for insurance services. Operating expenses for internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities, and Equity 1. Deposits and Investments K.S.A authorizes the District to invest moneys not regulated by other statutes in time deposits, repurchase agreements consisting of obligations insured by the U.S. government or any agency thereof, U.S. Treasury bills or notes with maturities not exceeding two years, and the Kansas Municipal Investment Pool. Investments are reported at fair value based on quoted market prices. The investments of proceeds of long-term debt are governed by specific statutes and authorize the District to invest in the following: Investments authorized by K.S.A Direct obligations of the U.S. government or any other agency thereof Wichita Public Schools Page 41

83 Financial Section Money market funds comprised entirely of obligations of the U.S. Treasury and agencies thereof Obligations of any municipality of Kansas Investment agreements with a financial institution rated in the three highest rating categories by Moody's or Standard and Poor's. Cash resources of the individual funds (except for the proceeds of general obligation bonds, which are separately invested) are combined to form a pool of cash and temporary investments that are managed by the District Treasurer. Investments of the pooled accounts consist primarily of certificates of deposits. Interest income earned is allocated to various funds based upon statutory requirements. Restricted cash and investments include the unspent proceeds from general obligation bond issues and funds held in escrow from crossover refunding bond sales. For purposes of the statement of cash flows, the District considers all investments by fund in the District's cash and investment pool to be cash equivalents. 2. Receivables Taxes are assessed on a calendar-year basis and become a lien on the property on November 1 of each year. The County Treasurer is the tax collection agent for all tax entities within the county. Property owners have the option of paying one-half or the full amount of the taxes levied on or before December 20 during the year levied with the balance to be paid on or before May 10 of the ensuing year. Tax installments paid to the County Treasurer in May are budgeted to finance the current year's operations and are distributed to the District prior to fiscal year end. State statutes provide that in the month of June of each school year, payment (from the State to District) shall be made of the full amount of the general state aid for the year. The State did not make the final state aid payment of $50,565,960 for the fiscal year ended June 2009 until July The District was instructed by the State to record the final payment as though it had been received on June 30, This receipt was recorded for the budgetary basis; however it was recorded as a receivable by the General, Supplemental General, Parents as Teachers, and Professional Development Funds for the district-wide and fund financial statements. 3. Inventories Inventories of supplies are stated at cost using the standard cost method. Inventories in the general fund consist of educational and maintenance supplies. Inventories in the special revenue funds are food supplies. The purchase method is used to account for governmental fund type inventories. Under the purchase method, inventories are recorded as expenditures when purchased; however, material amounts of inventories are reported as assets of the respective fund. Reported inventories in these funds are equally offset by a fund balance reserve, which indicates they are unavailable for appropriation even though they are a component of reported assets. Textbooks are expensed at the time of purchase and equally offset by the textbook rental fund. On hand quantities of textbooks are tracked internally, and a replacement value for textbooks is established using the "purchasing list price" of the textbook multiplied by the on hand quantity. Wichita Public Schools Page 42

84 Financial Section 4. Capital Assets General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the district-wide statement ofnet assets, but are not reported in the fund financial statements. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated capital assets are recorded at their estimated fair values as of the date received. The District maintains a capitalization threshold of $2,000. The District does not possess any infrastructure. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not capitalized. All reported capital assets except land are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Asset Class Buildings Building Improvements Land Improvements Machinery and Equipment 5. Compensated Absences Estimated Useful Lives years years years 5-15 years The District annually grants employees temporary leave, the amount of which varies with the classification of the employee. All vacation days accrue monthly. As of June 30 each year, vacation in excess of 40 days is converted to temporary leave. Temporary leave, which consists primarily of sick and personal leave, is allowed to accrue without limit. Upon separation from the District, unused accrued vacation leave up to 20 days is paid on the basis of current salary. An employee who dies or who retires or resigns honorably after reaching age 55 or completing 5 years of employment is eligible for a severance payment. The severance payment is paid at a rate of $3.75 per unused accrued temporary leave hour and unused accrued vacation leave hour in excess of 20 days. All vacation pay is accrued when incurred in the district-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. 6. Long-Term Obligations In the district-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance costs are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of Wichita Public Schools Page 43

85 Financial Section debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 7. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. The fund balance reserved for encumbrances is used to segregate a portion of fund balance legally restricted for the future payment of outstanding encumbrances. The fund balance reserved for inventory of supplies is used to segregate a portion of fund balance to indicate that inventories do not represent available or spendable resources. The fund balance reserved for crossover refunded bonds is the result of funds held in escrow from a crossover refunding bond sale, which are reserved for repayment and defeasement of the refunded bonds. See also Note III.C. 8. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Restricted resources are used first to fund appropriations. 9. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities, (2) disclosures such as contingencies, and (3) the reported amounts of revenues and expenses included in such financial statements. Actual results could differ from those estimates. II. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary Information Kansas statutes require budgets be adopted for all funds, unless exempted by a specific statute. The statutes provide for the following sequence and timetable in the adoption of the legal budget. 1. Preparation of the budget for the current fiscal year on or before August 1. Wichita Public Schools Page 44

86 Financial Section 2. Publication in local newspaper of the proposed budget and notice of hearing on the budget on or before August Public hearing on or before August 15, but at least 10 days after publication of notice of hearing. 4. Adoption of the final budget on or before August 25. Kansas statutes allow school districts to operate from July 1 to August 15 without an adopted budget. Kansas statutes also dictate the level of the general fund budget based on a formula that used $4,400 per full-time equivalent weighted student as of September 20. Because the number of students as of September 20 of the budget year was not known at the time of budget adoption, an estimated number was used. If the estimate is too low, the Board of Education is allowed by statute to increase the general fund budget to the actual amount after following the procedures for publication and public hearing as outlined above. For the current year, the estimated general fund budget was too high due to changes in the rate per student set by the Legislation. The initial rate set by the Legislature was $4,433 per student and was subsequently reduced to $4,400. Kansas statutes limit the supplemental general fund budget to a percentage of the general fund budget. However, once adopted, the supplemental general fund budget may not be increased. For the year ended June 30, 2009, the adopted general fund budget was reduced but the supplemental general fund budget was not. The District's legal level of budget control is at the fund level. Kansas statues allow for the governing body to increase the original adopted budget for previously unbudgeted increases in revenue other than ad valorem taxes. To do this, a notice of public hearing to amend the budget must be published in the local newspaper. At least 10 days after the publication, the hearing may be held and the governing body may amend the budget at that time. Kansas statutes permit transferring budgeted amounts from one object or purpose to another within the same fund; however, such statutes prohibit creating expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Management may amend the amount of a specific object or purpose appropriation without obtaining authorization from the Board of Education providing the amendments or transfers do not create a total budgeted expenditure amount for a specific fund in excess of the amount originally adopted by the Board of Education. All legal annual operating budgets are prepared using the statutory basis of accounting, in which revenues are recognized when cash is received and expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year-end. Encumbered appropriations are not reappropriated in the ensuing year's budget but are carried forward until liquidated or canceled. Accordingly, the data presented in the budgetary comparison statements differ from the data presented in the financial statements prepared in accordance with GAAP. Wichita Public Schools Page 45

87 Financial Section A legal operating budget is not required for the internal service funds, the agency funds and the following funds: Special revenue funds: Athletic activity Textbook rental Contingency reserve Capital project funds: Bond capital projects Music rental Student material revolving Supplemental grants - federal Supplemental grants - state and local Spending in funds which are not subject to legal annual operating budget requirement is controlled by federal regulations, other statutes, or by the use of internal spending limits established by the Board. III. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments Custodial Credit Risk. For deposits and investments, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. As of June 30, 2009, the District was not exposed to custodial credit risk with its deposits or investments since all were either covered by federal depository insurance, or the collateral and investments were held by the District's agent in the District's name. The District does not have a formal policy regarding custodial credit risk, though it follows Kansas statutes, which require that deposits be secured 100%, and investments be perfected in the name of the investing entity and be delivered to the purchases or a third-party custodian. Credit Risk. State law limits the types of investments that the District may make (see Note I.D.1). The District's investment policy does not add any further limitations. As of June 30, 2009, the securities underlying the District's repurchase agreements include FNMA and FHLMC securities. Both are rated AAA by Standard & Poor's and Aaa by Moody's Investors Service. The other investments are all in U.S. Treasuries or U.S. Treasury bond funds. Interest Rate Risk. State law and the District's investment policy limit investments in U.S. Treasury bills or notes to those with maturities not exceeding two years. District policy also states that portfolio maturities shall be staggered in a way that avoids undue concentration of assets in a specific maturity sector, and that the investment portfolio shall remain sufficiently liquid to enable the District to meet all operating requirements which might reasonably be anticipated. Wichita Public Schools Page 46

88 Financial Section As of June 30, 2009, the District had the following investments and maturities: Investment maturities (in Years) Investment Type Fair Value Less than Repurchase agreements $ 7,000,000 $ 7,000,000 $ U. S. Treasuries 120,792, ,792,594 Treasury obligation mutual bond funds 3,923,640 3,923,640 U.S. Treasuries held in bond escrow trust account 73,998,970 4,413,758 69,585,212 Total $ 205,715,204 $ 136,129,992 $ 69,585,212 Deposits and investments at June 30, 2009 appear in the financial statements as summarized below: Carrying amount of deposits Carrying amount of investments Total Cash and investments - governmental funds, balance sheet Cash and investments - internal service funds, statement of net assets Cash and investments - governmental activities statement of net assets Cash and investments - fiduciary funds Total $ 228,531, ,715,204 $ 434,247,125 $ 383,736,454 45,414, ,151,287 5,095,838 $ 434,247,125 Wichita Public Schools Page 47

89 Financial Section B. Capital Assets Capital asset activity for the year ended June 30, 2009 was as follows: Balance July 1, Balance 2008 Increases Decreases June 30, 2009 Governmental activities: Capital assets, not being depreciated: Land $ 11,033,316 $ 690,078 $ -- $ 11,723,394 Construction in progress 14,468,861 8,342,671 19,121,841 3,689,691 Total capital assets, not being depreciated 25,502,177 9,032,749 19,121,841 15,413,085 Capital assets, being depreciated: Buildings and improvements 527,268,965 19,163, ,432,511 Machinery and equipment 27,158,996 5,983,441 3,402,211 29,740,226 Land improvements 17,389,261 1,808,540 19,197,801 Total capital assets being depreciated 571,817,222 26,955,527 3,402, ,370,538 Less accumulated depreciation for: Buildings and improvements 174,779,691 13,299, ,079,321 Machinery and equipment 17,251,075 2,062,192 3,179,922 16,133,345 Land improvements 10,224, ,621 10,967,341 Total accumulated depreciation 202,255,486 16,104,443 3,179, ,180,007 Total capital assets, being depreciated, net 369,561,736 10,851, , ,190,531 Governmental activities capital assets, net $ 395,063,913 $ 19,883,833 $ 19,344,130 $ 395,603,616 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: Instruction Student and Instructional Support Administration Operations and Maintenance Transportation Nutrition Service Total depreciation expense - governmental activities $ 15,055,810 74,067 16, ,509 6,184 96,449 $ 16,104,443 Wichita Public Schools Page 48

90 Financial Section c. Long-Term Debt Long-term liability activity for the year ended June 30, 2009 was as follows: General obligation bonds Special assessment taxes payable Early retirement program Compensated absences Premium on bonds Discount on bonds Deferred refunding Arbitrage liability Environmental liability Claims payable OPEB Total Balance Balance June 30, 2008 Additions Reductions June 30, 2009 Due within one year $ 276,855,000 $ 191,260,000 $ 16,075,000 $ 452,040,000 $ 13,955, ,133 48,915,305 11,417,000 5,312, ,000 18,726,121 15,247,000 5,336,620 (29,083) (363,541) 31,679 13,583,406 14,749, ,659 (202) 168,454 54,058,020 11,915,000 9,911,397 (28,881) (363,541) 190,000 33,276 14,824,200 11,915,000 1,145,318 (2,424) (30,295) 1,640,000 11,382, ,000 37,300,590 38,791,090 2,050,000 9,891, ,000 6,184,500 1,374,113 3,585,074 4,959,187 _ $ 357,285,987 $ 271,472,781 $ 83,967,632 $ 544,791,136 $ 48,304,575 Compensated absences and the early retirement program are liquidated by the fund where each employee's regular salary is charged (primarily the General Fund and various special revenue funds). The arbitrage liability will be liquidated with funds from the Bond Capital Outlay Fund. The environmental liability will be liquidated primarily with funds from the Special Liability Expense Fund. General Obligation Bonds. On August 15, 2000 the District issued $94,833,000 of general obligation bonds with interest rates ranging from 3.5% to 6.0%, due in September On July 10, 2001, the District issued $94,835,000 of general obligation bonds with interest rates varying from 3.50% to 5.50% due in September On September 15, 2002, the District issued $94,830,000 of general obligation bonds with interest rates ranging from 2.50% to 5.00%, due in October On May 27, 2009, the District issued $58,760,000 in General Obligation Refunding and School Building Bonds with interest rates from 2% - 5% due October 1, 2021, and $132,500,000 in Taxable General Obligation School Building bonds (Build America Bonds Direct Payment to Issuer), with an interest rate of 6.22% due October 1, The bond proceeds will be used to construct, furnish, and equip new school facilities and make additions and improvements to existing school facilities throughout the District. The debt service requirements for general obligation bonds will be paid with future property tax revenues. Crossover Advance Refunding. On November 1, 2004, the District issued $31,990,000 in general obligation refunding bonds with a net interest cost of 3.56% for a crossover refunding of $33,085,000 of the outstanding Series 2000 bonds, which have a net interest cost of 5.01%. On June 15, 2005, the District issued $36,470,000 in general obligation refunding bonds with a net interest cost of 3.83% for a crossover refunding of $37,790,000 of the outstanding Series 2001 bonds, which have a net interest cost of 4.75%. Wichita Public Schools Page 49

91 Financial Section Under a crossover advance refunding bond issue, the original bond issues (refunded bonds) are not considered defeased until they are retired. Proceeds of the crossover refunding are placed into an escrow account; however, unlike other advance refundings, the escrow account in a crossover advance refunding is not immediately dedicated to debt service principal and interest on the refunded bonds. Instead, resources in the escrow account are used temporarily to meet debt service requirements on the new, refunding bonds. Only at a later date, known as the "crossover date," are resources in the escrow account dedicated exclusively to payment of principal and interest on the refunded bonds. Therefore, crossover refundings do not result in the defeasance of debt until the crossover date. The District has recorded both the refunding and refunded bonds in the financial statements, as well as the balance of funds held in escrow for their repayment, which totals $73,998,970 as of June 30, General obligation bond Series 2000 has a crossover date of September 1, has a crossover date of September 1, Series Advance Refunding. On May 27, 2009, the District issued $ million in General Obligation Refunding and School Building Bonds. The issue included $58.76 million in nontaxable bonds with an average yield of 3.35% and $132.5 million in taxable bonds with an average rate of 4.04%. Three million of the tax exempt bonds were used to advance refund $3 million of outstanding 2002 Series bonds with and average interest rate of 5.0%. The net proceeds of $3,363,541 were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 2002 Series bonds. As a result, that portion of the 2002 Series bonds is considered to be defeased and the liability for those bonds has been removed from the government-wide statement of net assets. The District completed the advance refunding to reduce its total debt service payments by $236,505 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $227,303. Annual debt service requirements to maturity for general obligation bonds are as follows: Year Ended June 30, Principal Interest 2010 $ 13,955,000 $ 21,668, ,110,000 21,735, ,315,000 20,686, ,205,000 19,400, ,085,000 17,913, ,595,000 67,073, ,275,000 44,923, ,500,000 25,330,950 Total $ 452,040,000 $ 238,733,526 Special Assessment Taxes Payable. The District is liable for certain special assessments on certain real property. The payments will be paid from future property tax revenues. The assessments have interest rates varying from 4.83% to 11.72%. Principal payments are due annually through December 1, 2014, as follows: Wichita Public Schools Page 50

92 Financial Section Year Ended June 30, Principal Interest 2010 $ 33,276 $ 8, ,871 6, ,218 5, ,415 3, ,674 2, ,000 1,392 Total $ 168,454 $ 28,789 Early Retirement Program. At the discretion of the Board of Education, the District offers a voluntary early retirement program to eligible employees who have been employed by the District in a permanent position for 15 or more years, are at least age 50 when they retire, and have an effective hire date prior to July 1, Benefits at attaining age 60 are based on the retiree's final average salary used by the Kansas Public Employees Retirement System (KPERS), a 1.4% multiplier for all years of participating service credit with KPERS, and the total number of years of credited KPERS service (excluding any purchased or repurchased years), paid in not more than 60 monthly payments. The benefits also include an amount equal to the amount of the social security benefit the retiree would have been eligible to receive if the employee were age 62, paid in not more than 24 monthly payments. This benefit will be reduced by 5% for each year by which the employee's years of qualified service are less than 20. This program is unfunded with costs expended as paid. For the year ended June 30, 2009, the District paid $13,583,406 in benefits. The liability for the early retirement program includes the expected cash outflows discounted at 4.04%. At year-end, there are 638 retirees receiving benefits, and another 103 eligible retirees that have not yet started receiving benefits. Arbitrage Liability. In 1986, Federal law changed, making it illegal for an entity to issue taxexempt debt, reinvest those proceeds in a tax-deductible instrument, and make an arbitrage profit on the differential in interest rates. A calculation was created which established the methodology for determining if the tax exempt debt proceeds were invested to yield a profit. If a profit exists, all ofthat profit must be paid to the U.S. Treasury. The District has issued bonds since the implementation of Federal law. The series 2000, series 2001, Series 2002 and 2009A general obligation bonds are subject to arbitrage. The District has recorded a liability of $190,000 in the entity-wide statement of net assets as its estimate of its liability at June 30, This liability will not be payable until Actual payments could differ from the estimates. D. Interfund Receivables and Payables At June 30, 2009, the General Fund recorded $29,440,565 due to the Supplemental General Fund (major fund), Special Education Fund (major fund), State Intervention Fund (major fund), and Special Liability Expense Fund (nonmajor fund). This interfund payable was the result of a cash advance from these funds. Wichita Public Schools Page 51

93 Financial Section E. Interfund Transfers A summary of interfund transfers by fund type for the year ended June 30, 2009 is as follows: Transfer To: State Special Capital Intervention Nonmajor Internal Education Outlay (K-12) Governmental Service Total Transfer from: General Fund $ 51,442,279 $ 1,484,103 $ 53,992,147 $ 13,841,516 $ -- $ 120,760,045 Supplemental General Fund 29,522,068 13,224,666 19,235, ,917 62,114,543 Total $ 80,964,347 $1,484,103 $ 67,216,813 $ 33,077,408 $ 131,917 $ 182,874,588 Transfers are used (1) to move revenues from the fund where State statute or the District's budget requires they be collected to the fund from which they are required to be expended under State statute or the District's budget, or (2) to move restricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. IV. OTHER INFORMATION A. Risk Management The District has adopted self-insurance programs for workers' compensation, short-term disability, health, pharmacy and dental. Liabilities are reported when it is probable a loss has occurred and the amount can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR). The District uses internal service funds to account for this activity. Each program is funded by a monthly contribution made by the District for each eligible employee. Contribution amounts are determined by the District and the insurance carrier for the District's stop loss policy, if applicable. There have been no settlements in excess of insurance coverage during any of the prior three years. Health Care. All employees who are permanent, active employees working at least half-time for the District are eligible for health, pharmacy and dental benefits. Health, prescription and dental benefits are provided through a self-funded program to District employees and all eligible dependents. The District's annual liability for benefits is limited to $400,000 per individual claim by a specific loss policy. There is no aggregate stop loss policy. Short-Term Disability. The District provides disability benefits covering employees working in a permanent position at least half-time. Short-term disability benefits for certificated employees are provided for disability resulting from occupational or non-occupational illness or injury at a rate of 70% of the employee's regular daily rate. Disability benefits for classified employees are provided for disability resulting from non-occupational illness at a rate of 70% of the employee's regular hourly rate of pay. Benefits are provided for a maximum of 180 calendar days from the beginning date of the disability. The outstanding claims liability is calculated from historical data and future expectations. This liability includes an estimated Wichita Public Schools Page 52

94 Financial Section liability for known claims as well as estimated liability for claims incurred but not reported. Short-term disability coverage for classified employees has been reduced from prior years through negotiation to eliminate the 70% coverage for occupational injuries, which are instead covered under workers' compensation. Workers' Compensation. Workers' compensation benefits are provided for medical expenses and indemnity resulting from occupational illness or accidental injury to all employees under the Kansas Workers Compensation Act. Benefits are paid according to Kansas statute governing workers compensation benefits. The District's liability for benefits is limited by a specific stop loss policy of $500,000 per claim. The District pays an annual assessment fee to the State of Kansas for the state insurance fund and an assessment for the operation of the Division of Workers Compensation in the Kansas Department of Labor. The outstanding claims liability is calculated from historical data and case reserves set by District staff, and evaluated by an independent actuarial opinion. This includes an estimated liability for known claims as well as an estimated liability for claims incurred but not reported (IBNR). These limits are the same as for the prior year. Risk Management. The District has a self-insurance program to provide legal defense and pay claims against the Board of Education when an incident occurs during the course of employment. There is a $500,000 limitation for Kansas claims based on government immunity law. The deductible portion of the property and casualty, general liability, automobile, and aviation premiums are paid from the risk management fund. This limit is the same as for the prior year. Changes in the claims liabilities during the past two years are as follows: Health Care Disability Reserve Workers' Compensation Risk Management Unpaid claims, June 30, 2007 $ 4,840,000 $ 50,000 $ Incurred claims (including IBNR) 39,796, ,312 Claims payments (39,551,770 ) (937,312) 5,745,000 1,253,749 (781,749) $ 1,694,000 (1,694,000) Unpaid claims, June 30, ,085,000 80,000 Incurred claims (including IBNR) 34,109, ,951 Claim payments (35,844,217) (821,951 ) 6,217,000 1,285,439 (1,030,939) 1,093,983 (1,093,983) Unpaid claims, June 30, 2009 $ 3,350,000 $ 70,000 $ 6,471,500 $ B. Environmental Matters An area near the District's School Service Center has been designated by the Kansas Department of Health and Environment (KDHE) as a groundwater contamination site. As a result of that contamination, the District entered into an agreement with KDHE to perform a Remediation Investigation and Feasibility Study (RifFS) to investigate the contamination and develop a clean-up plan. The District is currently conducting the Feasibility Study portion of Wichita Public Schools Page 53

95 Financial Section the agreement, which will determine the best approach to site clean-up and restoration, and is completing some groundwater interim remedial measures. While the Feasibility Study and interim remedial measures progress, the District is required to perform semi-annual monitoring of the groundwater. The present value of the costs required for the Feasibility Study, monitoring activities over the next five years, and interim remedial measures is estimated at $2,050,000. This amount has been recorded with long-term debt on the statement of net assets and is based on engineering estimates and actual costs incurred. Until the Feasibility Study has been completed, it is not yet possible to estimate the District's ultimate cost for clean-up of the site. There are no anticipated recoveries on this project. C. Contingent Liabilities The District is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the District's counsel that resolution of these matters will not have a materially adverse effect on the financial condition of the District. D. Construction Commitments As of June 30, 2009, the District has outstanding construction commitments of $8,606,606 under its current general obligation bond projects to construct, furnish, and equip new school facilities and make additions and improvements to existing school facilities throughout the District. This amount is reflected as reserve for encumbrances in the bond capital projects fund. E. Defined Benefit Pension Plan Plan Description. The District participates in the Kansas Public Employees Retirement System (KPERS), a cost-sharing, multiple-employer defined benefit pension plan as provided by K.SA , et. seq. KPERS provides retirement benefits, life insurance, disability income benefits, and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to KPERS (611 South Kansas, Suite 100; Topeka, KS 66603) or by calling Funding Policy. K.SA establishes the KPERS member-employee contribution rate at 4% of covered salary. Member-employees' contributions are withheld by their employer and paid to KPERS according to the provisions of Section 414(h) of the Internal Revenue Code. The State of Kansas is required to contribute the remaining amount necessary to achieve the actuarially determined contribution rate. The State of Kansas contributed 7.97% of covered payroll for the year ended June 30, These contribution requirements are established by KPERS and are periodically revised. The State of Kansas' contributions to KPERS for District employees for the years ended June 30, 2007, 2008 and 2009 were $17,573,703, $20,741,982 and $22,980,806, respectively, equal to the statutory required contributions each year. These contributions are recognized as revenues and expenditures in KPERS Retirement Contributions Fund. KPERS had no investments in the District's debt securities. Ten-year historical trend information showing KPERS' progress in accumulating Wichita Public Schools Page 54

96 Financial Section sufficient assets to pay benefits when due is presented in KPERS' June 30, 2009 financial report. F. Postemployment Healthcare Plan Plan Description. Wichita Public Schools Post-Retirement Benefits Plan (the Plan) is a singleemployer defined benefit healthcare plan administered by the Wichita Public Schools #259 (the District). The Plan provides healthcare benefits, including medical, dental, vision and life, to retirees. Retiree health coverage is provided for under K.S.A Employees who retire on or after age 55 with at least 10 years of cumulative service with the District and 10 years of vested service under Kansas Public Employee Retirement System (KPERS) are eligible for benefits. If a participant was hired before July 1, 1996, then the participant can access the plan if retirement is on or after age 50 with 15 years of service with the District. Retirees and spouses have the same benefit as active employees. Retiree coverage terminates either when the retiree becomes covered under another employer health plan, or when the retiree reaches the Medicare eligibility age which is currently age 65. Spousal coverage is available until the retiree becomes covered under another employer health plan, attains Medicare eligibility age, or dies. Funding Policy. As provided by K.SA , the District allows retirees to participate in the group health insurance plan. The funding policy of the District is to pay premiums as they come due through the Health Care internal service fund. The contribution requirements of plan members and the District are established and may be amended by the Board of Education. The required contribution is based on projected pay-as-you-go financing requirements. District retirees pay 100% of their premiums; the District is not required to share costs of retiree premiums. The District pays claims costs for retirees through its Health Care internal service fund, as described in Note IVA Annual OPEB Cost and Net OPEB Obligation. The Districts's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 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 (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Districts' net OPEB obligation to the Plan: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Contributions made Other net OPEB obligation adjustment Increase in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year $ 4,466, ,247 (160,477) 4,425,845 (2,138,821) 1,298,050 3,585,074 1,374,113 $ 4,959,187 Wichita Public Schools Page 55

97 Financial Section The district's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 were as follows (dollar amounts in thousands): Percentage ofannual Fiscal Year Annual OPEB NetOPEB Ended OPEB Cost Cost Contributed Obligation 6/30109 $ 4,425, % $ 4,959,187 6/30108 $ 4,466, % $ 1,374,113 Funded Status and Funding Progress. As of July 1, 2007, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits was $35.8 million, and there was no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $35.8 million. The covered payroll (annual payroll of active employees covered by the plan) was $266.2 million, and the ratio of the UAAL to the covered payroll was percent. 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. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability 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 the 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. In the July 1, 2007, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.5 percent investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the District's own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 9 percent initially, reduced by decrements of.5 percent to an ultimate rate of 5 percent after eight years. Both rates included a 2.5 percent inflation assumption. The UAAL is being amortized as a level dollar of projected payroll on a closed basis. The remaining amortization period at July 1, 2007, was thirty years. G. Pending Governmental Accounting Standards The effect on the District's financial statements ofthe following statements issued, but not yet adopted, has not yet been determined. Wichita Public Schools Page 56

98 Financial Section GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets was issued June This statement provides guidance on identifying, accounting for, and reporting intangible assets. The new standard characterizes an intangible asset as an asset that lacks physical substance, is non-financial in nature, and has an initial useful life extending beyond a single reporting period. It further states that these assets should be classified as capital assets. The provisions of this statement are effective for the District's fiscal year ending June 30, GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions was issued in February This statement will be effective for the District beginning with its fiscal year ended June 30, This statement is intended to improve the usefulness of information provided to financial report users about fund balance by providing clearer, more structured fund balance classifications, and by clarifying the definitions of existing governmental fund types. GASB 54 establishes a hierarchy of fund balance classifications based primarily on the extent to which a government is bound to observe spending constraints imposed upon how resources reported in governmental funds may be used. Specifically, GASB 54 distinguishes fund balance between amounts that are considered nonspendable and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. H. Subsequent Events On July 8, 2009, the City of Wichita experienced rain, wind and hail that damaged several school district buildings and vehicles. This damage will exceed the District's $250,000 self insurance retention for its property insurance coverage. On July 27, 2009, the Board of Education approved an amount not to exceed $3,000,000 for repairs to District property. On November 4, 2008, the patrons of the Wichita Public Schools voted to approve a $370 million general obligation bond proposal. To date, $188,260,000 of the $370 million has been issued. The District intends to issue another $32 million before the end of The date of issuance has not been definitively determined. The remaining bonds are expected to be issued over the next two years. Wichita Public Schools Page 57

99 Financial Section WICHITA PUBLIC SCHOOLS UNIFIED SCHOOL DISTRICT NO. 259 REQUIRED SUPPLEMENTARY INFORMATION June 30, 2009 Schedule of Funding Progress Actuarial Valuation Date 07/01/07 Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) (b) $ 35,793,858 $ Unfunded AAL (b-a) 35,793,858 Funded Ratio (a/b) 0% Covered Payroll ( c) $ 266,214,828 UAAL as a Percent of Covered Payroll ((b-a)/c) 13.45% Wichita Public Schools Page 58

100 AJ CD.c c _. (j3 c. en c 'C 'C - CD 3 CD r+ C) - 0'., 3 C) r+ _. o

101 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual General Fund Year ended June 3D, 2009 Actual Variance with Amounts Final Budget Budgeted Amounts BudgetalY Overl Original FInal Basis (Under) Revenues: Taxes $ 45,554,695 $ 45,554,695 $ 45,193,733 $ (360,962) Intergowmmental- Slate 268,079, ,578, ,838, ,137 other 235, ,594 Total rewnue 333,634, ,133, ,267, ,769 Expenditures: C"",nt Instruction 121,158, ,142, ,518,855 (5,623,229) Student and inslnjctional support 30,369,596 30,369,596 31,583,386 1,213,790 Adminisuation 30,446,861 30,446,861 31,055, ,062 Operations and maintenance 36,883,805 36,883,805 36,343,611 (540,194) Total expenditures 218,858, ,842, ,501,775 (4,340,571 ) Revenue over expenditures 114,776, ,291, ,765,626 4,474,340 Other financing sources (uses): Transfer (to) from other funds: Special Revenue Funds (114,904,440) (116,419,474) (120,760,045) 4,340,571 Total other financing sources (uses) (114,904,440) (116,419,474) (120,760,045) 4,340,571 Revenues and other financing sources over (under) expenditures and other uses (128,188) (128,188) 5, ,769 Fund balances at beginning ofyear 128, , ,190 2 Fund balances atend afyear $ $ $ 133,771 $ 133,771 Explanation ofdifference between budgetary and GAAP fund balances: Accounts payable for items received but not yet paid for. (125,174) Encumbrances for equipment and supplies ordered but not received are not reported rorgaap purposes until received. 1,940,108 Inventory purchases are outflows ofbudgetary resources but are not expenditures for GAAP. 1,431,917 GAAP fund balance at end of year $ 3.380,622 Wichita Public Schools Page 59

102 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Supplemental General Fund Year ended June 30, 2009 Actual Variance with Amounts Final Budget BUdgeted Amounts BUdgetary Overl Original Final Basis (Under) Revenues: Taxes $ 55,845,825 $ 55,845,825 $ 59,697,472 $ 3,851,647 Intergovemmental- State 39,200,439 39,200,439 39,200,439 Other 228, ,306 Total revenues 95,046,264 95,046,264 99,126,217 4,079,953 Expenditures: Current Instruction 2,459,892 2,459,892 2,394,806 (65,086) Student and instructional support 57,106 57,106 Administration 256, , ,441 (60,554) Operations and maintenance 25,596,595 25,596,595 21,301,806 (4,294,789) Student transportation service 16,391,121 16,391,121 14,064,134 (2,326,987) Total expenditures 44,704,603 44,704,603 38,014,293 (6,690,310) Revenues over (under) expenditures 50,341,661 50,341,661 61,111,924 10,770,263 Other financing sources (uses):. Transfers out (55,424,233) (55,424,233) (62,114,543) 6,690,310 Revenues and other financing sources over (under) expenditures and other uses (5,082,572) (5,082,572) (1,002,619) 4,079,953 Fund balances at beginning afyear 5,082,572 5,082,572 5,082,574 2 Fund balances atend afyear $ $ $ 4,079,955 $ 4,079,955 Explanation ofdifference between budgetary and GAAP fund balances: Accounts payable for items received but not yet paid for. Encumbrances for equipment and supplies ordered but not received are not reported for GAAP purposes until received. GAAP fund balance at end of year (36,744) 3,189,377 $ 7,232,588 Wichita Public Schools Page 60

103 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Special Education Fund Year ended June 3D, 2009 Actual Variance with Amounts Final BUdget BUdgeted Amounts BUdgetary Overl Original Final Basis (Under) Revenues: Intergovernmental- Federal $ 10,938,825 $ 10,938,825 $ 13,150,041 $ 2,211,216 Other 305, ,061 Total revenues 10,938,825 10,938,825 13,455,102 2,516,277 Expenditures: Current Instruction 63,556,654 63,556,654 60,626,723 (2,929,931) Student and instructional support 20,270,235 20,270,235 20,680, ,217 Administration 5,425,860 5,425,860 4,420,192 (1,005,668) Operations and maintenance 1,295,071 1,295,071 1,252,041 (43,030) Student transportation service 9,928,321 9,928,321 8,449,893 (1,478,428) Total expenditures 100,476, ,476,141 95,429,301 (5,046,840) Revenues over (under) expenditures (89,537,316) (89,537,316) (81,974,199) 7,563,117 Other financing sources (uses): Transfers in 78,508,170 75,908,170 80,964,347 5,056,177 Total other financing sources (uses) 78,508,170 75,908,170 80,964,347 5,056,177 Revenues and other financing sources over (under) expenditures and other uses (11,029,146) (13,629,146) (1,009,852) 12,619,294 Fund balances at beginning of year 14,651,421 14,651,421 14,651,420 (1) Fund balances at end of year $ 3,622,275 $ 1,022,275 $ 13,641,568 $ 12,619,293 Explanation ofdifference belween budgetary and GAAP fund balances: Accounts payable for items received but not yet paid for. Encumbrances for equipment and supplies ordered but not received are not reported for GAAP purposes until received. Intergovernmental revenues earned but not received are reported as revenues for GAAP purposes. GAAP fund balance at end of year (97) 1,183, ,658 $ 15,019,511 Wichita Public Schools Page 61

104 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual State Intervention Fund (K-12) Year ended June 3D, 2009 Actual Variance with Amounts Final Budget Budgeted Amounts Budgetary Overl Original Final BasIs (Under) Revenues: Charges for services $ $ $ 68,041 $ 68,041 Other 56,431 56,431 Total revenues 124, ,472 Expenditures: Current: Instruction 64,647,383 64,647,383 64,297,068 (350,315) Student and instructional support 1,038,530 1,038,530 1,070,807 32,277 Administration 1,376,655 1,376,655 1,448,434 71,779 Operations and maintenance 407, , ,541 9,675 Total expenditures 67,470,434 67,470,434 67,233,850 (236,584) Revenues over (under) expenditures (67,470,434) (67,470,434) (67,109,378) 361,056 Other financing sources (uses): Transfers in 65,331,227 65,331,227 67,216,813 1,885,586 Total other financing sources (uses) 65,331,227 65,331,227 67,216,813 1,885,586 Revenues and other financing sources over (under) expenditures and other uses (2,139,207) (2,139,207) 107,435 2,246,642 Fund balances at beginning of year 2,139,207 2,139,207 2,139,207 Fund balances stend ofyaar $ $ $ 2,246,642 $ 2,246,642 Explanation ofdifference betv.jeen budgetary and GAAP fund balances: Accounts payable for items received but not yet paid for. (4,083) Encumbrances for equipment and supplies ordered but not received are not reported for GAAP purposes until received. 392,533 GAAP fund balance at end afyear $ 2: Wichita Public Schools Page 62

105 en c "C "C - CD 3 CD..m - 0'., 3 ṃ. _. o

106 Special Revenue Funds - used to account for specific revenues that are legally restricted to expenditures for particular purposes. maintained by the District and the purpose of each are as follows: The special revenue funds Adult Education - used to account for revenue and expenditures in conjunction with the Adult Basic Education program identified in K.S.A Year Old. Program - was created by Kansas statute in 2005 and provides early childhood programs for the district. State Intervention - was created by Kansas statute in 2005 to provide for the district's At-Risk population with additional educational opportunities and instructional services to assist in closing the achievement gap. Bilingual Education - used to account for costs incurred in administering programs to provide special help for pupils whose native language is not English. eschool- used to provide lessons, resources, training and teaching support onune for K-8 families and to provide an online alternative learning option for high school students in Wichita and the Wichita Metro Area. Capital Outlay - used to account for capital improvement projects and capital equipment purchases for the district. Driver Education - used to account for the costs of transporting students within the district. Nontraditional School Program - used to account for expenditures associated with the high school night school and learning center programs. Food Service - used to account for the all monies received and expended attributable to the food service program. The program is administered according to the state plan of child nutrition operations under which federal funds and commodities are received pursuant to federal acts relating to child nutrition. The programs are administered and meals are served on a nonprofit basis. Professional Development - used to account for teacher inservice training program. Parents As Teachers - used to account for the home/school partnership program that helps parents understand more about how young children grow and learn so that they can be better teacher of their preschool children. Summer School - used to account for costs associated with the summer school programs. Vocational Education - weighting fonnula. used to account for secondary education vocational programs approved by the state and funded by the General fund Special L1abllltv Expense - is used to pay for the cost of providing for the defense of the district and its employees for the payment of claims. Contingency Reserve - used to provide resources for unforeseen and unplanned needs. Student Material Revolving - used to account for revenues from student materials fees and the expenditures associated with the purchase of student materials. Music Rontal- used to account for the collection of student music rental fees and the expenditures for musical instruments. Textbook Rental - used to account for the receipt of student textbook rental fees and the expenditures for student textbooks Athletic Actlvltv - used to account for gate receipts at secondary school athletic functions and expenditures relating to those functions. Special Assessment - used to pay for costs associated with capital improvements such as streets, sewers, curbs, and gutters. Supplemental Grants - Federal- used to account for revenue and expenses of programs administered in accordance with federal grants awarded to the district. Supplemental Grants - State and Local - used to account for revenue and expenses of programs administered in accordance with state and nongovernmental and/or local grants awarded to the district. KPERS - used to account for revenue and expenses of the Kansas Public Employees Retirement System. KPERS provide statewide defined benefit retirement plans for state and local public employees. Debt Service Funds - used for payment of principal and interest on the District's general obligation bonds when such bonds are outstanding. Capital Projects Funds used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Internal Service Funds - used to account for the financing of goods or services provided by one department or agency to other departments or agencies ofthe government and to other government units, on a cost reimbursement basis. The internal service funds maintained by the district and purpose for each are as follows: Heath Cara - used to account for premium deposits and expenditures to health care providers of medical and dental services for covered district employees. DIsability Reserve - used to account for premiums and disability claims paid by the district on behalf of covered employees. Workers' Compensation used to account for benefits provided for disability resulting from occupational illness or injury to all employees under the Kansas Worker's Compensation Law. Risk Management - used to account for legal defense and pay claims against the Board of Education when an incident occurs during the course of employment. The deductible portion ofthe property and casualty, general liability, automobile and aviation premiums are also accounted for in this fund

107 !l g. ;;: Qi t Cli' fil g. g iii' Revenues: Taxes Intergovernmental- State Intergovernmental - Federal Charges for services Earnings on investments Other Contributions Total revenues Expenditures: Current: Instruction Student and instructional support Administration Operations and maintenance Student transportation service Nutrition selvices Facility acquisition and construction service Total expenditures Wichita Public Schools Unified School District No. 259 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2009 Special Revenue Funds Non- Adult 4 Year Old traditional Education - State Bilingual eschool Virtual Driver School Regular Intervention Education Education Education Program $ 9,786 $ ,295, , ,858 47,479 $ 9, $ 2, , ,916 43,293 $ 63, , ,437 1,165, , , ,895 Nutrition Services 219,542 14,835,272 3,936,241 53,763 18,873, $ $ " S' Qi'... f: C;' ::I Q? G) Col Excess of revenues over (under) expenditures Other flnanclng sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Change in reseive for inventory Fund balances at end of year 9,786 (4,979,343) (9,611,253) (699,351) (778,529) (40,253) 171,581 5,035,369 9,517, ,882 1,009, ,000 5,035,369 9,517, ,882 1,009, ,000 9,786 56,026 (93,983) 6, , , , , , , , ,699 8,444, ,359 $ 138,674 $ 313,225 $ 20,527 $ $ 1,137,105 $ $ 8,740,488 (continued)

108 !e ill' ::t... &t ti' ::::- C)' : 2- C/j Assets: Cash, cash equivalents and investments Accounts receivable State aid receivable Due from otl1er funds in"",ntory Total assets Liabilities: Accounts payable Accrued payroll Deferred revenue Total liabilities Wichita Public Schools Unified School District No. 259 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2009 (continued) Special Revenue Funds Parents Special Professional as Summer Textbook Vocational Liability Contingency AtI1letic Development Teachers School Rental Education Expense Reserve Activity $ 1,647,124 $ 131,179 $ 381,834 $ 6,383,615 $ 629,094 $ 213,642 $ 14,477,282 $ 1,359,611 $ 1,795,646 $ 257,283 $ 381,834 $ 6,383,615 $ 629,094 $ 2,907,240 $ 14,477,282 $ 1,359,611 $ 148, ,104 $ 1,927 $ $ 84,763 22,655 97, ,499 $ 6,513 $ 443,634 2,693,598 84,763 24,582 97, , ,147-1,910 $ $ 1,910 " 5;' ii'... 1: ' ::li al,. Fund Balances: Reserved for. Encumbrances Inventory Unreserved Total fund balances Totall/abil/ties and fund balances 57,749 19,648 1,653, , ,207 5,366,101 (3,803) 2,817,318 14,477,282 1,257,193 1,710, , ,207 6,247, ,947 2,907,240 14,477,282 1,357,701 $ 1,795,646 $ 257,283 $ 381,834 $ 6,383,615 $ 629,094 $ 2,907,240 $ 14,477,282 $ 1,359,611 (continued) 881, ,750 89, ,508

109 ; (=j' ::Jo ;;: Qi ;p t (=j' 2iii' Assets: Cash, cash equivalents and in\l13stments Accounts receivable State aid receivable Due from other funds Inventory Total assets Liabilities: Accounts payable Accrued payroll Deferred revenue Total liabilities Music Rental Wichita Public Schools Unified School District No. 259 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2009 (continued) Student Material Revolvin9 Supplemental Grants Federal Special Revenue Funds Supplemental Grants - Special State and Local Assessments KPERS Retirement Contributions Total Nonmajor Governmental Funds $ 584,085 $ 495,805 $ 1,614,738 $ 6,476,250 $ 1,315,125 $ $ 47,015, , , , ,626 2,693, ,570 $ 584,085 $ 495,805'$ 2,154,483 $ 6,624,429 $ 1,315,125'$ $ 51,598,982 $ 2,145 $ $ 115,902 $ 348,647 $ $ $ 770,931 1,094,373 4,157 2,654, , , ,922 2,145, 1,409, ,692-4,186,128 " :s' C'l ii'... ga C'l :!' 0' :::a Fund Balances: Reserved for. Encumbrances Inventory Unreserved Total fund balances Total liabilities and fund balances 46,221 5, ,425 1,894,455 7,509, , , ,490 (174,251) 3,815,282 1,315,125-38,975, , , ,174 5,709,737 1,315,125-47,412,854 $ 584,085 $ 495,805 $ 2,154,483 $ 6,624,429 $ 1,315,125 $ $ 51,598,982 ell CII

110 ; l\'.., Ql' ;p tl\' Wichita Public Schools Unified School District No. 259 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2009 Special Revenue Funds go 2- CIj Revenues: Taxes Intergovemmental- State Intergovemmental- Federal Charges for services Earnings on investments Other Contributions Total revenues Expenditures: Current Instruction Studerrt and instructional support Administration Operations and mairrtenance Studerrt transportation service Nutrition services Facility acquisition and construction service Total expenditures Non- Adult 4 YearOld traditional Education - State Bilingual eschool Virtual Driwr School Regular rnterwntion Education Education Education Program $ 9,766 $ 219,542 14,835,272 3,936, ,786 2, , ,642.Q1: ,295, , ,858 47,479 $ 9,611,253 $ 2, ,916 43,293 $ , ,437 1,165, , , ,895 Nutrition Services ,237 4,979,343 9,611, ,116 1,350, ,895 18,873,237 $ $ " is' nqi'... n ::t g Excess ofrevenues o...er (under) expenditures (4,979,343) (9.611,253) (699,351) (778,529) (40,253) 171,581 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) 5,035,369 9,517, , , ,000 5,035,369 9,517, ,882 1,009, Net change infund balances 9,786 56,026 (93,983) 6, , , ,581 1 en en Fund balances at beginning ofyear Change in reserw for inwrrtory Fund balances at end of year 128, , , , , $ 138,674 $ 313,225 $ $ 6,531 $ 1, $ 812,446 $ 8,740,488 (continued)

111 ill' ::i'.., Qt ti' ::::- f)' : aiii Revenues: ra>es Intergovernmental State Intergovernmental Federal Charges for services Earnings on investments Other Contributions Total revenues Expenditures: Current Instruction Student and instructional support Administration Operations and maintenance Student transportation service Nutrition services Facility acquisition and construction service Total expenditures Wichita Public Schools Unified School District No. 259 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2009 (continued) Special Revenue Funds Parents Special Professional as Summer Textbook Vocational Liability Contingency Athletic Development Teachers School Rental Education E)QJense Reserve Activity $ 246,117 $ 504, ,341 $ 176,264 $ 772,988 28,834 $ 20,821 $ 21, ,804 74, , , , ,822 _ ,261 1,526,190 1,124, ,101 2,747,792 7,332, , ,538 $ 316,658 $ 642,955 1,526,190 1, ,101 2,747,792 8, , E>a::ess of revenues over (under) expenditures (1,280,073) (416,489) (18,837) (1,945,970) (8,402,216) (274,029) (160,694),. S' Qi'... [ ' :::. Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) 1,512, ,958 3,569,966 8,307, ,000 1, ,000 1,512, ,958 3,569,966 8, ,000 1,817, ,000 Net change in fund balances 232, ,469 (18,837) 1,623,996 (94,838) 245,971 1, ,306 en... Fund balances at beginning of year. Change in reserw for inventory Fund balances atend of year 1,478, , ,044 4,623,120 $ 1,710,883 $ 232,701 $ 284,207 $ 6,247,116 $ (continued) ,661,269 12, ,318, ,947 $ 2.907,240 $ 14,477,282 $ 1,357,701

112 it...: Qj t l=j' go!ij Revenues: Taxas Intergowrnmental - State lntergowmmental- Federal Charges for services Earnings on investments Other ContributiollS Total revenues Expenditures: Current Instruction Student arxl instructional support Administration Operations and maintenance Student transportation service Nutrition services Facility acquisition and construction service Total e)(jjenditures Wichita Public Schools Unified School District No. 259 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2009 (continued) $ Music Rental Student Material ReVQlving Supplemental Grants Federal Supplemental Grants - Special State and Local Assessments KPERS Retirement Contributions Total Nonmajor Governmental Funds $ $ $ $ 2,551 $ $ 23, ,483 22,980,806 24,255,637 30,277,809 45,694,723 75, , ,859 6,424,515 8, ,694 8,901 2,112,833 15,921 2,243, , ,267 ":s' 75, ,079 30,277,809 3,767,001 18,472 22,980,806 80,256, , ,328 11,219,359 17,013,966 1,381, ,506 30, ,423 Special Revenue Funds 972,513 11,417,014 50,704, ,028 4,395,851 25,781, ,348 2,835,148 5,380,504 2,740,197 3,988,953 8,062,331 4,424 58,691 93,504 13, ,149 19,342,146 53,905 72, , , ,328 30,413,314 4,199,752 72,214 22,980, , Qi'... 1r ' ::I Excess ofrevenues over (under) expenditures (129,693) (56,249) (135,505) (432,751) (53,742) (29,233,610) 0) co Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning ofyaar. Change inreseml for inventory, Fund balances atend ofyaar 200,000 33,077, ,000 33,077,408 70,307 (56,249) (135,505) (432,751) (53,742) 3,843, , , ,142,488 1,368,867 43,444, ,359 $ 581,940 $ 495,805 $ 745,174 $ 5,709,737 $ 1,315,125 $ $ 47,412,854

113 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Adult Education - Regular Fund Year ended June 30, 2009 Revenues: Earnings on in\lestments Total revenues Expenditures: Current Instruction Total expenditures $ BUdgeted Amounts Original Final $ Actual Amounts Budgetary Basis $ 9,786 $ 9,786 Variance with Final Budget Overl (Under) 9,786 9,786 Revenues over (under) expenditures 9,786 9,786 Fund balances at beginning of year Fund balances atend ofyear $ $ 128,888 $ 138,674 $ 128, ,674 Wichita Public Schools Page 69

114 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Four Year Old State Intervention Fund Year ended June 30, 2009 Revenues: Other Total revenues $ Budgeted Amounts Original Final $ Actual Amounts Budgetary Basis $ 280 $ 280 Variance with Final Budget Over! (Under) Expendures: Current Instruction Student and instructional support Administration Operations and maintenance Total expenditures Revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Revenues and other financing sources over (under) expenditures and other uses Fund balances at beginning ofyear Fund balances atand ofyaar 4,512,450 4,512,450 4,337,325 (175,125) 474, , ,865 (13,849) 247, , ,230 (71,097) 55,939 55,939 47,479 (8,460) 5,290,430 5,290, ( ) (5,290,430) (5.290,430) ( ) ,369 5,035, ,035,369 5,035, (255,061) ( ) 13, , , , ,061 $ $ $ 268,811 $ 268,811 Wichita Public Schools Page 70

115 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Bilingual Education Fund Year ended June 30, 2009 Revenues: Other Total revenues $ Budgeted Amounts Original Final $ Actual Amounts BUdgetary Basis $ 3,185 $ 3,185 Variance with Final Budget Overl (Under) 3,185 3,185 Expenditures: Current Instruction Student and instructional support Administration Operations and maintenance Total expenditures Revenues over (under) expenditures other financing sources (uses): Transfers in Total other financing sources (uses) Revenues and other financing sources over (under) expenditures and other uses 8,515,765 8,515,765 8,622, , , , ,815 22, , , , , , , ,936 (230,319) 9,517,270 9,517,270 9,517,270 (9,517,270) (9,517,270) (9,514,085) 3,185 9,517,270 9,517,270 9,517,270 9,517,270 9,517,270 9,517,270 3,185 3,185 Fund balances at beginning ofyear Fund balances atend ofyear $ $ $ 3,185 $ 3,185 Wichita Public Schools Page 71

116 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual eschool Virtual Education Program Year ended June 30, 2009 Revenues: Other Total revenues $ Budgeted Amounts Original Final $ Actual Amounts BudgelaIY Basis $ 2,765 $ 2,765 Variance with Final Budget Over} (Under) 2,765 2,765 Expenditures: Cunrent Instruction Student and Instructional support Administration Total expenditures Re\lenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Rewnues and other financing sources over (under) expenditures and other uses 705, , ,673 (219,209) 175, ,916 43,293 43, , , ,882 (705,882) (705,882) (703,117) 2, , , , , , ,882 2,765 2,765 Fund balances at beginning ofyear Fund balances at end of year $ $ $ 2,765 $ 2,765 Wichita Public Schools Page 72

117 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Driver Education Fund Year ended June 30, 2009 Actual Variance with Amounts Final Budget Budgeted Amounts Budgetary Overl Original Final Basis (Under) Revenues: Intergovemmental- State $ 187,164 $ 187,164 $ 63,270 $ (123,894) Charges for services 141, , ,121 21,966 Earnings on investments 221, , , ,894 Other 3,681 3,681 Total revenues 549, , ,509 25,647 Expenditures: Current Instruction 1,351,217 1,351,217 1,175,424 (175,793) Student and instruction support 196, , ,372 (15,154) Total expenditures 1,547,743 1,547,743 1,356,796 (190,947) Revenues over (under) expenditures (997,881) (997,881 ) (781,287) 216,594 Other financing sources (uses): Transfers in 110, ,961 1,009, ,003 Total other financing sources (uses) 110, ,961 1,009, ,003 Revenues and other financing sources over (under) expenditures and other uses (886,920) (886,920) 228,677 1,115,597 Fund balances at beginning ofyear 886, , ,920 Fund balances at end of year $ $ $1,115,597 $ 1,115,597 Wichita Public Schools Page 73

118 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Nontraditional School Program Fund Year ended June 30, 2009 Actual Variance with Amounts Final Budget BUdgeted Amounls Budgetary Overl Original Final Basis (Under) Revenues: Intergovemmental- Federal $ 537,376 $ 537,376 $ 581,642 $ 44,266 Charges for services 105, ,197 (105,197) Other 3,711 3,711 Total revenues 642, , ,353 (57,220) Expenditures: Current Instruction 1,415,859 1,415, ,101 (845,758) Total expenditures 1,415,859 1,415, ,101 (845,758) Revenues over (under) expenditures (773,286) (773,286) 15, ,538 Other financing sources (uses): Transfers in 150, , ,000 Total other financing sources (uses) 150, , ,000 Revenues and other financing sources over (under) expenditures and other uses (623,286) (623,286) 165, ,538 Fund balances at beginning ofyear 623, , ,286 Fund balances atend ofyear $ $ $ 788,538 $ 788,538 Wichita Public Schools Page 74

119 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Nutrition Services Fund Year ended June 30, 2009 Revenues: Inlergovemmenlal- Slale lntergovemmental- Federal Charges for services Earnings on investments Other Total revenues Expendttures: Current Nutrition services Tolal expenditures Revenues over (under) expenditures Fund balances at beginning of year Fund balances at end ofyear Actual Variance with Amounts Final Budget Budgeted Amounts Budgetary Overl Original Final Basis (Under) $ 259,234 $ 259,234 $ 219,543 $ (39,691) 14,129,230 14,129,230 14,835, ,Q42 3,616,556 3,616,556 3,936, , , ,483 53,763 (349,720) 320, ,778 18,408,503 18,408,503 19,365, ,094 21,757,482 21,757,482 18,332,725 (3,424,757) 21,757, ,482 18,332,725 (3,424,757) (3,348,979) (3,348,979) 1,032,872 4,381,851 3,588,411 3,588,411 3,588,410 (1 ) $ 239,432 $ 239,432 $ 4,621,282 $ 4,381,850 Wichita Public Schools Page 75

120 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Professional Development Fund Year ended June 30, 2009 Revenues: Intergovemmental- State Other BUdgeted Amounts Original Final $ 180,366 $ 180,366 $ Total revenues 180, ,366 Actual Amounts Budgetary Basis 246,115 $ 11, ,603 Variance with Final Budget Overl (Under) 65,749 11,488 77,237 Expenditures: Current Student and instructional support Total expenditures Revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Revenues and other financing sources over (under) expenditures and other uses Fund balances at beginning ofyear Fund balances atend ofyear 1,933,961 1,933,961 1,550,978 (382,983) 1,933,961 1,933,961 1,550,978 (382,983) (1,753,595) (1,753,595) (1,293,375) 460, , ,348 1,512,955 1,083, , ,348 1,512,955 1,083,607 (1,324,247) (1,324,247) 219,580 1,543,827 1,433,552 1,433,552 1,433,554 2 $ 109,305 $ 109,305 $ 1,653,134 $ 1,543,829 Wichita Public Schools Page 76

121 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parents As Teachers Fund Year ended June 30, 2009 Actual Variance with Amounts Final BUdget BUdgeted Amounts Budgetary Overl Original Final Basis (Under) Revenues: Intergovemmental- State $ 534,037 $ 534,037 $ 504,419 $ (29,618) Eamings on invesbnents 202, , , Other 2,292 2,292 Total revenues 736, , ,052 (26,744) Expenditures: Current: Student and instructional support 1,088,380 1,088,380 1,085,871 (2,509) Total expenditures 1,088,380 1,088,380 1,085,871 (2,509) Revenues over (under) expenditures (351,584) (351,584) (375,819) (24,235) Other financing sources (uses): Transfers in 291, , , ,215 Total otherfinancing sources (uses) 291, , , ,215 Revenues and other financing sources over (under) expenditures and other uses (59,841) (59,841) 155, ,980 Fund balances at beginning ofyear 59,841 59,841 59,841 Fund balances atend 01 year $ $ $ 214,980 $ 214,980 Wichita Public Schools Page 77

122 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Summer School Fund Year ended June 30, 2009 Revenues: Charges for services Total revenues Expenditures: Current: Instruction Total expenditures Revenues over (under) expenditures Budgeted Amounts Original Final $ 202,445 $ 202,445 $ 202, ,445 Actual Amounts BUdgetary Basis 176,264 $ 176,264 Variance with Final Budgel Over' (Under) (26,181) (26,181 ) 386, , ,101 (191,368) 386, , ,101 (191,368) (184,024) (184,024) (18,837) 165,187 Fund balances at beginning ofyear Fund balances atend ofyear 303, ,Q43 303,044 1 $ 119,019 $ 119,019 $ 284,207 $ 165,188 Wichita Public Schools Page 78

123 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Vocational Education Fund Year ended June 3D, 2009 Actual Variance with Amounts Final Budget Budgeted Amounts Budgetary Overl Original Final Basis (Under) Revenues: Other $ $ $ 2,710 $ 2,710 Total revenues 2,710 2,710 Expenditures: Current Instruction 6,799,356 6,799,356 7,248, ,213 Administration 1,132,995 1,132, ,316 (442,679) Operations and maintenance 378, , ,538 (6,534) Total expenditures 8,310,423 8,310,423 8,310,423 Revenues over (under) expenditures (8,310,423) (8,310,423) (8,307,713) 2,710 Other financing sources (uses): Transfers in 8,307,378 8,307,378 8,307,378 Total other financing sources (uses) 8,307,378 8,307,378 8,307,378 Revenues and other financing sources over (under) expenditures and other uses (3,045) (3,045) (335) 2,710 Fund balances at beginning of year 3,045 3,045 3,045 Fund balances alend ofyear $ $ $ 2,710 $ 2,710 Wichita Public Schools Page 79

124 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Liability Expense Fund Year ended June 30, 2009 Revenues: Taxes Earnings on investments Total revenues $ Budgeted Amounts Original Final $ Actual Amounts BUdgetary Basis $ 20,821 $ 21,808 42,629 Variance with Final Budget Over' (Under) 20,821 21,808 42,629 Expenditures: Cunrent: Operations and maintenance Total expenditures Revenues over (under) expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Revenues over (under) expenditures 1,000,000 1,000, ,467 (656,533) 1,000,000 1,000, ,467 (656,533) (1,000,000) (1,000,000) (322,646) 677, , , , ,000 (1,000,000) (1,000,000) 219,162 1,219,162 Fund balances at beginning of year Fund balances atend ofyear 2,598,156 2,598,156 2,598,156 $1,598,156 $ 1,598,156 $ 2,817,318 $ 1,219,162 Wichita Public Schools Page 80

125 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Assessment Fund Year ended June 30, 2009 Revenues: Taxes Earnings on investments Total revenues $ BUdgeted Amounts Original Final $ Actual Amounts BUdgetary Basis $ 2,551 $ 15,921 18,472 Variance with Final BUdget Overt (Under) 2,551 15,921 18,472 Expenditures: Current Facility acquisition and construction service Total expenditures Revenues over (under) expenditures Fund balances at beginning ofyear Fund balances atend ofyear 500, ,000 43,214 (456,786) 500, ,000 43,214 (456,786) (500,000) (500,000) (24,742) 475,258 1,339,867 1,339,867 1,339,867 $ 839,867 $ 839,867 $1,315,125 $ 475,258 Wichita Public Schools Page 81

126 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual KPERS Retirement Contributions Year ended June 30, 2009 Revenues: Intergovemmental- State Total revenues Expenditures: Current Instruction Student and Instructional support Administration Operations and maintenance Transportation Nutrition services Total expenditures BUdgeted Amounts Original Final Actual Amounts Budgetary Basis Variance with Final Budget Overl (Under) $ 24,890,378 $ 24,890,378 $ 22,980,806 $ (1,909,572) 24,890,378 24,890,378 22,980,806 (1,909,572) 13,489,134 13,489,134 11,417,014 (2,072,120) 4,761,121 4,761,121 4,395,851 (365,270) 3,070,733 3,070,733 2,835,148 (235,585) 3,196,979 3,196,979 3,988, ,974 63,568 63,568 58,691 (4,877) 308, , ,149 (23,694) 24,890,378 24,890,378 22,980,806 (1,909,572) Revenues over (under) expenditures Fund balances at beginning of year Fund balances at end of year $ $ $ $ Wichita Public Schools Page 82

127 Financial Section Wichita Public Schools Unified School District No. 259 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Bond and Interest Fund Year ended June 30, 2009 Revenues: Taxes Intergovemmentat- State Earnings on invesbnents Total revenues Expenditures: Current: Principalflnterest on long-tenm debt Total expenditures Revenues over (under) expenditures Other financing sources (uses): Issuance of refunding bonds Total other financing sources (uses) Rewnues over (under) expenditures Fund balances at beginning of year Fund balances at end ofyear Actual Variance with Amounts Final BUdget Budgeted Amounts BUdgetary Overl Original Final Basis (Under) $ 16,706,026 $16,706,026 $ 17,326,543 $ 620,517 5,772,093 5,772,093 5,702,065 (70,028) 786, ,991 22,478,119 22,478,119 23,815,599 1,337,480 22,280,164 22,280,164 22,280,163 (1 ) 22,280,164 22,280,164 22,280,163 (1) 197, ,955 1,535,436 1,337,481 3,472,997 3,472,997 3,472,997 3,472, , ,955 5,008,433 4,810,478 21,856,422 21,856,422 21,856,422 $ 22,054,377 $ 22,054,377 $ 26,864,855 $ 4,810,478 Wichita Public Schools Page 83

128 Financial Section Fund Balance - Budget and Actual Capital Outlay Fund Year ended June 3D, 2009 Actual Variance with Amounts Final Budget Budgeted Amounts BUdgetary Overl Original Final Basis (Under) Revenues: Taxes $ 19,782,495 $ 19,782,495 $ 20,528,768 $ 746,273 Intergovernmental - Federal 96,113 96,113 Intergovernmental - Slale 4,882,079 4,882,079 4,843,407 (38,672) Earnings on investments 3,500,000 3,500,000 1,420,140 (2,079,860) Sale ofproperty 519, ,592 Other 449, ,780 Total revenues 28,184,574 28,184,574 27,857,800 (306,774) Expenditures: Current: Facility acquisition and construction service 35,000,000 35,000,000 28,080,778 (6,919,222) Total expenditures 35,000,000 35,000,000 28,080,778 (6,919,222) Revenues over (under) expenditures (6,835,426) (6,835,426) (222,978) 6,612,448 Other financing sources (uses): Transfers in 1,484,103 1,484,103 Total other financing sources (uses) 1,484,103 1,484,103 Revenues and other financing sources over (under) expenditures and other uses (6,835,426) (6,835,426) 1,261,125 8,096,551 Fund balances at beginning of year 35,278,763 35,278,763 35,278,763 Fund balances at end of year $ 28,443,337 $ 28,443,337 $ 36,539,888 $ 8,096,551 Wichita Public Schools Page 84

129 Financial Section Wichita Public Schools Unified School District No. 259 Combining Statement of Net Assets Internal Service Funds June 30, 2009 Health Disability Workers' Risk Care Reserve Compensation Management Total Assets: Current assets; Cash and cash equivalents $ 32,303,372 $ 1,501,376 $ 8,063,093 $ 3,546,992 $ 45,414,833 Total currenl assets 32,303,372 1,501,376 8,063,093 3,546,992 45,414,833 Liabilities; Current liabilities; Accrued liabilities 2,086 2,086 Accrued salaries 5,161 4,799 4,068 14,028 Current portion - claims payable 3,350,000 70,000 2,764,500 6,184,500 Total current liabilities 3,357,247 74,799 2,768,568 6,200,614 Noncurrent liabilities; Long-term claims payable 3,707,000 3,707,000 Total liabilities 3,357,247 74,799 6,475,568 9,907,614 Net Assets: Total net assets restricted for seff-insurance claims $ 28,946,125 $ 1,426,577 $ 1,587,525 $ 3,546,992 $ 35,507,219 Wichita Public Schools Page 85

130 Financial Section Wichita Public Schools Unified School District No. 259 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2009 Health Disability Workers' Risk Care Reserve Compensation Management Total Operating revenues: Charges for services $ 50,067,936 $ 1,300,849 $ 3,925,861 $ 286,183 $ 55,580,829 Olher insurance reimbursements 2,624 80, Total operating revenues 50,070,560 1,300,849 3,925, ,185 55,663,455 Operating expenses: Contractual services 36,845, ,783 3,065,124 1,021,638 41,871,912 Total operating expenses 36,845, , ,124 1, ,871,912 Operating income (loss) 13,225, , ,737 (655,453) 13,791,543 Nonoperating revenues: Interest 140,586 10,576 60,095 37, ,694 Total nonoperating revenue 140,586 10, , ,694 Income (loss) before transfers 13,365, , ,832 (618,016) 14,040,237 Transfers in 131, ,917 Change in net assets 13,365, , ,832 (486,099) 14,172,154 Total net assets..ijeginning ofyear 15,580,346 1,054, ,693 4,033,091 21,335,065 Total netassets-end of year $ 28,946,125 $ 1,426,577 $ 1,587,525 $ 3,546,992 $ 35,507,219 Wichita Public Schools Page 86

131 Financial Section Wichita Public Schools Unified School District No. 259 Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2009 Health Dlsablll1y Workers' Risk Care Reserve CompensaUon Management Total Cash flows from operating activities: Cash received for services $ 50,067,936 $ 1,300,849 $ 3,925,661 $ 286,183 $ 55,580,829 Cash recei\f!d from insljance camparies 2,624 80,002 82,626 Cash payments for claims (38,576,786) (949,039) (2,811,078) (1,023,376) (43,360,279) Net cash flow from operating activities 11,493, ,810 1,114,783 (657,191) 12,303,176 Cash flows from non-capltal financing activities: Transfers from other turds 131, ,917 Net cash flow from norh:apital financing activities 131, ,917 Cash flows from Investing activities: Herest on investments 140,586 10,576 60,095 37, ,694 Net cash flow from investing activities 140,586 10,576 60,095 37, ,694 Change in cash aoo cash equivalents 11,634, ,386 1,174,878 (487,837) 12,683,787 Cash and cash equivalents-beginning aftha year 20,669,012 1,138,990 6,888,215 4,034,829 32,731,046 Cash and cash equlvalents-end aftha year $ 32,303,372 $ 1,501,376 $ 8,063,093 $ 3,546,992 $ 45,414,833 Reconciliation ofoperating Income (loss) to net cash flow from operating activities: Operating income (loss) $ 13,225,193 $ 361,066 $ 860,737 $ (655,453) $ 13,791,543 Adjustments to reconcile operating income (loss) to net cash flow from operatill'j actilaties: Change in accrued liabilities 3, (454) (1,738) 2,133 Change in claims payable (1,735,000) (10,000) 254,500 (1,490,500) Net cash ftow from operating activities $ 11,493,774 $ 351,810 $ 1,114,783 $ (657,191) $ 12,303,176 Wichita Public Schools Page 87

132 Financial Section Wichita Public Schools Unified School District No. 259 Combining Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2009 Agency Funds Student Payroll Total Activity Trust Flexible Agency Funds Fund Spending Funds Assets Cash and cash equivalents $ 3,355,585 $ 1,060,501 $ 679,752 $ 5,095,838 Total assets $ 3,355,585 $ 1,060,501 $ 679,752 $ 5,095,838 Liabilities Due to others $ 3,355,585 $ 1,060,501 $ 679,752 $ 5,095,838 Total liabilities $ 3,355,585 $ 1,060,501 $ 679,752 $ 5,095,838 Wichita Public Schools Page 88

133 Financial Section Wichita Public Schools Unified School District No. 259 Combining Statement of Changes in Assets and Liabilities Fiduciary Funds Year ended June 30, 2009 Totals All Agency Funds Balance, Balance, July 1, June Additions Deletions 2009 Assets Cash and cash equivalents $ 5,052,969 $ 148,544,292 $ 148,501,423 $ 5,095,838 Total assets $ 5,052,969 $ 148,544,292 $ 148,501,423 $ 5,095,838 Liabilities Due to others $ 5,052,969 $ 148,544,292 $ 148,501,423 $ 5,095,838 Tolalliabilities $ 5,052,969 $ 148,544,292 $ 148,501,423 $ 5,095,838 Student Activity Funds Assets Cash and cash equivalents $ 3,180,057 $ 13,893,480 $ 13,717,952 $ 3,355,585 Total assets $ 3,180,057 $ 13,893,480 $ 13,717,952 $ 3,355,585 Liabilities Due to others $ 3,180,057 $ 13,893,480 $ 13,717,952 $ 3,355,585 Total liabilities $ 3,180,057 $ 13,893,480 $ 13,717,952 $ 3,355,585 Payroll Trust Fund Assets Cash and cash equivalents $ 1,065,802 $ 129,909,984 $ 129,915,285 $ 1,060,501 Total assets $ 1,065,802 $ 129,909,984 $ 129,915,285 $ 1,060,501 Liabilities Due to others $ 1,065,802 $ 129,909,984 $ 129,915,285 $ 1,060,501 Tolalliabilities $ 1,065,802 $ 129,909,984 $ 129,915,285 $ 1,060,501 Flexible Spending Fund Assets Cash and cash equivalents $ 807,110 $ 4,740,828 $ 4,868,186 $ 679,752 Total assets $ 807,110 $ 4,740,828 $ 4,868,186 $ 679,752 Liabilities Due to others $ 807,110 $ 4,740,828 $ 4,868,186 $ 679,752 Total liabilities $ 807,110 $ 4,740,828 $ 4,868,186 $ 679,752 Wichita Public Schools Page 89

134 Financial Section Wichita Public Schools Page 90

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136 Statistical Section STATISTICAL SECTION This part of the Wichita Public Schools statistical comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the Wichita Public Schools overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the district's financial performance and wellbeing have changed over time. Revenue Capacity These schedules contain information to help the reader assess the district's financially significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the district's current levels of outstanding debt and the district's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators To help the reader understand the environment within which The district's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the district's financial report relates to the services the districts provides and the activities it performs Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The district implemented GASS Statement 34 in June 2002; schedules presenting government-wide information include information beginning in that year. Wichita Public Schools Page 91

137 Statistical Section Changes In Fund Balances, Governmental Funds Last Ten Fiscal Years Revenues: Taxes Intergowmmental - State lntergowmmenlal - Federal Charges for sences Earnings on imestments Other Contributions Total re\enues Expenditures: Current General management salaries Instruction salaries Operations salaries Maintenance salaries Exira Duty Pay Employee Benefits Purchase I Contracted SenAces Utilities Supplies and materials Other (1) 2002 (1) 2003 (1) $ 85,975,414 $ 214,682,837 31,947,027 9,778,309 2,914,581 6,251, ,550,006 7,803, ,735,311 13,485,528 7,308,043 9,018,950 57,624,798 15,558,860 6,285,037 16,086, ,121 2,895, , ,587,438 (7,037,432) 33,710 44,106,147 (44,237,819) (97,962) (7,135,394) 58,962, ,276 52,134,024 78,357,129 $ 222,433,322 38,426,667 9,685,428 8,728,029 4,634, ,263,443 7,923, ,733,477 14,060,026 7,388,319 8,188,051 59,929,282 19,594,554 7,685,591 16,735, ,487 3,100,000 3,216, ,002,020 9,261,423 94,833, ,062 44,927,289 (45,475,257) 94,386, ,647,517 52,134,024 (68,806) $ 155,712,735 $ 97,937, ,268,004 43,977,302 8,233,981 10,997,796 5,721,640 34, ,170,229 16,103,000 8,343, ,591,256 (33,421,027) 94,835,000 82,129,797 (84,006,239) 92,958,558 59,537, ,712,735 (173,586) 215,076,680 $ $ 107,792, ,743,897 48,636,740 7,439,103 7,768,054 6,627,091 21, ,029,134 Instruction (2) 204,352, ,308,468 Student and instructional support (2) 51, ,522,283 Administration (2) 28,082,224 29,956,146 Operations and maintenance (2) 42,074, ,585 Student transportation senaoe (2) 15,172,615 14, ,150 17,625,854 Nutrition senaces (4) 6,398,474 6,748,350 14,078,456 15,613,915 Sub-total current expenditures Facility acquisition and construction sel\lice 19,394,533 14,773,085 53,492, ,034,656 Debt SeNce: Principal retirement Interest Total expenditures Excess (deficiency) of re-.enues Oloer (under) expenditures Other financing sources (uses): Bond issuance (5) Premium on bond issuance (5) Discount on bond issuance (5) Payment on refunded bonds (5) Proceeds of lease purchase Proceeds from issuance of debt Issuance of refunding bonds Premiums on bonds sold Sale of property Transfers in Transfers out Transfers out - debt sence Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Change in reserw tor inloentory Fund balances at end ofyear --3;;-'''5'',''68;::9:2,-o1';-42;C---3;;-2''9'',i:91,'',''9''50;;--'''3;;-5''6?,6"5"'1","8"18;;---;3"8"8",2"3"5",2"'5",'""" $ 10,395,000 11,118, ,782,942 (67,753,808) 94,830,000 87,469,160 (88,451,851) 93,847,309 26,093, ,076,680 8, ,178,759 Ratio of total debt sence expenditures to noncapital expenditures. 6.43% 5.53% Note: Starting in 2002,!he dlstrlctlrrplemented GAse 34, which changed how we presented our expenditure functions. (1) creases, since 2000 Is due to bond Issues, self-insurance reserve funds, and grant revenues. (2) This lnfonmtlon Is not available In years prior to!he Irrplementallon of GASa 34. (3) The stale changed the tax cobecuon dates resulting in a one year only increase in lax revenues. (4) Prior to 2002, salaries for nutrillon services staff were reflected in operauons and maintenance. (6) Noverrber 2008, \I\1ichita citizens approved!he passage of $370 n1illon bond Issue h May 2009 II.SD 259 ISSIIecI $58 7 Q fh)q jj bgnds Wichita Public Schools Page 92

138 Statistical Section Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years 2004 (3) $ 151,517,208 $ 115,817,735 $ 120,700,320 $ 126,534,430 $ 138,635,857 $. 142,769, ,890, ,080, ,607, ,665, ,323, ,839,622 58,274,593 59,811,021 59,895,999 59,971,569 57,235,874 58,799,705 7,617,597 5,414,169 8,525,609 6,011,281 5,561,626 6,492,556 3,553,282 3,169,608 4,785,887 10,859,048 10,380,375 5,701,943 4,382,923 3,769,354 3,092,723 6,953,381 3,763,512 2,763,531 13, ,647 1,217, , ,236, ,062, ,622, ,355, ,117, ,339, ,021, ,635, ,698, ,913, ,752, ,195,270 49,891,245 50,099,298 59,202,505 69,652,446 74,075,547 79,389,067 28,869,729 30,451,254 32,799,723 34,610,127 37,197,292 42,609,103 43,876,578 50,174,541 55,337,795 57,507,190 65,557,633 70,351,157 17,477,166 18,128,299 18,376,565 19,140,522 20,095,468 21,509,033 15,560,532 15,581,790 16,745,000 16,727,652 17,424,261 19,342, ,697, ,070, ,160, ,551, ,103, ,395, ,006,225 68,948,723 34,467,735 18,926,102 33,939,625 31,360,422 13,040,000 9,905,000 10,675,000 11,465,000 12,264,999 13,075,000 12,286,238 12,859,653 13,956,286 13,860,796 13,211,519 12,907, ,029, ,783, ,259, ,803, ,519, ,738,585 (58,793,307) (48,721,466) (5,636,954) 20,552,286 (401,313) (2,399,073) 191,260,000 5,336,620 (29,083) (3,000,000) 68,460,000 7,683,648 76,768,505 81,051, ,571, ,766, ,735, ,742,671 (77,427,560) (81,183,661) (122,083,020) (139,284,085) (161,867,852) (182,874,588) (659,055) 76,011,731 (1,511,166) (3,527,679) (131,917) 193,435,620 (59,452,362) 27,290,275 (7,148,120) 17,024,607 (533,230) 191,036, ,178, ,686, ,926, ,152, ,457, ,586,019 (39,990) (50,267) 374, ,432 (338,577) 88,478 $ 181,686,407 $ 208,926,415 $ 202,152,788 $ 219,457,827 $ 216,586,020 $ 409,711, % 5.59% 5.27% 5.11% 4.79% 4.60% Wichita Public Schools Page 93

139 !l g. ", El' ;p ti' i 2-!Ij General Fund Reserved Unreserved Total general fund All Other Governmental Funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Debt service funds Total all other governmental funds Total Fund Balance $ 4,073,093 $ 4,754,682 $ 5,729,281 $ 5,305,206 $ 6,386,977 $ 4,806,381 $ 5, $ 4,605,335 $ 4, $ 3.372, , , , , , , , , ,190 8, , ,152 5,970,964 5,467,717 6,660,246 5, ,928 4,744,879 4, ,380,622 (1) $ 9,955,403 $100,231,562 $104,298,581 $ 66,684,021 $ 80, $113, $ $112,138,906 $ ,568 $104, (1) $ 52, $ 155, $ 153, $ 131, $ ,581 $ ,415 $ 202,152,788 $ 219,457,827 $ 218, $ 409, (1) Increased substantially In 2001 and 2009 due (0 the issuance or general obligation bonds. FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years 2002 Fiscal Year ,335,067 31,681,784 28,847,297 38,962,382 48, ,622 54,587, ,402 59, , , ,853,499 7,086, , , ,352 26,522, , , , n, , ,nS ,856,423 26,864.S ,330, fil Qt ijl' "" "" C\' at f&l n "" a' :::a Qi.. CD,.

140 ;; ::t n'.., Ql' 2 n' go III Expenses Governmental activities: Instruction Student and instructional support AdmInistration Operations and maintenance Student transportation service Nulrition services Interest on long-term debt Tolal primary government expenses Program Revenues Governmental activities: Charges for services Inslruction Student and instructional support Operations and maintenance Nutrition services Operating granls and contributions Capital granls and conlributlons Total primary government program revenues Net (Expense)fRevenu8 Total primary government net expense General Revenue and Other Changes In Net Assets Governmental activities: Taxes Property taxes levied for general purposes Property taxes levied for debt service Property taxes levied for capital projects State and federal aid not mstricted to specific purposes Earnings on investments Sale of property Miscellaneous Special item - loss on the disposal of fixed assets Total primary government general revenue 2002 Schedule of Changes in Net Assets Last Eight Fiscal Years Fiscal Year (l) $ 211,978,588 $ 219,775,272 $ 234,218,611 $ 240,980,556 $ 269,482,620 $ 288,593,364 $ 302,662,754 $ 311,741,071 54,910,997 53,606,277 50,880,988 51,098,489 62,343,417 72,536,322 74,397,253 80,905,216 28,295,953 29,879,549 29,224,271 31,520,542 34,469,634 36,072,351 37,438,148 43,170,671 43,457,070 45,970,178 43,922,430 51,708,259 59,667,037 61,284,641 66,225,149 72,110,571 16,388,709 17,594,464 17,421,034 18,305,064 19,070,619 19,525,800 20,280,150 22,040,131 13,049,730 15,408,607 15,483,096 16,080,432 17,459,840 17,218,179 17,608,651 19,661,902 9, , ,322 13,191,484 13,483,218 12, , ,753, ,198, ,271, ,884, , ,195, ,917, ,542,372 3,554,012 4,222,455 1,934,840 2,313, ,390 1,696,780 2,020, ,540 59,712 63,743 43, ,014 69, , , ,856 4,085,612 3,825,379 3,331,399 3,479,329 3,684,387 3,729,021 3,795,630 3,936,241 (2) 94,006, ,395, ,493, ,615, ,019, ,195, ,716, ,872,905 1,599,576 1,867, , , Jtt3,702, ,821, ,029, ,061, ,206, ,277, ,584,058 $ (273,913,130) $ (280,496,437) $ (280,450,367) $ (295,855,085) $ (340,915,062) $ (364,988,640) $ (393,639,623) $ (422,575,605) ) 73,273,240 80,262, ,974,978 81,149,882 86,151,743 90,871, ,568, ,914,577 ) 15,806,462 18,326,898 25,533,237 17,941,189 16,376,108 16,647,085 16,996,667 17,326,543 (4) 8,857,645 9,202,973 19,008,993 16,726,684 18,172,469 19,015,981 20,070,805 20,528,768 ( 182,673, ,138, ,961, ,679, ,831, ,790, ,060, ,520,092 11,282,023 7,963,735 3,692,524 3,506,757 6,569,625 11,760,389 11,069,066 5,950, ,592 5,721,640 6,627,091 4,382, ,694 3,243,512 6,964,396 3,803,513 2,243,939 (633,396) 296,981, ,522, ,554, ,369, ,344, ,050, , ,004, til Ql'... iii' =:!:... C'l... 0' ::2 Change in Net Assets Total primary government $ 23, $ ,098 $ ,769 $ 5,514,816 $ 6,429,499 $ ,421 $ ,284 $ 17,428,543 'I CD c.n f4qlu: TIlll dls1tlcl began to repolllleenjlill/lformllllon wllen it implemented GASa statement 34 in (1) The dlstr1ct's expenses foc lilsincuon have IllCreeseil slgnlfieantl)llnthe last fml yeers as I resur olthe 80lIrd IMiaUve to reduce class size IIIld to ejlpand al!-day kjllllergallento all elemelllalles. (2) The dlstr1cl recelws faderal dollars fornine TlUe lundlllg 5OUlCOS, special edueallon. and olher gl8llta and they /law increased yearly. (3) Duling 2004, tha stale ofkansas moved the ad valorem property lali: dlsliibullons from July to June resulung In lhree majorl1ll{ dlslribullons in the fiseal year. (4) In2004tha dlsliid. approved as-year I1lsolutlon to ase the Capital Oullay levylo 7 mills. (5) When the SllIIa Chsnged the texdlsiribulldll dllles tor 2004 the amount of SIlIIe aid dribll1ed 10 schools wss reduced.