Auburn Riverside High School. Mt. Baker Middle School. Lake View Elementary School

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1 Auburn Riverside High School Mt. Baker Middle School Lake View Elementary School

2 Auburn Riverside High School Mt. Baker Middle School Lake View Elementary School

3 Legal Notice: The Auburn School District complies with all federal rules and regulations and does not illegally discriminate on the basis of race, color, national origin, sex, age, or disability, and does not tolerate sexual harassment. This holds true for all students who are interested in participating in educational programs and/or extracurricular school activities. Any reports of alleged sexual harassment or concerns about compliance and/or grievance procedures should be directed to the school district s Title IX RCW 28A.640 officer and Section 504 and ADA coordinator, Tim Cummings, 915 4th Street NE, Auburn, Washington 98002, (253)

4 Introductory Section Table of Contents Directory of Officials School District Organizational Chart Letter of Transmittal Certificate of Excellence in Financial Reporting

5 Auburn School District No. 408 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2009 I. INTRODUCTORY SECTION TABLE OF CONTENTS Schedule No. Page No. Table of Contents i Directory of Officials iv Organizational Chart vi Letter of Transmittal 1 Certificate of Excellence in Financial Reporting 7 II. FINANCIAL SECTION 8 Independent Auditor's Report 9 Management's Discussion and Analysis 10 Basic Financial Statements Government-Wide Financial Statements 21 Statement of Net Assets 1 22 Statement of Activities 2 23 Governmental Fund Financial Statements 24 Fund Balance Sheet-Governmental Funds 3 25 Reconciliation: Balance Sheet/Statement of Net Assets 3A 26 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 4 27 Reconciliation: Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities 4A 28 Fiduciary Fund Financial Statements 29 Statement of Net Assets 5 30 Statement of Changes in Net Assets 6 31 Notes to the Financial Statements 32 (An integral part of the financial statements) Required Supplementary Information 55 Budgetary Comparison Schedule - General Fund A-1 56 Budgetary Comparison Schedule - Special Revenue Fund (Associated Student Body) A-2 57 Actuarial Valuation of Post Employment Benefits Other Than Pension Schedule of Funding Progress A-3 58 Supplemental Data 59 Governmental Funds General Fund Comparative Balance Sheets B-1 60 Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual B-2 61 Schedule of Revenues - Budget and Actual B-3 62 Schedule of Expenditures by Program - Budget and Actual B-4 64 Special Revenue Fund (Associated Student Body) Comparative Balance Sheets C-1 66 Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual C-2 67 Debt Service Fund (Bond Fund) Comparative Balance Sheets D-1 68 Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual D-2 69 Capital Projects Fund Comparative Balance Sheets E-1 70 Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual E i-

6 Auburn School District No. 408 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2009 TABLE OF CONTENTS Transportation Vehicle Fund Schedule No. Page No. Comparative Balance Sheets F-1 72 Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual F-2 73 Fiduciary Fund Private Purpose Trust Comparative Statement of Fiduciary Net Assets G-1 74 Statement of Changes in Fiduciary Net Assets G-2 75 Employee Benefit Trust Comparative Statement of Fiduciary Net Assets G-3 76 Statement of Changes in Fiduciary Net Assets G-4 77 Long-Term Debt Statement of Changes in Long-Term Debt H-1 78 Outstanding General Obligation Indebtedness Debt Service H-2 79 Capital Assets Schedule of Capital Assets by Location I-1 80 Statement of Changes in Capital Assets I-2 81 Schedule of Capital Assets by Function and Activity I-3 82 Bond Amortization Summary Amortization Schedule for All Outstanding Bonds Bond Premium, Discount, Refunding Adjustment J-1 83 Amortization Schedule Bond Premium-1997 Bonds J-2 85 Amortization Schedule Bond Premium-2003 Bonds J-3 86 Amortization Schedule Bond Premium and Refunding Adjustment-2004 Bonds J-4 87 Amortization Schedule Bond Premium-2004 Bonds J-5 88 Amortization Schedule Bond Premium-2005 Bonds J-6 89 Amortization Schedule Bond Premium-2006 Bonds J-7 90 III. STATISTICAL SECTION Table No. Page No. Net Assets by Component-Last Six Fiscal Years 1 92 Changes in Net Assets-Last Six Fiscal Years 2 93 Fund Balances, Governmental Funds-Last Ten Fiscal Years 3 94 Changes in Fund Balances, Governmental Funds-Last Ten Fiscal Years 4 95 Revenues by Source-Fund Level-Last Ten Fiscal Years 5 96 General Expenditures by Function-Fund Level-Last Ten Fiscal Years 6 97 Interest Earnings on Investments-Last Ten Fiscal Years 7 98 Property Tax Levies and Collections-Last Ten Calendar Years 8 99 Assessed and Estimated Actual Value of Taxable Property-Property Tax Rates-All Overlapping Taxing Authorities-Last Ten Years Ratio of Annual Debt Service for General Bonded Debt to Total General Fund Expenditures-Last Ten Fiscal Years Ratio of Net General Bonded Debt Per Capita Ratio of Net General Bonded Debt to Personal Income-Last Ten Fiscal Years Statement of Direct and Overlapping Bonded Debt Computation of Legal Debt Margin Legal Debt Margin Information-Last Ten Fiscal Years ii-

7 Auburn School District No. 408 Comprehensive Annual Financial Report For the Fiscal Year Ended August 31, 2009 TABLE OF CONTENTS Table No. Page No. Demographic and Economic Statistics-Last Ten Fiscal Years Principal Taxpayers, Current Year and Nine Years Ago Property Value and Construction-Last Ten Years Major Employers Current Year and Nine Years Ago Full Time Equivalent District Employees by Program-Last Ten Fiscal Years Operating Statistics-Last Ten Fiscal Years Capital Assets by Function Last Six Fiscal Years Miscellaneous Statistics iii-

8 Auburn School District No. 408 Directory of Officials ~ August 31, 2009 School Board: Ray Vefik, President Carol Helgerson Lisa Connors Craig Schumaker Janice Nelson Term and First Elected: 4-Year Term, First Elected Year Term, First Elected Year Term, First Elected Year Term, First Elected Year Term, First Elected Term Expires: November 2011 November 2011 November 2009 November 2011 November 2009 Administrative Staff: Dr. Kip Herren...Superintendent Mike Newman...Deputy Superintendent, Business and Operations Tim Cummings...Assistant Superintendent, Human Resources Rod Luke...Assistant Superintendent, Student Learning and Technology Louanne Decker...Assistant Superintendent, PK-12 School Programs Gordon O Dell... Executive Director, Student Services Jennifer Traufler...Executive Director, Student Special Services Principals: Elementary Schools: Diane Collier...Alpac Eric Daniel...Arthur Jacobsen Lenny Holloman...Chinook Greg Brown...Dick Scobee Anne Gayman..Evergreen Heights Robin Logan...Gildo Rey Sally Colburn...Hazelwood Adam Couch...Ilalko Mike Weibel...Lake View Ryan Foster...Lakeland Hills Ed Herda...Lea Hill Debra Gary...Pioneer Tim Carstens...Terminal Park Pauline Thomas...Washington Middle Schools: Isaiah Johnson...Cascade Darin Adams...Mt. Baker Jason Hill...Olympic Ben Talbert...Rainier High Schools: Richard Zimmerman...Auburn Terri Herren...Auburn Mountainview Bruce Phillips...Auburn Riverside Brad Sprague...West Auburn Comprehensive Annual Financial Report Contributing Staff: Toni Lally, CPA, Executive Director of Business Debra Bodkins, Senior Accountant Debra Podesta, Accounting Systems Analyst Andrea Hollister, District Publications Tech Amy Spence and Gary Kissel, Photography Building the Future -iv-

9 Auburn School District No. 408 Board of Directors and Superintendent Ray Vefik, First Elected or Appointed: June 1998 ~ District 1 Ray Vefik has extensive years of experience as a volunteer and supporter of Auburn schools. He served as PTA president of Dick Scobee Elementary in and as president of the Auburn Council of PTAs, He was an integral part of the district s attendance area committee which was formed in 1990 and proceeded to serve on several more attendance area committees until Mr. Vefik also served on the Auburn School District s Ad Hoc Committee in 1994 and chaired the renovations sub-committee. Mr. Vefik and his family have lived in Auburn since 1985 and his son attended and graduated from Auburn schools. Mr. Vefik is a project manager/architect. Carol Helgerson, First Elected or Appointed: June 2002 ~ District 2 Carol Helgerson and her family have lived in Auburn for over 16 years. She and her husband have two children, both proud Auburn graduates. Ms. Helgerson brings a background in leadership and policy development to the Board. She is a strong believer that the School Board must be visable and strong advocates to ensure that all children are provided the resources needed to succeed in a safe environment. Lisa Connors, First Elected or Appointed: December 2007 ~ District 5 Lisa Connors is an active member of the community and believes community collaboration is essential to increasing student achievement. She brings strong communication skills to the school board and desires to seek knowledge and input from the community. Mrs. Connors has served actively in her local PTA for six years. She was the chairperson for the Reading Program, promoting literacy and providing free books to students. She created an after-school program serving students annually that offered a variety of classes in art, science and writing. Mrs. Connors was instrumental in creating the new Auburn High School PTSA and currently serves as president. Mrs. Connors holds an associate degree in business administration. She brings years of business administrative experience in banking and human resources to the school board. Mrs. Connors has lived in Auburn since 1997 and has three sons in the Auburn School District. Craig Schumaker, First Elected or Appointed: November 1999 ~ District 4 Craig Schumaker brings strong leadership and teamwork skills to the Auburn School District Board of Directors. Mr. Schumaker believes the school board has to anticipate changes in educational requirements as well as future needs such as increased classroom space and up-to-date resources. We have to ensure that students, teachers, and staff have the appropriate resources for a quality education. Mr. Schumaker works for the Federal Aviation Administration and he currently is a front line manager. He is a Navy veteran and has retired from the Washington Army National Guard with over 25 years of active and reserve service. He has lived in Auburn since 1984, and his two sons graduated from Auburn Riverside High School. Janice Nelson, First Elected or Appointed: May 1997 ~ District 3 Janice Nelson has a focus of finding opportunities to include all people. She spends many hours building relationships with community organizations and events such as the Soroptomists, Auburn Chamber of Commerce, Uniquely Auburn committee (of which she is co-chair), and Reaching Out Fair. Partnerships and collaborative efforts are such an important part of this community, says Ms. Nelson. Ms. Nelson has lived in Auburn since 1992 and her daughter graduated from Auburn High School. She is a senior employment consultant for Trillium, an employment service for people with developmental disabilities. Dr. Kip Herren, Superintendent of Auburn Schools Dr. Kip Herren has enjoyed working in the field of education for 34 years, 31 of those years dedicated to the Auburn School District. He has been a teacher, a principal, central office administrator, and, currently, is superintendent of Auburn schools. Kip is active in a variety of civic organizations including, president of the YMCA, Rotary, and Chamber of Commerce. He is in the Washington State Wrestling Coaches Hall of Fame and has been honored as a Forensic Administrator of the Year. He was adjunct professor of educational policy and finance for the University of Washington at Tacoma where he currently services on the school s Professional Education Advisory Board. His passion and advocacy for student learning is well known in the community. -v-

10 AUBURN SCHOOL DISTRICT NO. 408 ORGANIZATIONAL CHART August 31, 2009 BOARD OF DIRECTORS SUPERINTENDENT DEPUTY SUPERINTENDENT Assistant Assistant Assistant Superintendent Superintendent Superintendent PK-12 School Student Learning Human Programs and Technology Resources Executive Director Executive Director Director Secondary Executive Director of Capital Projects High Schools Student Learning Human Resources Coordinator High School Director Elementary Director Human of Capital Projects Principals Student Learning Resources & Legal Executive Director of Business Services Coordinator of Payroll Supervisor of Purchasing Director of Maintenance and Operations Director of Transportation Executive Director Information Services Director Child Nutrition Services Director, Athletics Career Tech Education Coordinator Performing Arts Centers Executive Director Student Special Services Assistant Director Student Special Services Elementary School Middle School Principals Coordinator Assessments -vi-

11 AUBURN SCHOOL DISTRICT AVENUE TO EXCELLENCE February 22, 2010 Board of Directors Auburn School District No Fourth Street Northeast Auburn, Washington Dear Board Members: We are pleased to present to you the Comprehensive Annual Financial Report (CAFR) for Auburn School District No. 408 for the fiscal year ended August 31, This report presents complete information about the district s financial position at year-end and financial activities during We feel that the report illustrates the efforts of the administration to attain the financial goals established by the Board. Business Services staff prepared this report. The accuracy of the data presented, including all disclosures and the completeness and fairness of the presentation, are the responsibility of the management of the district. We believe the information, as presented, is accurate in all material aspects. The data presented in this report is presented in a manner designed to set forth fairly, in all material respects, the financial position and results of operations of the district as measured and reported by the financial activity of its various funds. All disclosures necessary to enable the reader to gain an adequate understanding of the district s financial affairs have been included. To facilitate readability, the Comprehensive Annual Financial Report is presented in three sections as described below: The Introductory Section includes a table of contents, directory of officials, school district organizational chart, certificate of excellence in financial reporting and this transmittal letter. The Financial Section includes our independent auditor s report as well as management s discussion and analysis of the performance of the district for the fiscal period. The financial section also includes government-wide financial statements, governmental fund financial statements, fiduciary fund financial statements, the notes to the financial statements, required supplementary information and supplemental data. The Statistical Section includes comparative and trend tables and schedules intended to provide additional information based on data from the financial history of the district for the past ten years, including debt, and demographic statistics. Information in this section is unaudited

12 REPORTING ENTITY This report includes all funds and account groups of the district, an independent reporting entity. Unaffiliated with the City of Auburn or other government jurisdictions, the district provides public education to pre-school through twelfth grade students. The public education provided includes a strong academic program of basic education, a comprehensive education for special education students, including preschool, a career and technical education program at the secondary level, a special program for academically gifted students, and alternative programs for those students requiring individualized learning opportunities. ECONOMIC CONDITION AND OUTLOOK OF LOCAL ECONOMY Located 25 miles south of Seattle and 10 miles northeast of Tacoma, Auburn is enjoying an increasingly diversified economy made possible by its location, its greatest economic asset. Near two major ports, two excellent rail hubs and the intersection of two major state highways, Auburn has attracted successful regional warehouse and distribution facilities, a regional medical center, entertainment facilities such as casinos and an amphitheater, a regional shopping mall and federal agencies such as the Federal Aviation Administration (FAA), the Social Security Administration and Region 10 of the U.S. General Services Administration (GSA). As the district s largest employer, the Boeing Fabrication Division continues to shrink its footprint in Auburn. Other businesses such as Safeway have stepped in to utilize prime vacant warehouse and office space. Boeing s ongoing consolidation efforts are creating opportunities for major employers to take advantage of Auburn s location and economical commercial lease rates. Although Boeing has reduced its size in Auburn, long range company plans call for redefining Auburn as an emergent manufacturing center of excellence the place Boeing turns to when it needs complex machining or specialized parts. A bright spot in the local economy continues to be the economically successful ventures of the Muckleshoot Indian Tribe. As the second largest employer in the district, the tribe operates two casinos generating $2 million dollars a day in revenue, a bingo hall, an amphitheater for large outdoor concerts by big name entertainers, small shopping malls and smoke shops. With a large stock of affordable housing as well as large new residential developments, Auburn continues to be a popular choice for young families. Conveniently located between Seattle and Tacoma as well as being close to several large employers such as Weyerhaeuser, the SuperMall and other large Boeing plants, Auburn residents enjoy short commutes and have time to participate in school and community activities. MAJOR INITIATIVES The Citizen s Ad Hoc Committee recommended the district conduct a detailed review of all district facilities and develop a Facilities Master Plan. In 2006, the school district began preparation of a Facilities Master Plan to address Auburn School District s facility needs during the next 10 years. This process included the formation of a Steering Committee in 2008 to provide recommendations for facility modernizations, replacement facilities, new facilities and property acquisitions. The Steering Committee recommended replacement of Auburn High School, Olympic Middle School, Chinook, Dick Scobee, Lea Hill, Pioneer and Terminal Park Elementary Schools. All of these schools have exceeded their economic life span and have an estimated cost of modernization that is more than 70% of their replacement cost

13 As the first phase of this facility modernization process, voters passed a proposition for a $46,400,000 capital improvements levy to fund improvements at 18 schools and six support facilities. After reviewing over 2,700 proposed projects, the Steering Committee selected those improvements that will accomplish the following: Reduce operating costs by replacing aging roofs and deteriorating utility lines and providing energy conservation improvements. Improve safety by providing seismic structural upgrades, improving vehicle and bus access, upgrading emergency power systems and improving fire alarm and sprinkler systems. Improve health by improving ventilation systems, enhancing water quality, remodeling health rooms and improving restrooms and locker rooms. Enhance learning opportunities by modernizing instructional spaces and upgrading equipment and furniture. Enhance facility operations by improving heating and cooling, upgrading plumbing and electrical systems, improving lighting and sound systems, upgrading kitchens, and remodeling office and storage areas. Improve security by upgrading lock systems and improving surveillance and intrusion detection systems Improve accessibility by enhancing site and building access for persons with disabilities. Support physical activity and community use by upgrading playgrounds, playfields, and athletic facilities. The capital improvements levy will be for six years beginning in 2010 for the school year through 2015 for the school year. The levies will be as follows: $12,000,000 for 2010 tax year at an estimated rate of $1.20 per $1,000 of assessed value $10,000,000 for 2011 tax year at an estimated rate of $1.00 per $1,000 of assessed value $11,700,000 for 2012 tax year at an estimated rate of $1.14 per $1,000 of assessed value $ 3,900,000 for 2013 tax year at an estimated rate of $.37 per $1,000 of assessed value $ 4,400,000 for 2014 tax year at an estimated rate of $.40 per $1,000 of assessed value $ 4,400,000 for 2015 tax year at an estimated rate of $.39 per $1,000 of assessed value The estimated combined tax rate for all funds including the above propositions is projected to be $5.09 per $1,000 of assessed value for Budgetary Control BUDGETARY AND INTERNAL CONTROL STRUCTURE Budgetary control is maintained at the fund level that is the legal level of budgetary control. The district records encumbrances when a commitment is made for the acquisition of goods or services in order to facilitate effective budgetary control. Encumbered amounts lapse at the end of the fiscal year. However, they are generally reappropriated as a part of the following annual budget

14 Internal Control Structure The district s administration is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the district are protected from loss, theft or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by administration. Accounting System The district s accounting records reflect generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board on governmental accounting in its Codification of Government Accounting and Financial Reporting Standards, June 30, 2008, and subsequent statements and interpretations. The district s accounting records for general governmental operations are maintained on a modified accrual basis as prescribed by the Washington State School Accounting Manual, September 1, 2008 edition, as revised. CASH MANAGEMENT Cash temporarily idle during the year was invested in the King County Investment Pool (Pool). The Pool invests in long-term notes, certificates of deposit, banker's acceptances and repurchase agreements. The district's deposit and investment activities are defined by State law (RCW ). Deposits can only be made with institutions which have been approved by the Public Deposit Protection Commission and which have segregated eligible collateral having a value of not less than their maximum liability. Average pool effective duration of investments in the King County Investment Pool was.68 years enabling the Pool to earn a greater return than any single district could with shorter-term liquidity requirements. District participation in the Pool was approximately 0.996% of total Pool assets of $4.07 billion. Rates on investments decreased during the year from a high of 2.95% at the beginning of the fiscal year to a low of 1.53% at the end of the year in August During the prior fiscal year, the Pool experienced losses from impaired commercial paper investments in Mainsail II, Cheyne Finance, Rhinebridge and Victoria Finance. The district s share of the losses for that prior fiscal year amounted to $1,352,763 and were included in the district s financial results for that year. As of September 1, 2008, the impaired assets were removed from the main King County Investment Pool and placed into an impaired investment pool. Based on bifurcating the pool, King County expects Standard & Poor s to restore the Pool s rating during the first quarter of As of December 31, 2009, the performing pool s net assets fair value was and the impaired pool s net assets fair value was See Notes to the Financial Statements for additional information. As shown in the following table, the earnings increased in 2009 compared to 2008, because the losses from the impaired commercial paper investments were included in However, the total earnings of $1,670,592 in 2009 were approximately half of the 2007 total earnings of $3,107,024. Rates were 5.24% at the beginning of fiscal 2007 and two years later slid to a low of 1.53% at the end of fiscal

15 Investment Earnings Fund Increase Increase General 406,742 52, , % Special Revenue 59,639 24,755 34, % Debt Service 296,135 (39,445) 335, % Capital Projects 847,989 (79,103) 927, % Transportation Vehicle 27,417 1,198 26, % Total Governmental Funds 1,637,922 (39,833) 1,677, % Private Purpose Trust 25, , % Employee Benefit Trust 7, , % Total All Funds 1,670,592 (39,543) 1,710, % RISK MANAGEMENT For liability and property losses, the district participates in the Washington Schools Risk Management Pool administered by Puget Sound Educational Service District No Working with the Pool, the district has established risk control techniques to reduce possible losses to property owned by the district. In addition, Pool participation has reduced the carrying cost of insurance primarily due to the greater buying power of the Pool as well as the practice of using large deductible amounts. Should losses occur, the portion of the uninsured loss is not expected to significantly impact the financial position of the district. For industrial insurance for all district employees, the district participates in the Workers Compensation Trust administered by Puget Sound Educational Service District No The Trust has been successful in lowering the cost of claims through an aggressive employee safety program and an effective claim management process. INDEPENDENT AUDIT State statutes require an annual audit of all state school districts by the Office of the State Auditor. The scope of the audit concentrated on four areas: (1) internal controls; (2) grant compliance; (3) financial statements and management s discussion and analysis; and (4) generally accepted accounting principles. This requirement has been complied with and the independent auditor s opinion has been included in this report. The district is also required to undergo an annual single audit in conformity with federal law. The auditor s report related to the single audit, including the schedule of federal financial assistance, and reports on the internal control structure and compliance with applicable laws and regulations will be published in a separate report. Copies may be obtained from The Office of the State Auditor Legislative Building, PO Box Olympia, Washington

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17 915 Fourth Street Northeast, Auburn, Washington (253)

18 Financial Section Independent Auditor s Opinion Management s Discussion and Analysis Government-Wide Financial Statements Governmental Fund Financial Statements Fiduciary Fund Financial Statements Notes to the Financial Statements Required Supplementary Information Supplemental Data 8

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20 MANAGEMENT S DISCUSSION AND ANALYSIS As management of Auburn School District No. 408, we offer readers of the district s comprehensive annual financial report (CAFR) this narrative overview and analysis of the financial activities of the district for the fiscal year ended August 31, FINANCIAL HIGHLIGHTS The district s net assets of governmental activities as of August 31, 2009 were $172,021,571 million. During the year, the district had revenues that were $8.8 million greater than the $151.9 million in expenses incurred for all governmental activities, resulting in a corresponding increase in the district s net assets. The general fund revenues exceeded expenditures by $1.7 million. District taxpayers approved a six-year capital improvements levy on November 3, 2009 shortly after the end of the fiscal year. The levy was approved for: Approximate Collection Levy Rate/$1,000 Levy Years Assessed Value Amount 2010 $1.20 $12,000, $1.00 $10,000, $1.14 $11,700, $0.37 $3,900, $0.40 $4,400, $0.39 $4,400,000 OVERVIEW OF THE FINANCIAL STATEMENTS This report consists of three parts: an introductory section, a financial section, and a statistical section. The financial section includes the independent auditor s report, management s discussion and analysis, the basic financial statements and related notes to the financial statements. The basic financial statements consist of a series of statements that present different financial 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 and activities. For district activities, these statements tell how these services were financed in the short term as well as what remains for future spending. All of the remaining statements are fund financial statements that report district operations in more detail by providing information about the district s most significant funds. Information is also provided about activities for which the district acts solely as a trustee for the benefit of those outside of the government

21 DISTRICT-WIDE FINANCIAL STATEMENTS The district-wide financial statements are designed to provide a broad overview of district finances, similar to a private-sector business. The statement of net assets presents information on all of the assets and liabilities of the district. The difference between the two is reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the district is improving or deteriorating. The statement of activities presents information showing how the district s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying financial event takes place, regardless of when the cash is actually received or disbursed. Thus, revenues and expenses are reported in this statement for some items that will result in cash receipts or disbursements in future fiscal periods. Earned but unused vacation leave and uncollected taxes are examples of these types of items. FUND FINANCIAL STATEMENTS A fund is a group of related accounts used to maintain control over resources segregated for specific activities or objectives. The district uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All district funds can be divided into two categories: governmental funds and fiduciary funds. GOVERNMENTAL FUNDS Governmental funds account for essentially the same functions reported as governmental activities in the district-wide financial statements. However, unlike these statements, governmental fund financial statements focus on how money flows into and out of the funds and the balances left at year-end that are available to spend. These funds use an accounting method called modified accrual accounting which measures cash and all other financial assets that can easily be converted to cash. Such information may be useful in evaluating the district s ability to finance the district s educational programs and support operations in the near future. Because the focus of governmental funds is narrower than that of the district-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the district-wide financial statements. By doing so, readers may better understand the long-term impact of the district s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains five individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balance for the General Fund, Associated Student Body (ASB) Fund, Capital Projects Fund, Transportation Vehicle Fund and the Debt Service Fund, all of which are considered major funds. FIDUCIARY FUNDS The district is the trustee or fiduciary, for individuals, private organizations and other governments for scholarships and to employees for an employee benefit trust for vision services. All of the district's fiduciary activities are reported in a separate statement of fiduciary net assets and changes in fiduciary net assets under the fiduciary financial statement section. These activities are excluded from the district's other financial statements because the district cannot use these assets to finance its operations. The district is responsible for ensuring that the assets reported in these funds are used for their intended purposes

22 DISTRICT-WIDE FINANCIAL ANALYSIS STATEMENT OF NET ASSETS Net assets may serve as a useful indicator of the district s financial position. Auburn School District s assets exceed liabilities by $172,021,571 at the end of the fiscal year, August 31, Approximately 66.8% of net assets are the investment in capital assets such as land, buildings and equipment less any related outstanding debt used to acquire those assets. The district continues to build and modernize various schools to meet student needs. These assets are not available for future spending. Resources to repay this debt come from property tax levies. Another 17.45% of the net assets are subject to restrictions on how they may be used. These restrictions include the acquisition of capital assets and school buses, debt service and student ASB activities. The balance of net assets will primarily be used to pay for the salaries and employee benefits for the school year. Although these funds are not legally restricted by enabling legislation as of August 31, 2009, they are committed to meet contractual salary obligations to teachers, principals, custodians, bus drivers, cooks and other school district staff for the year beginning September 1, Condensed Statement of Net Assets as of August 31, 2009 and 2008 Governmental Activities Current and other assets $ 67,690,320 $ 71,133,604 Capital assets 226,212, ,019,790 Total assets 293,902, ,153,394 Other liabilities 5,502,124 5,013,813 Long-term debt outstanding 116,379, ,927,224 Total liabilities 121,881, ,941,037 Net assets Invested in capital assets, net of related debt 114,931,374 98,712,271 Restricted 30,018,004 38,261,173 Unrestricted 27,072,193 26,238,913 Total Net Assets $ 172,021,571 $ 163,212,

23 STATEMENT OF ACTIVITIES Governmental activities improved the district s overall financial position, increasing the district s net assets by $ 8,809,214. Changes in Net Assets Governmental Activities For the Fiscal Years Ended August 31, 2009 and 2008 Revenues Program Revenues Charges for services $ 5,586,072 $ 5,939,083 Operating grants and contributions 37,319,309 29,681,546 Capital grants and contributions 1,126,924 1,786,481 General revenues Property taxes for levies for educational programs 24,897,526 22,095,935 Property taxes for levies for debt service 16,520,770 14,753,202 Property taxes for levies for technology equipment 2,812,995 2,739,257 Property taxes for levies for buses - - Unallocated state apportionment and other 70,838,733 69,364,051 Interest and investment earnings 1,619,753 (39,833) Total Revenues 160,722, ,319,722 Expenses Regular instruction 80,669,252 71,901,340 Special instruction 15,098,723 12,288,601 Vocational instruction 6,512,069 6,578,187 Compensatory education 12,627,620 12,459,201 Other instructional programs 696, ,345 Community services 829, ,083 Support services 16,663,401 15,569,387 Child nutrition services 4,460,243 3,978,063 Pupil transportation services 6,904,871 6,526,189 Extracurricular activities (ASB) 2,239,516 2,150,367 Interest on long-term debt 5,210,720 5,702,085 Total Expenses 151,912, ,573,848 Increase (decrease) in Net Assets 8,809,214 7,745,874 Beginning Net Assets 163,212, ,466,483 Ending Net Assets $ 172,021,571 $ 163,212,357 FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS GOVERNMENTAL FUNDS The focus of the district s governmental funds is to provide information on short-term cash inflows, outflows, and balances of spendable resources. Such information is useful in assessing the district s financing requirements

24 GENERAL FUND The General Fund is the major operating fund of the district, providing the majority of the resources for educational programs and support operations. GENERAL FUND REVENUES Revenues for the General Fund totaled $ 134,072,208 in the fiscal year ending August 31, This was $10,058,592 or 8.11% more than the prior year. Revenue Source Increase (Decrease) Amount Increase (Decrease) Percent Local Taxes & Non-taxes $ 27,006,566 $ 25,412,210 $ 1,594, % State Revenues 89,466,739 87,926,472 1,540, % Federal Revenues 16,801,336 9,775,469 7,025, % Other Revenues 797, ,465 (101,898) % Totals $ 134,072,208 $ 124,013,616 $ 10,058, % The increase of $1,594,356 in local taxes and other local sources was primarily due to the increase in the special property tax levies approved by the voters. Calendar year 2009 levy was $24,325,407 compared to the 2008 levy of $22,100,000 and the 2007 levy of $20,759,650. Larger state revenues of $1,540,267 were the result of increased student enrollment, especially special education and bilingual enrollment, over the prior year. Since state revenues are calculated on a per student basis, more students generate more revenue for all state educational programs. In addition, state funds were provided to increase salaries by 4.4%, health insurance by 3.5% and pension costs by 44% for certificated staff and 28% for classified non teaching staff. Although there was a net increase in this revenue source, the increase would have been larger by the $6,340,684 of state revenues that were replaced by Federal Stimulus-State Fiscal Stabilization funds. Of the $7.025 million increase in federal revenue, over 90% or $6,340,684 came from Federal Stimulus-State Fiscal Stabilization funds. Approximately $400,000 of the increase was due to increased participation in the federal school lunch program. Additional funding of $104,240 was provided to assist students with reading through the new Reading First grant and another $143,490 was added to the Title I disadvantaged student grant. Other revenues decreased by over 11% primarily due to a change in state accounting rules that required reimbursements for charges to other districts for shared transportation costs for homeless students under the McKinney-Vento Act to be netted against payments to the contractor for homeless student transportation

25 Revenue Sources 12.53% Federal Sources.6% Other 20.14% Local Sources 66.73% State Sources GENERAL FUND EXPENDITURES Expenditures in the General Fund totaled $132,375,222 for the fiscal year. This represents an increase of $10,640,133 or 8.74% over the prior year. GENERAL FUND EXPENDITURES Increase (Decrease) Amount Increase (Decrease) Percent Current Regular Instruction $ 72,290,756 $ 65,011,968 $ 7,278, % Special Education 14,127,354 11,766,231 2,361, % Vocational Instruction 6,058,317 6,270,243 (211,926) (3.38%) Compensatory Education 11,837,525 11,932,553 (95,028) (0.80%) Other Instructional Programs 580, ,283 81, % Community Services 805, ,284 43, % Support Services 15,971,100 15,272, , % Child Nutrition Services 4,341,959 3,938, , % Pupil Transportation Services 6,081,125 5,857, , % Capital Outlay Equipment 281, ,931 (142,800) (33.68%) Totals $ 132,375,222 $ 121,735,089 $ 10,640, % The increase of 11.2% or $7,278,788 in regular instruction was primarily due to increases in salary and benefit costs for certificated staff including teachers, librarians, counselors, psychologists, nurses, and principals. Almost 60% of the increase was due to increased salaries and 35% was due to greater costs for pension and health care insurance. In addition to a salary and benefit increase for current staff, 13 additional staff were added to meet the needs of an increase in enrollment. A portion of the increase of approximately $300,000 was due to the addition of all day kindergarten at Pioneer and Gildo Rey Elementary schools. These funds were provided under a special state program that is gradually expected to provide all day kindergarten for all students. Additional expenditures of $2,361,123 in special education spending reflect the salary increase and the increase in health insurance and pension costs provided to all certificated staff. Costs also increased in part due to the addition of services and staff to accommodate a 8.8% growth in special education enrollment. Vocational instruction expenditures decreased by 3.38% over the prior year. This decrease of $211,926 was partially due to a drop in overall vocational enrollment. The remainder of the decline was due to transferring the responsibility of the Auburn High School cafeteria from the vocational culinary arts program to the child nutrition program

26 The decrease of $95,028 in compensatory education was primarily due to a reduction of $545,127 of I 728 student achievement funds and the reduction of $370,230 of the Promoting Academic Success program by the state legislature. These reductions were offset by an increase of $282,150 of state remediation funds, an increase of $163,446 of state bilingual funds, an increase of $138,391 in federal Title I funds, an addition of $93,812 from the new Reading First federal grant, and an increase of $88,555 in state special and pilot program funds. Other instructional program spending increased $81,209 or 16.27% partly as the result of increases to the professional development program for math and science teachers from the 4 th to the 12th grade. The state legislature provided funds for two additional days of training for 4 th and 5 th grade teachers, three days for middle and high school math and science teachers and five days for one math and one science teacher in each middle and high school. The remainder of the increase was due to additional funds applied to the Indian education program from federal impact aid funds. The increase of $43,179 in community services expenditures was primarily due to an increase in the summer feeding program to a total cost of $216,733. This highly successful program provided lunches and snacks to Auburn children up to the age of 18 at a variety of parks and community centers throughout the summer. All of the costs of the program were covered by federal USDA funds. Support Service spending increases of $698,296 included $369,095 of additional salary, benefit and supply costs for custodians. Utility costs increased by $193,807 over the prior year and maintenance increased by $74,048. Increases in Child Nutrition and Pupil Transportation expenditures were partially due to salary and benefit increases provided to all staff. A portion of the increases were also due to the addition of more staff to serve an increased enrollment. In addition, Child Nutrition expenditures increased as a result of assuming responsibility for the cafeteria at Auburn High School. This cafeteria was formerly part of the vocational culinary arts program % Nutrition 12.07% Support Services.21% Capital Outlay 4.59 % Transportation 0.61% Community Services Expenditure Uses 79.24% Instruction SPECIAL REVENUE FUND The Special Revenue Fund, like the General Fund, is considered a major fund for fiscal year reporting purposes. Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. In the state of Washington, the only fund designated as a special revenue fund is the Associated Student Body (ASB). This fund is financed, in part, by the establishment and collection of fees from students and non-students as a condition of their attendance at any optional noncredit extracurricular event of the district

27 SPECIAL REVENUE FUND Increase (Decrease) Beginning Fund Balance $ 1,193,537 $ 1,206,871 $ (13,334) Revenues 2,419,636 2,136, ,626 Expenditures (2,240,907) (2,149,344) 91,563 Ending Fund Balance $ 1,372,266 $ 1,193,537 $ 178,729 DEBT SERVICE FUND Also a major fund for fiscal year , the Debt Service Fund is used to account for the payment of principal, interest, and related expenditures related to the redemption of outstanding bonds. The Debt Service Fund is financed from voter-approved levies sufficient to meet the annual payments of principal, interest and other expenditures related to the redemption of the bonds. The district s fiscal agent, the Bank of New York, makes principal and interest payments on behalf of the district. DEBT SERVICE FUND Increase (Decrease) Beginning Fund Balance $ 8,484,345 $ 8,746,611 $ (262,266) Revenue 16,415,252 16,487,179 (71,927) Expenditure (16,370,660) (16,749,445) (378,785) Ending Fund Balance $ 8,528,937 $ 8,484,345 44,592 CAPITAL PROJECTS FUND The Capital Projects Fund is also a major fund for the fiscal reporting period. Capital projects funds account for financial resources to be used for the acquisition or construction of major capital facilities. CAPITAL PROJECTS FUND Increase (Decrease) Beginning Fund Balance $ 25,864,041 $ 34,973,641 $ (9,109,600) Revenues 4,507,052 3,454,292 1,052,760 Expenditures (13,122,023) (12,563,892) 558,131 Ending Fund Balance $ 17,249,070 $ 25,864,041 (8,614,971) During the fiscal year, approximately $9 million of Capital Projects funds were spent to purchase land for a future school site. This purchase was financed, in part, by impact fees collected from builders during the permitting process. Expenditures for new computers and other instructional technology equipment of $2,026,404 were financed by the six year technology levy passed by the voters in Tax collections for came from the last half of the calendar year 2008 levy of $2,500,000 and the first half of the 2009 calendar year levy of $2,750,

28 TRANSPORTATION VEHICLE FUND The Transportation Vehicle Fund is also a major fund for fiscal reporting purposes. State and other revenues of $731,939 were partially used to purchase school buses for $583, Increase (Decrease) Beginning Fund Balance $ 293,250 $ 472,399 $ (179,149) Revenues 731, ,568 92,371 Expenditures (583,458) (818,717) (235,259) Ending Fund Balance $ 441,731 $ 293, ,481 FIDUCIARY FUNDS Fiduciary funds are not reported in the district-wide financial statements. Fiduciary funds are reported in the Fiduciary Statement of Net Assets and Statement of Changes in Fiduciary Net Assets. These activities are excluded from the district s other financial statements because the district cannot use these assets to finance its operations. Trust and agency funds account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include the Private Purpose Trust Fund and the Employee Benefit Trust Fund. PRIVATE PURPOSE TRUST FUND The Private Purpose Trust Fund was created to act as a custodian for funds, such as scholarships, held for the benefit of private individuals and organizations. These funds are not used for the benefit of the district. The district does not budget for the Private Purpose Trust Fund. During the fiscal reporting period, the Private-Purpose Trust Fund received donations of $105,976, earned $25,462 on investments and incurred disbursements of $128,190. Net assets at the end of the year totaled $608,711. EMPLOYEE BENEFIT TRUST FUND The Employee Benefit Trust Fund was created to act as a custodian for funds held for the benefit of employees for vision services. These funds are not used for the benefit of the district. The district does not budget for the Employee Benefit Trust Fund. During the fiscal reporting period, the Employee Benefit Trust Fund received employee member contributions of $170,834, earned $7,209 on investments and incurred vision claims and administrative expenses of $189,030. Net assets at the end of the year totaled $196,305. MAJOR FUND BUDGETARY HIGHLIGHTS Appropriations are a prerequisite to expenditures in the governmental funds. Appropriations lapse at the end of the fiscal year. The original fiscal year budget adopted by the Board of Directors for the district totaled $175,857,525 including General Fund appropriations of $136,092,758, Special Revenue Fund (ASB) appropriations of $3,491,423, Debt Service Fund appropriations of $16,373,344, Capital Projects Fund appropriations of $19,000,000 and Transportation Vehicle Fund appropriations totaling $900,

29 CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS The District s investment in capital assets for its governmental type activities as of August 31, 2009 amounted to $226,212,516 (net of accumulated depreciation of $90,558,554). This investment in capital assets includes land, buildings, building improvements, furniture and equipment. During the fiscal year, $833,981 was added to buildings for improvements that met the capitalization policy of $100,000, $1,012,096 was added to equipment that met the capitalization policy of $5,000 per unit, and $9,579,853 was added to construction in progress primarily for land for a future school site. Fully depreciated surplus school buses that originally cost $406,743 and vehicles that were originally purchased for $22,482 were removed from the books and sent to the State of Washington Surplus Property Department to be sold at auction. See Note 4, Changes in Capital Assets, for more information. CAPITAL ASSETS Capital Assets Accumulated Depreciation Net Land $ 20,895,236 $ - $ 20,895,236 Building & Improvements 259,522,913 (78,282,016) 181,240,897 Equipment 18,355,027 (12,276,538) 6,078,489 Construction In Progress 17,997,894-17,997,894 Total $ 316,771,070 $ (90,558,554) $ 226,212,516 DEBT ADMINISTRATION At the end of the current fiscal year, the district had $108,065,000 in unlimited general obligation bonds outstanding. This debt is secured by a pledge of the full faith and credit of the district. $12,915,000 of that debt is due within the next twelve months. The Washington State Constitution and the Revised Code of Washington and limit the amount of general obligation (GO) debt that may be issued. With a vote of the people, debt cannot be incurred in excess of 5% of the value of the taxable property of the district, provided the indebtedness in excess of 2.5% is for capital outlay. For the fiscal year ended August 31, 2009, the maximum GO debt authorized by statutory limit was $ million. The district had $108,065,000 million of debt outstanding at August 31, 2009, that was subject to that limitation. With $8.529 million of assets in the Debt Service Fund available for payment of principal, there is a legal debt margin of $ million. The District s bond rating from Moody s Investor Service has been A1 since Standard and Poor s rating is A+. Additional information on the district s bonded debt obligations is presented in Note 7. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES The appropriations for governmental funds of the district were approved at $182,953,038. For calendar year 2009, the total property tax rate for special levies was $4.38 per thousand dollars of assessed property value. The projected rate for 2010 is $5.09. Total assessed value grew by 8.3% from $9.2 billion to $9.98 billion during For 2010, the projected assessed valuation is $8.9 billion, a decrease of 11% over the prior year. The district serves the cities of Auburn, Pacific, and Algona as well as portions of unincorporated King and Pierce Counties. The outlook for the local economy for 2010 and

30 beyond is like the rest of the nation, a lingering recession. Unemployment has ranged from 12% for middle management to 9% for blue collar workers. Economic growth will be slower than in the past when Auburn s economy grew much faster than the State of Washington as a whole. Auburn s economy has been relatively stable as many of its basic industries have been somewhat insulated from economic downturns. This has been reflected in relatively stable property tax collection rates with no noticeable declines. The Boeing Company is the largest single employer in the City of Auburn. Other major employers include the Auburn School District, the Muckleshoot Tribal Casino, Auburn Regional Medical Center, Green River Community College, Emerald Downs Racetrack, the Social Security Administration, the Federal Aviation Administration and the Auburn Supermall. In 1990, Boeing accounted for 71% of all jobs in the City of Auburn. Today, Boeing jobs account for only 40% of the employment base in Auburn as the local economy continues to diversify. The projected future shape of the Boeing Company includes the Auburn Fabrication plant. Over the last decade, Auburn s location has enabled it to diversify from primarily aircraft manufacturing to becoming a regional hub for wholesale distribution centers, entertainment complexes, medical centers, a large shopping mall, a commuter rail center and federal government administration centers. Auburn will continue to reap economic benefits from its location far into the future. According to the City of Auburn, some of the most recent and significant projects are: An 11,000 square foot cancer treatment center adjacent to Auburn Regional Medical Center with a 300 stall parking garage. A new three story building that will house a City Hall Annex, Key Bank, medical and professional offices and a restaurant. Auburn Junction a four-block downtown redevelopment project near the Transit Station valued at $240 million. Since the State Legislature has identified the project as a demonstration project, the City will receive up to $250,000 a year to support $3.35 million in infrastructure improvements. A large retail/office project in 65 acres replacing a former drive-in movie complex. A new Super Wal-Mart adjacent to the Super Mall that will provide new jobs and new tax revenues. REQUESTS FOR INFORMATION This financial report is designed to provide the district s citizens, taxpayers, customers, investors and creditors with a general overview of the district s finances and to demonstrate the district s accountability for the money it receives. If you have questions about this report or need additional financial information, visit or contact Toni Lally, CPA Executive Director of Business Services Auburn School District No th Street NE Auburn, WA

31 Government-Wide Financial Statements The government-wide financial statements consiste of the Statement of Net Assets and the Statement of Activities. These statements report all financial and capital resources of the primary government as a whole, except for the fiduciary funds of the primary government. The Statement of Net Assets displays assets less liabilities equal net assets format. The Statement of Activities presents governmental activities by function, at the level of detail required in the governmental fund statement of revenues, expenditures and changes in fund balances. The government-wide financial statements were prepared using the economic resources measurement focus and the accrual basis of accounting. 21

32 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF NET ASSETS August 31, 2009 Note # Schedule 1 Primary Government Governmental Activities ASSETS Cash and Cash Equivalents 1.E.1 and 2 $ 38,643,222 Property Tax Receivable 1.E.2 26,276,061 Receivables, Net 1.E.3 138,126 Due from Other Governments 1.E.5 1,307,727 Inventories 1.E.6 497,500 Capital Assets, not being depreciated Land 4 $ 20,895,236 Construction-in-progress 5 17,997,894 Total capital assets, not being depreciated 38,893,130 Capital Assets, being depreciated Buildings & Improvements 4 259,522,913 Equipment 4 18,355,027 Total capital assets, being depreciated 277,877,940 Less accumulated depreciation 4 (90,558,554) Total capital assets, net of accumulated depreciation 187,319,386 Capital assets, net of accumulated depreciation 226,212,516 Unamortized Bond Issuance Costs 7.B 827,684 TOTAL ASSETS 293,902,836 LIABILITIES Accounts Payable 1,507,433 Accrued Wages & Benefits Payable 1,972,037 Due to Other Governments 423,782 Accrued Interest 1,289,833 Unearned Revenue 1.E.9 309,039 Long-Term Liabilities Due within one year 7.A 13,196,530 Due in more than one year 103,182,611 TOTAL LIABILITIES 121,881,265 NET ASSETS Invested in capital assets, net of related debt 114,931,374 Restricted for: Capital Projects 17,249,070 Debt Service 8,528,937 Student ASB Activities 1,372,266 Acquisition of School Buses 441,731 Other Items 2,426,000 Unrestricted 27,072,193 TOTAL NET ASSETS $ 172,021,571 The notes to the basic financial statements are an integral part of this statement. -22-

33 Schedule 2 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF ACTIVITIES For the Year Ended August 31, 2009 Functions/Programs Expenses Charges for Service PROGRAM REVENUES Operating Grants and Contributions Capital Grants and Contributions NET (EXPENSE) REVENUE AND CHANGES IN NET ASSETS PRIMARY GOVERNMENT Governmental Activities Primary Government: Governmental Activities: Regular Instruction $ 80,669,252 $ 674,016 $ 6,340,684 $ 425,537 $ (73,229,015) Special Instruction 15,098,723-10,931,848 - (4,166,875) Vocational Instruction 6,512, ,230 84,720 - (5,869,119) Compensatory Education 12,627,620-12,432,427 - (195,193) Other Instructional Programs 696,904 12, ,325-88,626 Community Services 829, , (426,503) Support Services 16,663, , (16,543,389) Child Nutrition Services 4,460,243 1,440,397 3,770, ,422 Pupil Transportation Services 6,904,871-2,986, ,387 (3,217,447) Extracurricular Activities (ASB) 2,239,516 2,378, ,650 Interest Expense on Long-Term Debt 5,210, (5,210,720) Total Governmental Activities $ 151,912,868 $ 5,586,072 $ 37,319,309 $ 1,126,924 $ (107,880,563) General Revenues: Taxes: Property taxes, levies for educational programs 24,897,526 Property taxes, levies for debt service 16,520,770 Property taxes, levies for technology equipment 2,812,995 Unallocated State Apportionment & Others 70,838,733 Interest and Investment earnings 1,619,753 Total General Revenues and Special Items 116,689,777 Changes in Net Assets 8,809,214 Net Assets - Beginning 163,212,357 Net Assets - Ending $ 172,021,571 The notes to the basic financial statements are an integral part of this statement. -23-

34 Governmental Fund Financial Statements The governmental fund financial statements consist of major governmental funds: General Fund Special Revenue Fund (Associated Student Body) Debt Service Fund Capital Projects Fund Transportation Vehicle Fund The governmental funds focus primarily on the sources, uses and balances of current financial resources and the modified accrual basis of accounting. 24

35 Schedule 3 AUBURN SCHOOL DISTRICT NO. 408 FUND BALANCE SHEET GOVERNMENTAL FUNDS August 31, 2009 GENERAL FUND SPECIAL REVENUE FUND (ASB) DEBT SERVICE FUND CAPITAL PROJECTS FUND TRANSPORTATION VEHICLE FUND TOTAL GOVERNMENTAL FUNDS ASSETS: Cash and Cash Equivalents $ 10,247,823 $ 1,691,682 $ 8,600,866 $ 17,654,262 $ 448,589 $ 38,643,222 Property Tax Receivable 12,331,851-8,445,062 1,391,191 1,744 22,169,848 Accounts Receivable, Net 90, ,084 Interest Receivable 13,044 1,705 10,658 22, ,042 Due From Other Funds 12,675 2,200-33,299-48,174 Due From Other Government Units 859, ,471-1,307,727 Inventories at Cost 478,405 19, ,500 TOTAL ASSETS 24,033,138 1,714,682 17,056,586 19,549, ,886 62,804,597 LIABILITIES: Accounts Payable 823,012 38, ,258-1,507,433 Accrued Liabilities 1,972, ,972,037 Due to Other Governments 61,718 11,974 82, ,092 7, ,782 Due To Other Funds 35,499 9,981-2,694-48,174 Deferred Revenue 12,358, ,298 8,445,062 1,391,191 1,744 22,478,887 TOTAL LIABILITIES 15,250, ,416 8,527,649 2,300,235 9,155 26,430,313 FUND BALANCES Unreserved: Designated for Opening New School 1,800, ,800,000 Designated for Inventory Replacement 326, ,000 Designated for Self Insurance 300, ,000 Designated for School Construction and Equipment ,249,070-17,249,070 Undesignated 6,356,280 1,372,266 8,528, ,731 16,699,214 TOTAL FUND BALANCES 8,782,280 1,372,266 8,528,937 17,249, ,731 36,374,284 TOTAL LIABILITIES AND FUND BALANCES $ 24,033,138 $ 1,714,682 $ 17,056,586 $ 19,549,305 $ 450,886 $ 62,804,597 The notes to the basic financial statements are an integral part of this statement. -25-

36 AUBURN SCHOOL DISTRICT NO. 408 RECONCILIATION BALANCE SHEET/STATEMENT OF NET ASSETS August 31, 2009 Schedule 3A Total Governmental Funds Long-Term Assets, Liabilities * Reclassifications and Eliminations* Statement of Net Assets Totals ASSETS Cash and Cash Equivalents $ 38,643,222 $ - $ - $ 38,643,222 Property Tax Receivable 22,169,848 4,106,213-26,276,061 Receivables, Net 90, ,084 Interest Receivable 48, ,042 Due from Other Funds 48,174 - (48,174) - Due from Other Governments 1,307, ,307,727 Inventories 497, ,500 Capital Assets, Net - 226,212, ,212,516 Unamortized Bond Issue Costs - 827, ,684 TOTAL ASSETS 62,804, ,146,413 (48,174) 293,902,836 LIABILITIES Accounts Payable 1,507, ,507,433 Accrued Liabilities 1,972, ,972,037 Due to Other Governments 423, ,782 Due to Other Funds 48,174 - (48,174) - Accrued Interest - 1,289,833-1,289,833 Deferred Revenue 22,478,887 (22,169,848) - 309,039 Long-Term Liabilities - 116,379, ,379,141 TOTAL LIABILITIES 26,430,313 95,499,126 (48,174) 121,881,265 FUND BALANCES/NET ASSETS Total Fund Balances/Net Assets 36,374, ,647, ,021,571 TOTAL LIABILITIES AND FUND BALANCES/NET ASSETS $ 62,804,597 $ 231,146,413 $ (48,174) $ 293,902,836 The notes to the basic financial statements are an integral part of this statement. * See Note 11A -26-

37 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 Schedule 4 GENERAL FUND SPECIAL REVENUE FUND (ASB) DEBT SERVICE FUND CAPITAL PROJECTS FUND TRANSPORTATION VEHICLE FUND TOTAL GOVERNMENTAL FUNDS REVENUES Local Taxes $ 22,954,024 $ - $ 16,119,117 $ 2,588,939 $ 3,135 $ 41,665,215 Local Non-Tax 4,052,542 2,419, ,135 1,273,526 27,417 8,069,256 State, General Purpose 69,162, ,162,544 State, Special Purpose 20,304, , ,387 21,650,169 Federal, General Purpose 240, ,154 Federal, Special Purpose 16,561, ,561,182 Revenues From Other Sources 797, ,567 TOTAL REVENUES 134,072,208 2,419,636 16,415,252 4,507, , ,146,087 EXPENDITURES Current: Regular Instruction 72,290, ,290,756 Special Instruction 14,127, ,127,354 Vocational Instruction 6,058, ,058,317 Compensatory Education 11,837, ,837,525 Other Educational Programs 580, ,492 Community Services 805, ,463 Support Services 15,971, ,971,100 Child Nutrition Services 4,341, ,341,959 Pupil Transportation Services 6,081, ,081,125 Extracurricular Activities (ASB) - 2,240, ,240,907 Debt Service: Principal ,940, ,940,000 Interest and Other Charges - - 5,430, ,430,660 Capital Outlay: Sites ,180,561-9,180,561 Buildings ,283,582-1,283,582 Equipment 281, ,582, ,458 3,447,167 Energy ,302-75,302 TOTAL EXPENDITURES 132,375,222 2,240,907 16,370,660 13,122, , ,692,270 Excess of Revenues Over (Under) Expenditures 1,696, ,729 44,592 (8,614,971) 148,481 (6,546,183) OTHER FINANCING SOURCES (USES) Sale of Equipment 8, ,480 TOTAL OTHER FINANCING SOURCES (USES) 8, ,480 NET CHANGE IN FUND BALANCE 1,705, ,729 44,592 (8,614,971) 148,481 (6,537,703) Fund Balances - September 1 7,076,814 1,193,537 8,484,345 25,864, ,250 42,911,987 Fund Balances - August 31 $ 8,782,280 $ 1,372,266 $ 8,528,937 $ 17,249,070 $ 441,731 $ 36,374,284 The notes to the basic financial statements are an integral part of this statement. -27-

38 AUBURN SCHOOL DISTRICT NO. 408 RECONCILIATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE STATEMENT OF ACTIVITIES August 31, 2009 Schedule 4A Total Governmental Funds Long-Term Revenue, Expenses * Capital Related items * Long-Term Debt Transactions * Statement of Activities Totals REVENUES AND OTHER SOURCES Property Taxes 41,665,215 $ 2,567,515 $ - $ - $ 44,232,730 Local Non-Taxes 8,069,256-8,480-8,077,736 State, General Purpose 69,162, ,162,544 State, Special Purpose 21,650, ,650,169 Federal, General Purpose 240, ,154 Federal, Special Purpose 16,561, ,561,182 Revenues From Other Sources 797, ,567 TOTAL 158,146,087 2,567,515 8, ,722,082 EXPENDITURES/EXPENSES Current: Regular Instruction 72,290,756 1,905,768 6,472,728-80,669,252 Special Instruction 14,127, , ,719-15,098,723 Vocational Instruction 6,058, , ,192-6,512,069 Compensatory Education 11,837, , ,485-12,627,620 Other Instructional Programs 580,492 2, , ,904 Community Services 805,463 19,489 4, ,549 Support Services 15,971, , ,152-16,663,401 Child Nutrition Services 4,341,959 85,814 32,470-4,460,243 Pupil Transportation Services 6,081, , ,260-6,904,871 Extracurricular Activities (ASB) 2,240,907 - (1,391) - 2,239,516 Debt Service: Principal 10,940, (10,940,000) - Interest and Other Charges 5,430, (219,940) 5,210,720 Capital Outlay: Sites 9,180,561 - (9,180,561) - - Buildings 1,283,582 - (1,283,582) - - Equipment 3,447,167 - (3,447,167) - - Energy 75,302 - (75,302) - - TOTAL EXPENDITURES/EXPENSES 164,692,270 3,473,697 (5,093,159) (11,159,940) 151,912,868 EXCESS OF REVENUES OVER UNDER EXPENDITURES (6,546,183) (906,182) 5,101,639 11,159,940 8,809,214 OTHER FINANCING SOURCES (USES) Sale of Equipment 8,480 - (8,480) - - TOTAL OTHER FINANCING SOURCES (USES) 8,480 - (8,480) - - NET CHANGE FOR THE YEAR $ (6,537,703) $ (906,182) $ 5,093,159 $ 11,159,940 $ 8,809,214 The notes to the basic financial statements are an integral part of this statement. * See Note 11B -28-

39 Fiduciary Funds Financial Statements The fiduciary funds financial statements consist of the Private- Purpose Trust Fund and the Employee Benefit Trust Fund. The fiduciary funds financial statements focus on net assets and changes in net assets. The Private-Purpose Trust Fund reports all trust arrangements under which principal and income benefit individuals, private organizations, or other governments. The Employee Benefit Trust Fund reports the trust arrangement under which funds are held for the benefit of employees for vision services. 29

40 Schedule 5 AUBURN SCHOOL DISTRICT NO. 408 FIDUCIARY FUNDS STATEMENT OF NET ASSETS August 31, 2009 ASSETS Private Purpose Trust Fund Employee Benefit Trust Fund Cash and Cash Equivalents $ 613,565 $ 197,741 Accounts Receivable Interest Receivable TOTAL ASSETS $ 614, ,969 LIABILITIES Accounts Payable Due to Other Governmental Units 5,691 1,664 TOTAL LIABILITIES 6,191 1,664 NET ASSETS Held in Trusts for Scholarships and Student Aid 608, ,305 Held in Trust for Member Benefits - - TOTAL NET ASSETS $ 608,711 $ 196,305 The notes to the basic financial statements are an integral part of this statement. -30-

41 Schedule 6 AUBURN SCHOOL DISTRICT NO. 408 FIDUCIARY FUNDS STATEMENT OF CHANGES IN NET ASSETS For the Year Ended August 31, 2009 Private Purpose Trust Fund Employee Benefit Trust Fund ADDITIONS Donations $ 105,976 $ - Member Contributions - 170,834 Investment Earnings 25,462 7,209 Total Additions 131, ,043 DEDUCTIONS Scholarships 128,190 - Benefit Claims and Expenses - 189,030 Total Deductions 128, ,030 Change in Net Assets 3,248 (10,987) Net Assets, Beginning of the year 605, ,292 Net Assets, End of the year $ 608,711 $ 196,305 The notes to the basic financial statements are an integral part of this statement. -31-

42 Notes to the Financial Statements 32

43 AUBURN SCHOOL DISTRICT NO. 408 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2009 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Auburn School District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principals. The more significant accounting policies of the District are described below: A. REPORTING ENTITY The Auburn School District is a municipal corporation organized pursuant to Title 28A Revised Code of Washington (RCW) for the purpose of providing public school services to students in grades K-12. Auburn School District operates under an independently elected board of directors. Management of the district is appointed by and is accountable to the board of directors. Fiscal responsibility, including budget authority, the power to set fees, levy property taxes and issue debt consistent with provisions of state statutes, also rests with the board of directors. Based on the criteria specified in GASB Statement No. 14, The Financial Reporting Entity, the district has no component units. The district s Comprehensive Annual Financial Report includes all funds that are controlled by or dependent on the district s board of directors. Control by or dependence on the district was determined on the basis of budget adoption, taxing authority, outstanding debt secured by the general credit of the district, obligation of the district to finance any deficits that may occur, or receipt of significant subsidies from the district. B. BASIS OF PRESENTATION The accounts of the district are organized on the basis of funds in governmental fund financial statements, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The district s basic financial statements in this report consist of: 1). Government Wide Financial Statements Overall governmental activities are reported here without displaying individual funds or fund types and display information about the district as a whole. The Government-Wide financial statements do not include Fiduciary Funds. The government-wide financial statements consist of the following: a. Statement of Net Assets The Statement of Net Assets reports all financial and capital resources. Capital assets (land, land improvements, buildings, building improvements, vehicles, and equipment) are reported at historical cost, net of accumulated depreciation

44 b. Statement of Activities The operations of the district are presented net of the applicable program revenues. General revenues are divided into property taxes, interest and investment earnings, and special and extraordinary items. The expenses and revenues are reported as follows: I). Expenses - Expenses are reported by function/program that includes direct and indirect expenses. Depreciation expenses are allocated to direct expenses if they can be specifically identified with a function or program. Interest expenses may be considered direct expenses when borrowing is essential to the creation or continuing existence of a program. Otherwise, interest on long-term liabilities is considered an indirect expense. II). Revenues Revenues are divided into program revenues and general revenues. Program revenues are derived directly from the program itself or from parties outside the district s taxpayers, as a whole. These revenues reduce the net cost of the function to be financed from the district s general revenue. Program-specific grants and contributions include revenues arising from mandatory and voluntary non-exchange transactions with federal or state governments, organizations, or individuals. These revenues are restricted for use in a particular program. General revenues are revenues that are not required to be reported as program revenues, such as property tax levies for a specific purpose and all non-tax revenue such as interest and investment earnings. 2). Fund Financial Statements a. Governmental Funds Governmental fund reporting focuses primarily on the sources, uses, and balances of current financial resources and often has a budgetary orientation. It includes general fund, special revenue fund (associated student body fund), capital projects fund, transportation vehicle fund, and debt service fund. The district considers all governmental funds to be major funds. I). General Fund - This fund is the general operating fund of the district. It accounts for all financial resources of the district, except those required to be accounted for in another fund. In keeping with the principle of as few funds as necessary, child nutrition, maintenance, information services, printing and pupil transportation activities are included in the fund. II). Special Revenue Fund (Associated Student Body Fund) - This fund is used to account for the extracurricular fees and resources collected in fund-raising events for students. Disbursements require the joint approval of the appropriate student body organization and the district's board of directors. This fund is accounted for as a special revenue fund since the financial resources legally belong to the district. III). Debt Service Fund - This fund is used to account for the accumulation of resources for the payment of general long-term debt principal, interest and related expenditures. All of the district's issues are serial bonds rather than term bonds and do not require sinking funds for each issue. Therefore, the district maintains one debt service fund for all bond issues. Also, there are no legal requirements that mandate a separate fund for each bond issue

45 IV). Capital Projects Fund This fund is used to account for the financial resources to be used for the construction or acquisition of major capital assets. This fund must be used when projects are financed wholly or in part by bond issues, intergovernmental resources, major private donations, special levies or insurance recoveries. This fund is also used to account for energy capital improvements. V). Transportation Vehicle Fund This fund is used to account for the purchase, major repair, rebuilding and debt service expenditures related to pupil transportation equipment. The major sources of revenue in this fund include the state reimbursement for pupil transportation equipment and special levies. b. Fiduciary Funds Fiduciary fund reporting focuses on net assets and changes in net assets. Fiduciary Funds such as private-purpose trust and agency funds are used by a district in its fiduciary capacity as trustee or agent for assets held for individuals, private organizations, and other governments. I). Private-Purpose Trust Fund - All of the income and principal in the private-purpose trust may be disbursed in the course of its operation. It includes money for scholarships donated by community supporters and funds for student aid provided by the Saul Haas Foundation. II). Employee Benefits Trust Fund (Vision Benefits) This fund accounts for moneys held in trust for employees participating in the district s self-insured vision benefits plan. Premiums are deposited into, and vision claims are paid from this fund. The district has contracted with a service provider to administer claims payments. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide financial statements measure and report all financial and capital assets, liabilities, revenues, expenses, gains and losses using the economic resources measurement focus and accrual basis of accounting. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets or cost recovery, and financial position. 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 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. Governmental fund financial statements include the General Fund, Special Revenue Fund, Debt Service Fund, Capital Projects Fund and Transportation Vehicle Fund. They are reported using the current financial resources measurement focus and the modified accrual basis of accounting. 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. Property taxes and interest associated with the current fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Private-purpose trust funds are reported on the accrual basis of accounting. Agency funds are reported on the modified accrual basis. Agency funds are custodial in nature and do not involve measurement of results of operation

46 1). Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Encumbrances are liquidated at the end of the year; therefore, there are no outstanding encumbrances at year-end. 2). Eliminations and Reclassifications In the process of aggregating data for the government-wide statements of net assets and the statement of activities, the inter-fund receivables and payables within governmental funds, except those with fiduciary funds, were eliminated. D. BUDGETS AND BUDGETARY ACCOUNTING 1). General Budget Policies The Auburn School District budgets its funds in accordance with the Revised Code of Washington Chapter 28A.505 and Chapter of the Washington Administrative Code (WAC). The School District Board adopts the budget after a public hearing. An appropriation is a prerequisite to expenditure. Appropriations lapse at the end of the fiscal period. Annual appropriated budgets are adopted at the fund level. Each governmental fund s total expenditures cannot, by law, exceed its formal fund appropriation. Management is authorized to modify specific accounts within the overall fund appropriation. However, only the Board has the authority to increase or decrease a given fund's annual budget. The Board may adopt a revised or supplemental budget appropriation after a public hearing at anytime during the fiscal year. 2). Budgetary Basis of Accounting For budget purposes, revenues and expenditures are accounted for on a modified accrual basis of accounting as prescribed in law for all governmental funds. Beginning fund balance is budgeted as available resources and, pursuant to law, the budgeted ending fund balance cannot be negative. Formal budgetary accounting is employed as a management control for all governmental funds. Budgets are adopted on the same basis of accounting used to reflect actual revenues and expenditures on a generally accepted accounting principles basis. E. ASSETS, LIABILITIES AND NET ASSETS/RESERVES/DESIGNATIONS 1). Cash and Cash Equivalents The district's cash and cash equivalents consist of cash balances, net of warrants outstanding, and cash equivalents with original maturities of three months or less. At August 31, 2009, cash deposits were $79,800, petty cash, lunchroom change funds and cash on hand were $56,945, the fair value of cash equivalents were $41,407,434 and warrants outstanding were $2,089,652. In accordance with authorized investment laws, the district s cash equivalents are deposited in the King County Investment Pool. The Pool invests in U.S. Agency mortgage-backed securities to enhance yield. As of August 31,2009, such securities comprised 1.4% of the Pool s portfolio. As of August 31, 2009, the district s funds invested in the Pool comprised 0.996% of the Pool s portfolio. (See Note 2) 2). Property Taxes Property tax revenues are collected as the result of special levies passed by the voters in the district. Per Revised Code of Washington , the tax assessment date is January 1 of the calendar year of collection. The tax lien date is January 1 of the year of collection and taxes receivable are

47 recognized as of that date. Current year taxes are due in full as of April 30, and are delinquent after that date. However, without incurring penalty, the taxpayer may elect to pay one half of taxes due by April 30, with the remaining one half taxes due October 31, and are delinquent after that date. Typically, a little more than half of taxes due are collected on the April 30 date. King County forecloses on property following the third year of delinquency. In governmental fund financial statements, property tax revenue that is measurable but not available (taxes that are not expected to be collected within the current period) is recorded as a receivable and deferred revenue. In government-wide financial statements, property tax revenue, net of estimated uncollectible amounts, is accrued at year-end. 3). Accounts Receivable This account represents amounts due for services rendered by the district, net of allowance for doubtful accounts. 4). Due From/To Other Funds Interfund receivables and payables and the associated revenues and expenditures/expenses are recorded in the respective funds in governmental fund financial statements. Interfund receivables and payables are eliminated in government-wide financial statements, except those with fiduciary funds. 5). Due From Other Governments This account represents receivables for federal, state, and local grants. Grant revenues are recorded in the year in which the related expenditures are incurred. 6). Inventories Inventories of instructional materials are valued at cost using the first-in first-out method. Warehoused inventories of food and maintenance and food service supplies are valued at cost using the weighted average method perpetual inventory system. Inventory is charged as an expenditure when it is issued for consumption. Reservation of fund balance is not necessary. However, the Board of Directors has designated a portion of fund balance to replace or increase the inventories. 7). Bond Discounts, Premiums, Issuance Costs and Refunding Losses In governmental fund types, bond discounts, premium, issuance costs and refunding losses are recognized in the period of issuance. In government-wide financial statements, they are amortized over the life of the bond and charged to expense accounts. 8). Capital Assets Capital Assets, which include property, buildings and improvements, and equipment are reported in the applicable governmental activities in the government-wide financial statements. Capital assets are defined by the district as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year for land, furniture, equipment, vehicles and school buses and $100,000 for buildings and improvements with an estimated useful life in excess of two years. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized, but are charged to expenditures in the current period. In governmental fund

48 financial statements, there is no depreciation for capital assets. However, depreciation is charged to expenses and allocated to various functions/programs in government-wide financial statements in compliance with GASB Statement No. 34 (See Note 4). Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is provided over the assets estimated useful life using the straight- line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings 50 years Building Improvements 20 years School Buses 8-18 years Equipment and Vehicles 4-10 years 9). Deferred Revenue In governmental fund financial statements, deferred revenues consist of amounts collected before revenue recognition criteria are met, and receivables which, under the modified accrual basis of accounting, are measurable but not yet available, e.g. unearned property tax revenues, unearned revenues from federal, state, and local grants, and unearned revenues on long-term receivables. In government-wide financial statements, property taxes are accrued, therefore there are no deferred property tax revenues. 10). Net Assets (Government-wide Financial Statements) In government-wide financial statements, the Invested in Capital Assets, Net of Related Debt component consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. The Restricted Net Assets component reports the net assets where constraints have been placed on net asset by external laws, regulations, or legislation. Therefore, they are available for disbursements only for specific purposes such as debt service and capital projects. The Unrestricted Net Assets are assets that can be used to finance day-to-day operations without constraints established by debt convenants, enabling legislation or other legal requirements. 11). Reserves and Designations (Governmental Fund Financial Statements) Reserves represent those portions of the fund balance legally segregated for a specific future use or not appropriable for expenditures. Designated unreserved fund balances such as designated for Self-Insurance represent plans for future use of financial resources. These plans are subject to change and may never be authorized or result in expenditures

49 CHANGES IN GENERAL FUND DESIGNATIONS OF FUND BALANCE DESIGNATION BEGINNING BALANCE ADDITIONS TO BALANCE USE OF BALANCE ENDING BALANCE Opening New School $ 1,800,000 $ 1,800,000 Inventory Replacement 326, ,000 Self Insurance 300, ,000 Undesignated 4,650,814 1,705,466 6,356,280 TOTAL $ 7,076,814 $ 1,705,466 $ - $ 8,782,280 12). Compensated Absences a). Sick Leave - Full-time employees earn sick leave at a rate of 12 days per year up to a maximum of one contract year. Under the provisions of RCW 28A , sick leave accumulated by district employees is paid at death or retirement at the rate of 25% of each day of accrued leave, limited to 180 accrued days. This statute also provides for an annual buy-back of an amount up to the maximum annual accumulation of twelve days. To qualify for annual sick leave buy-back, the employee must have accumulated an excess of 60 days sick leave as of January 1. Sick leave is reported under long-term liabilities in the Statement of Net Assets. For reporting purposes, 25% of the sick leave liability (up to 180 days) for those eligible for retirement is considered accruable. The vesting method in GASB statement 16 was applied in calculating the sick leave. The amount of accrued sick leave as of August 31, 2009 was $1,560,337 and reported as a long-term liability in the government-wide financial statements. b). Vacation Leave - Vacation leave is accrued according to bargaining agreement rules for those employees eligible. Annual leave accumulated by district employees is paid upon retirement at 100% of per diem value. In addition, annual leave accumulated by classified employees represented by the Public School Employees of Washington bargaining groups is paid upon termination at 100% of per diem value. As of August 31, 2009, vacation leave payable, estimated to be $742,399, is reported as a long-term liability in the government-wide financial statements. NOTE 2. DEPOSITS AND INVESTMENTS By law, the King County Treasurer is the ex-officio treasurer for the district. In this capacity, the County Treasurer receives, deposits and transacts investments on the district's behalf. A. DEPOSITS At year-end, the carrying amounts of the district's deposits with financial institutions and with the King County Treasurer were respectively $79,800 and $41,407,434, the warrants outstanding were $2,089,652 and the petty cash, change funds and cash on hand totaled $56,945. Total district cash and cash equivalents were $39,454,527. Of this amount, $38,643,221 were in governmental funds and $811,306 were in fiduciary funds. (See Note 1). In addition to FDIC insurance, the district s deposits are protected by the Washington Public Deposit Protection Commission (a multiple financial institution collateral pool). The provision for guaranteed coverage against loss applies not only to demand deposits, but also to certificates of deposit, money market deposit accounts, and savings deposits as well as accrued interest through the date of repayment. Accordingly, the district s deposits are classified per GASB Statement No.3 as risk level one, insured or collateralized with securities held by the entity or by its agent in the entity's name

50 B. INVESTMENTS In accordance with state investment laws, the district s governing body has entered into a formal inter-local agreement with the district s ex officio treasurer, King County, to have all of its funds not required for immediate expenditure to be invested in the King County Investment Pool (Pool). All non-invested cash is held in this external investment pool administered by King County, Washington and consequently is not subject to categorization. At August 31, 2009, the fair value of the district investment in the pool was $41,407,434 with an effective duration of.68 years.. The pool is not registered by the SEC and does not operate in a manner consistent with the SEC s rule 2a7 which would allow it to be treated as a money market fund for basis of presentation. Oversight of the Investment Pool is provided by the King County Executive Finance Committee (EFC) pursuant to RCW The EFC consists of the Chair of the County Council, the County Executive, the Chief Budget Officer, and the Director of the Finance and Business Operations Division. All investments are subject to written policies and procedures adopted by the EFC. The EFC reviews Pool performance monthly. All investments in cash equivalents are stated at fair value. Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties. Fair value for the King County Investment Pool is provided by the County s safekeeping bank or Bloomberg L.P., a provider of fixed income analytics, market monitors, and security pricing. The net increase in fair value of the district s proportionate share of the King County Investment Pool for was $238,855. This increase has been recognized and reported against investment income. Impaired Investments. As of September 1, 2008, the impaired commercial paper assets were removed from the main King county Investment Pool and placed into an Impaired Investment Pool. As of August 31, 2009, the King County Impaired Investment Pool held one commercial paper asset that is impaired and part of an enforcement event where a trustee or receiver is appointed to determine the best option for selling assets and/or restructuring the portfolio; and the residual investments in four commercial paper assets that were part of completed enforcement events. The district s share of the Pool s impaired assets is $567,412 and the district s fair value of these investments is $137,258. Interest Rate Risk. As of August 31, 2009, the Pool s average duration was.68 years. As a means of limiting its exposure to rising interest rates, securities purchased in the Pool must have a final maturity, or weighted average life, no longer than five years. While the Pool s market value is calculated on a monthly basis, unrealized gains and losses are not distributed to participants. The Pool distributes earnings monthly using an amortized cost methodology. Credit Risk. As of August 31, 2009, the district s investment in the Pool was not rated by a nationally recognized statistical rating organization (NRSRO). In compliance with state statues, Pool policies authorize investments in U.S. Treasury securities, U.S. agency securities and mortgage-backed securities, municipal securities (rated at least A by two NRSROs), commercial paper (rated at least the equivalent of A-1 by two NRSROs), certificates of deposits issued by qualified public depositories, repurchase agreements, and the Local Government Investment Pool managed by the Washington State Treasurer s office

51 NOTE 3. INTERFUND RECEIVABLES AND PAYABLES As of August 31, 2009, short-term interfund receivables and payables in governmental funds that resulted from various interfund transactions in governmental fund financial statements were as follows: Due from Other Funds Due to Other Funds General Fund $ 12,675 $ 35,499 Special Revenue Fund 2,200 9,981 Capital Projects Fund 33,299 2,694 Total $ 48,174 $ 48,174 The interfund balances are liquidated on a monthly basis. Almost all of the interfund transfers are to reimburse the general fund from other funds for processing payroll and other accounts payable in the general fund. In addition, all funds collected in the district are electronically swept on a daily basis into the general fund bank account at the county treasurer. Funds are then transferred to the appropriate fund as soon as the receipts are reconciled to the daily deposit reports. NOTE 4. CHANGES IN CAPITAL ASSETS Purchases of equipment over $5,000 and building improvements over $100,000 are capitalized and depreciated in the government-wide financial statements. Land is excluded from depreciation. The district s property valuation of buildings and contents for insurance purposes was $312,145,895 on August 31, In the opinion of the district s insurance consultant, the amount is sufficient to adequately fund replacement of the district s assets. Balance 9/1/2008 Additions Deletions Governmental Activities: Capital assets, not being depreciated Land $ 20,895,236 $ - - Balance 8/31/2009 $ $ 20,895,236 Construction in progress 8,479,526 9,579,853 (61,485) 17,997,894 Total capital assets, not being depreciated 29,374,762 9,579,853 (61,485) 38,893,130 Capital assets, being depreciated: - Buildings and improvements 258,688, , ,522,913 Furniture and equipment 17,772,156 1,012,096 (429,225) 18,355,027 Total capital assets, being depreciated 276,461,088 1,846,077 (429,225) 277,877,940 Less: accumulated depreciation - Buildings and improvements (73,075,711) (5,206,305) - (78,282,016) Furniture and equipment (11,740,349) (965,414) 429,225 (12,276,538) Total accumulated depreciation (84,816,060) (6,171,719) 429,225 (90,558,554) Total capital assets, being depreciated, net 191,645,028 (4,325,642) - 187,319,386 Governmental activities capital assets, net $ 221,019,790 $ 5,254,211 $ (61,485) $ 226,212,516 The increases to buildings and improvements include completed projects transferred from construction in progress less those portions of the projects classified as capitalized and non capitalized equipment. Only those building improvements that are greater than $100,000 are capitalized. Additions to equipment include only those capital outlay purchases with a unit cost greater than $5,000 in accordance with the district s capitalization policy. Decreases to equipment were the result of the sale or trade-in of obsolete equipment

52 Depreciation Depreciation expense was charged to governmental activities as follows: Regular instruction $ 3,906,061 Special instruction 556,033 Vocational instruction 265,601 Compensatory education 466,485 Other instructional programs 75,574 Support services 237,598 Child Nutrition services 5,570 Transportation services 658,212 Extracurricular activities (ASB) 585 Total depreciation expense charged to governmental activities $ 6,171,719 NOTE 5. CONSTRUCTION IN PROGRESS Project Authorized Expended Committed Future Middle School Site #5 8,481,407 8,481,407 - Multi-Facility Property 9,417,695 9,417,695 - Miscellaneous Property 96,962 96,962 - Other Projects 1,830 1,830 - Total Construction in Progress $ 17,997,894 $ 17,997,894 $ - NOTE 6. PENSIONS A. GENERAL INFORMATION Substantially all of the district s full-time and qualifying part-time employees participate in one of the following three contributory, multi-employer, cost-sharing statewide retirement systems managed by the Washington State Department of Retirement Systems (DRS). The Teachers' Retirement Systems (TRS) includes certificated staff of 295 public school district employers and other public employers. As of September 30, 2008, it includes 75,223 active and inactive vested members. The Public Employees Retirement System (PERS) includes non-certificated staff of 295 public school district employers and other public employers. As of September 30, 2008, it includes 188,935 active and inactive vested members. The School Employees Retirement System (SERS) includes non-certificated staff of 295 public school district employers. As of September 30, 2008, it includes 60,374 active and inactive vested members

53 The employer contribution rates for PERS, TRS and SERS are established each biennium by the state Actuary. The employee contribution rate for Plan I is set by statute at six percent and does not vary from year to year. The employer rate is the same for all plans in a system. The method used to determine the contribution requirements are established under Chapter and Revised Code of Washington (RCW) for PERS and TRS, respectively. A new Plan III for TRS was established effective July 1, This plan is a combination defined benefit, defined contribution plan. Employer contribution rates are established each biennium by the legislature. The state actuary calculates the rates, the economic revenue forecast council adopts the rates and the legislature enacts the rates for the defined benefit portion of the plan. Employee rates are established each biennium by the legislature as well. These rates fund the defined contribution portion of the plan. The new retirement system for school employees, SERS, was established effective September 1, 2000 and includes a Plan III. This plan is a combination defined benefit, defined contribution plan. The Pension Funding Council establishes employer contribution rates each biennium. The state actuary calculates the rates and the Pension Funding Council adopts the rates, for the defined benefit portion of the plan. The Employee Retirement Benefits Board (ERBB) establishes employee rate choices. These rates fund the defined contribution portion of the plan. Employee contribution rates for Plan I and Plan II for both systems have been set at rates reflective of amounts that have been appropriated by the state legislature. The district contribution represents its full liability under both systems, except that future rates may be adjusted to meet the system needs. B. GENERAL SYSTEM INFORMATION BY INTERNAL BENEFITS PLANS Certificated public employees are members of TRS. Non-certificated public employees are members of PERS if Plan I or SERS. Plan I (employment on or before September 30, 1977) members of TRS and PERS are eligible to retire with full benefits after 5 years of credited service and attainment of age 60 or after 25 years of credited service and attainment of age 55 or after 30 years of credited service. Plan II (employment on or after October 1, 1977) members of TRS and SERS are eligible to retire with full benefits after 5 years of credited service and attainment of age 65 or after 20 years of credited service and attainment of age 55 with the benefit actuarial reduced from age 65. Plan III (employment on or after July 1, 1996) members of TRS are eligible to retire with full benefits after 10 years of credited service and attainment of age 65 or after 10 years of credited service and attainment of age 55 with benefit actuarially reduced from age 65. Average final compensation (AFC) of Plan I TRS and PERS members is the greatest average salary during any 2 consecutive years. For Plan II TRS and SERS members, it is the greatest average salary during any 5 consecutive years. The retirement allowance of Plan I TRS and PERS members is the AFC multiplied by 2 percent per year of service capped at 60 percent. For Plan II TRS and SERS members it is the AFC multiplied by 2 percent per year of service with provision for a cost of living adjustment capped at 3 percent per year. For the defined benefit portion of Plan III TRS and SERS members it is the AFC multiplied by one percent per year of service with provision for a cost of living adjustment

54 C. CONTRIBUTIONS Employee contribution rates as of August 31, 2009: Plan I TRS 6.00% Plan I PERS 6.00% Plan II TRS 4.26% Plan II SERS 4.68% Plan III TRS % Plan III SERS % Employer contribution rates as of August 31, 2009: Plan I TRS 8.46% Plan I PERS 5.29% Plan II TRS 8.46% Plan II SERS 7.54% Plan III TRS 8.46% Plan III SERS 7.54% Under current law the employer must contribute 100 percent of the employer-required contribution. Employer required contributions were as follows: Plan Plan I TRS $ 304,538 $ 237,697 $ 207,374 Plan II TRS 638, , ,917 Plan III TRS 4,104,645 2,624,004 2,011,129 Plan I PERS 46,444 37,683 29,690 Plan II SERS 510, , ,781 Plan III SERS 1,110, , ,661 Historical trend information showing TRS, PERS and SERS progress in accumulating sufficient assets to pay benefits when due is presented in the State of Washington s June 30, 2009, comprehensive annual financial report. Refer to this report for detailed trend information. It is available from: State of Washington Office of Financial Management 300 Insurance Building P. O. Box Olympia, Washington NOTE 7. OTHER POST-EMPLOYMENT BENEFITS (OPEB) The state, through the Health Care Authority (HCA), administers an agent multiple-employer other postemployment benefit plan. The Public Employees Benefits Board (PEBB) created within the HCA is authorized to design benefits and determine the terms and conditions of employee and retired employee participation and coverage, including establishment of eligibility criteria for both active and retired employees. Programs include medical, dental, life and long-term disability. Employers participating in the plan include the state (which includes general government agencies and higher education institutions), 52 of the state s K-12 school and educational service districts (ESDs), and 200 political subdivisions. Additionally, the PEBB plan is available to the retirees of the remaining 249 K- 12 school districts and ESDs. The Auburn School District s retirees are eligible to participate in the plan under this arrangement

55 Plan Description Eligibility District members are eligible for retiree medical benefits after becoming eligible for service retirement pension benefits (either reduced or full pension benefits) under Plan 2 or 3 of TRS or SERS. Age 65 with 5 years of service Age 55 with 20 years of service Former members who are entitled to a deferred vested pension benefit are not eligible to receive medical and life insurance benefits after pension benefit commencement. Survivors of covered members who die are eligible for medical benefits. Medical and Life Benefits Upon retirement, members are permitted to receive medical benefits. Retirees pay the following month rates for pre-65 Medical coverage for 2009: Type of Coverage Employee Descriptions Employee Employee & Full & Spouse Children Family Aetna Public Employees Plan $ $1, $ $1, Group Health Classic , , Group Health Value , Kaiser Permanente Classic , Kaiser Permanente Value , Uniform Medical Plan , For 2009, after age 65, retired members receive a subsidy of 50 percent of their monthly medical premiums up to $ For retirees with covered spouses, the explicit subsidy is the lesser of $ or 50% of the premium. For 2009, retirees also receive an explicit subsidy of $4.77 per month toward life insurance premiums. Funding Policy The funding policy policy is based upon the pay-as-you-go financing requirements. Annual OPEB Cost and Net OPEB Obligation The district s annual other post-employment benefits (OPEB) cost is calculated based upon the annual required contribution (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 on-going basis, is projected to cover the normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) over a period of thirty years as of September 1, 2009 (level cost method). 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 district s net OPEB

56 Determination of Annual Required Contribution August 31, 2009 Normal Cost at Year End $ 2,239,203 Amortization of UAAL 1,315,313 Annual Required Contribution (ARC) 3,554,516 Determination of Net OPEB Obligation Annual Required Contribution 3,554,516 Interest on Prior year Net OPEB Obligation - Adjustment to ARC - Annual OPEB Cost 3,554,516 Less Contribution Made* 759,253 Increase in Net OPEB Obligation $ 2,795,263 Net OPEB Obligation - End of Year $ 2,795,263 *Estimated based on retiree benefit amounts, adjusted for medical trend. The district s annual OPEB cost, the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for 2009 were as follows: Fiscal Percentage of Year Annual OPEB Cost Net OPEB Ended OPEB Cost Contributed Obligation 8/31/2009 $ 3,554, % $ 2,795,263 Funded Status and Funding Progress As of August 31, 2009, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $39.5 million, and actuarial value of assets was $0, resulting in a UAAL of $39.5 million. Actuarial valuations 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. 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. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations

57 The health cost trend rates used for the actuarial study are as follows: Medical Life Year Trend Trend % 0.00% % 0.00% % 3.50% % 3.50% % 3.50% % 3.00% % 3.00% % 3.00% In the August 31, 2009 actuarial valuation, the Projected Unit Credit actuarial cost method was used. The actuarial assumptions used included a 4.5% discount rate, which is based upon the long-term investment yield on the investments that are expected to be used to finance the payments of benefits. The UAAL is being amortized on a closed basis at the assumed discount rate. The remaining amortization period at August 31, 2009 was 30 years. For further information on the results the actuarial valuation of the employer provided subsidies associated with state s PEBB plan refer to: NOTE 8. ` LONG-TERM DEBT A. CHANGES IN LONG-TERM LIABILITIES During the year ended August 31, 2009, the following changes occurred in liabilities reported in the government- wide financial statements. Beginning Balance Additions Reductions Ending Balance Amount Due within One Year GOVERNMENTAL ACTIVITIES Bonds Payable: 1997 UTGO Bonds $ 6,500,000 $ - $ 3,050,000 $ 3,450,000 3,450, UTGO Bonds 36,000, ,000, UTGO Refunding Bonds 26,505, ,000 26,315,000 1,615, UTGO Bonds 18,000,000-2,200,000 15,800,000 2,350, UTGO Bonds 20,000, ,000, UTGO Bonds 12,000,000-5,500,000 6,500,000 5,500,000 Total Bonds Payable 119,005,000-10,940, ,065,000 12,915,000 Unamortized Bond Premium 3,716, ,474 3,354, ,239 Unamortized Refunding Adjustment (414,145) - (276,097) (138,048) (138,048) Net Bonds Payable 122,307,519-11,026, ,281,142 13,127,191 Other Liabilities: Compensated Absences 1,619,705 2,302,736 1,619,705 2,302,736 69,339 Net OPEB Obligation - 3,554, ,253 2,795,263. GRAND TOTAL $ 123,927,224 $ 5,857,252 $ 13,405,335 $ 116,379,141 $ 13,196,

58 The debt service fund is established to redeem the outstanding bonds. Compensated Absences payments are liquidated by the general fund. Besides the long-term liabilities, the district also has short-term liabilities such as general accounts payable, wages and benefits payables, and deferred revenues. Those are on-going liabilities in the General Fund and will liquidate within one year. The district does not have conduit debt or hold demand bonds. B. UNAMORTIZED BOND ISSUANCE COSTS Unamortized Bond Issuance Costs Descriptions Beginning Balance Increases Decreases Ending Balance 1997 UTGO Bonds $ 154,988 $ - 18, , UTGO Bonds 236,168-17, , UTGO Refunding Bonds 175,644-20, , UTGO Bonds 128,188-8, , UTGO Bonds 156,853-9, , UTGO Bonds 70,813-20,232 50,581 Total $ 922,654 $ - $ 94,970 $ 827,684 ` C. PRIOR-YEAR DEFEASANCE OF DEBT In prior years, the district defeased other general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the bonds defeased in the current year as well as those defeased in prior years are not included in the district s financial statements. At August 31, 2009, $26,000,000 of bonds outstanding are considered defeased. D. LEGAL DEBT MARGIN RCW and RCW provide that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the district:.375% Without a vote of the people (Non-bonded debt only per RCW 28A51.010) 2.5% With a vote of the people 5.0% With a vote of the people, provided the indebtedness in excess of 2.5% is for capital outlay. Assessed valuation of taxable property for 2009 taxing purposes was $9,977,727,040. E. DEBT SERVICE, BOND PREMIUM, DISCOUNT AND REFUNDING ADJUSTMENT Below is a schedule of the debt service, amortization of the bond premium, discount and the refunding loss adjustment for the general obligation bonds outstanding at August 31, Bond premiums, discounts, and refunding adjustment losses are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. The $38,000, bond issue was sold at a premium of $312,815. The $36,000, bond issue was sold at a premium of $1,945,125. The 2004 $27,785,000 general obligation refunding bonds refunded $26,000,000 par amount of the 1997 bond issue. It was sold at a premium of $1,464,510. The $18,000, bond issue was sold at a net premium of $720,

59 The $20,000, bond issue was sold at a net premium of $714,800. The $12,650, bond issue was sold at a net premium of $265,884. Schedule of Debt Service, Bond Premium, Discount, Refunding Adjustment Amortization Premium/ Discount Amortized Refunding Adjustment Amortized Carrying Amount of Bonds Date Payment Interest Expense Principal 08/31/09 111,281,142 08/31/10 17,805,593 4,540, , ,048 12,915,000 98,153,951 08/31/11 8,469,056 4,212, ,755-3,930,000 93,897,196 08/31/12 8,530,819 4,101, ,443-4,125,000 89,467,753 08/31/13 6,411,482 3,968, ,380-2,150,000 87,024,373 08/31/14 10,407,831 3,819, ,380-6,295,000 80,435, ,293,754 15,733,481 1,185,273-26,375,000 52,875, ,334,925 7,477, ,388-42,275,000 10,018,332 08/31/25 10,250, ,668 18,332-10,000,000 - Total $ 155,503,460 $ 44,084,270 $ 3,354,190 $ 138,048 $ 108,065,000 F. GENERAL OBLIGATION DEBT Debt outstanding as of August 31, 2009 is composed of the following: Description Purpose Interest Rate Issue Date Maturity Date Amount Issued Amount Outstanding Governmental Activities: 1997 UTGO Bonds Construction % 03/13/97 12/01/16 38,000,000 3,450, UTGO Bonds Construction % 05/08/03 12/01/21 36,000,000 36,000, UTGO Refunding Construction % 03/02/04 12/01/16 27,785,000 26,315, UTGO Bonds Construction % 08/09/04 12/01/22 18,000,000 15,800, UTGO Bonds Construction 5.0% 04/13/05 12/01/24 20,000,000 20,000, UTGO Bonds Construction % 07/25/06 12/01/11 12,650,000 6,500,000 Total $ 152,435,000 $ 108,065,000 NOTE 9. OPERATING LEASES (NON-CAPITALIZED) The district is obligated under certain leases accounted for as operating leases. Operating leases do not give rise to property rights or lease obligations, and therefore, the results of the lease agreements are not reflected in the district's Capital Assets. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms of one year or more as of August 31, 2009:

60 Y e a r E n d i n g A u g u s t 31, C o p i e r s , , , , ,806 Total $ 486,707 NOTE 10. RISK MANAGEMENT A. UNEMPLOYMENT Auburn School District self-insures for unemployment compensation for all of its employees. Actual employee claims are paid by the State of Washington, Department of Employment Security and then reimbursed by the district. This self-insurance program costs the district less than full participation in the state unemployment compensation program. For the fiscal year ended August 31, 2009 the district s unemployment compensation expense was $613,254. Funds are designated in the General Fund amounting to $300,000 for payment of excess loss claims resulting from work stoppage, layoffs, or other emergencies resulting in excess benefit claims. B. INDUSTRIAL INSURANCE For the fiscal year ended August 31, 2009, Auburn School district made payments totaling $895,253 to the Workers Compensation Trust administered by Puget Sound Educational Service district No. 121 for industrial insurance for all district employees. This trust is operated for the benefit of several neighboring school districts in-lieu-of districts making monthly premium payments to the State of Washington for industrial insurance. This practice enables these districts to pay industrial insurance claims as they occur and minimizes the districts costs for the program. C. RISK MANAGEMENT POOL The district is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. In order to obtain general liability insurance at a cost it considered to be economically justifiable, the district joined the Washington Schools Risk Management Pool administered by Puget Sound Educational Service District No This pool is a public entity risk pool currently operating as a common risk management and insurance program. The district pays an annual premium to the pool for its general insurance coverage. For the fiscal year ended August 31, 2009, the district contributed $827,290 to the pool. The agreement for formation of the Washington School Risk Management Pool provides that the pool will be self-sustaining through member premiums and reinsure through commercial companies for claims in excess of $1 million for each property loss. For each liability loss up to $100 million per occurrence, the pool will reinsure for claims in excess of $2 million plus 50% quota share on losses from $2 million to $10 million, for a maximum of $6 million on a $10 million claim. The Pool maintains an excess insurance contract with Royal Insurance Company for property and machinery and boiler coverage, which provides a $100 million limit of coverage over the Pool s self-insured retention limit. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years

61 Washington School risk Management Pool has published its own financial report for the year ended August 31, This report can be obtained from: Washington Schools Risk Management Pool P.O. Box SW 152 nd St. Burien, WA NOTE 11. EXPLANATION OF DIFFERENCES BETWEEN GOVERNMENTAL FUND FINANCIAL STATEMENTS AND GOVERNMENT-WIDE FINANCIAL STATEMENTS A. RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS Total fund balances for governmental funds $ 36,374,284 Total net assets for governmental activities in the statement of net assets differs because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land $ 20,895,236 Construction in progress 17,997,894 Buildings and improvements, net of $78,282,016 accum. depreciation 181,240,897 Furniture and equipment, net of $ 12,276,538 accumulated depreciation 6,078, ,212,516 Property taxes that are deferred in government funds since not available soon enough to pay for the current period's expenditures. 26,276,061 Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is recognized. (1,289,833) Bond issuance costs are reported as expenditures in the governmental funds. 827,684 Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the statement of net assets. Balances at year-end are: Bonds payable $ (108,065,000) Unamortized deferred refunding loss 138,048 Unamortized premiums (3,354,190) Compensated Absences (2,302,736) Net OPEB Obligation (2,795,263) (116,379,141) Total net assets of governmental activities $ 172,021,

62 B. RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Net change in fund balances-total governmental funds $ (6,537,703) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets with an initial, individual cost of more than $5,000 for furniture and equipment and $100,000 for buildings and improvements are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period: Capital outlays $ 11,264,878 Depreciation expense (6,171,719) $ 5,093,159 The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities. The repayment of principal reduces the liability. Governmental funds expend issuance costs and premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. However, interest expense is recognized as it accrues, regardless of when it is due. The effect of these differences in the treatment of general obligation bonds and related items is as follows: Repayment of bond principal $ 10,940,000 Interest and other charges - general obligation bonds 219,940 11,159,940 Property tax revenues received prior to the year for which they are being levied are reported as deferred revenue in the governmental funds. They are, however, recorded as revenues in the statement of activities. Deferred property tax revenues increased this year. 2,567,515 In the statement of activities, certain operating expenses such as compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used. During this year, accrued vacation and sick leave payable increased by (678,434) Net OPEB Obligation (2,795,263) Change in net assets of governmental activities $ 8,809,

63 NOTE 12. SUMMARY OF SIGNIFICANT CONTINGENCIES A. LITIGATION Auburn School District is party to various pending legal actions arising from its normal educational activities. It is the opinion of the administration that these will be resolved without any material impact on the operations or the financial position of the district. B. CLAIMS AND JUDGMENTS The district participates in a number of federally assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Since these have not been completed, the amount, if any, of expenditures that may be disallowed by the granting agencies has not yet been determined. The district believes that disallowed expenditures, if any, will not have a material effect on any of the governmental funds or the overall financial position of the district. NOTE 13. FUND BALANCE (GOVERNMENTAL FUNDS) CHANGES IN FUND BALANCES General Fund Special Revenue Fund Debt Service Fund Capital Projects Fund Transportation Vehicle Fund Total Fund Balance 8/31/08 $ 7,076,814 $1,193,537 $ 8,484,345 $25,864,041 $ 293,250 Designated for Opening Elementary School Designated for School Construction and Equipment (8,614,971) 148,481 Unreserved, Undesignated Fund Balance 1,705, ,729 44,592 Total Fund Balance 8/31/09 $ 8,782,280 $1,372,266 $ 8,528,937 $17,249,070 $ 441,731 NOTE 14. OTHER DISCLOSURES KING COUNTY DIRECTORS ASSOCIATION The district is a member of the King County Directors Association (KCDA). KCDA is a purchasing cooperative designed to pool the member district s purchasing power. This association serves 294 public school districts. Auburn School District s equity in KCDA totaled $265, as of December 31, This equity is the accumulation of the annual assignment of KCDA s operating surplus based upon the percentage derived from KCDA s total sales to the district compared to all other districts applied against paid administrative fees. The district may withdraw from the joint venture and will receive its equity in 10 annual allocations of merchandise or 15 annual payments. The district s equity is not included in the district s financial statements. Annual purchases from the cooperative were $506,

64 NOTE 15. SUBSEQUENT EVENTS A. KING COUNTY INVESTMENT POOL On September 25, 2009, the Victoria Commercial Paper restructuring was completed. The Investment Pool accepted the exchange offer which provides that the Pool will continue to receive cash flows from the underlying securities. B. CAPITAL IMPROVEMENTS LEVY In a special election on November 3, 2009, the voters of the Auburn School District authorized the district to levy an additional tax to provide a total of $46,400,000 for capital improvements that include site work, building modernizations, structural work, roofing, mechanical and electric work, additions, and acquisition of equipment. Taxes will be levied as follows: Approximate Collection Levy Rate/$1,000 Levy Years Assessed Value Amount 2010 $1.20 $12,000, $1.00 $10,000, $1.14 $11,700, $0.37 $3,900, $0.40 $4,400, $0.39 $4,400,

65 Required Supplemental Information The required supplemental information presents budgetary comparisons (original and final budget), actual inflows and outflows, and balances of general fund and for each major fund. 55

66 REQUIRED SUPPLEMENTARY INFORMATION AUBURN SCHOOL DISTRICT NO. 408 BUDGETARY COMPARISON SCHEDULE* GENERAL FUND FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 Schedule A-1 BUDGETED AMOUNTS ACTUAL ORIGINAL FINAL AMOUNT VARIANCE REVENUES Local $ 28,266,461 $ 28,266,461 $ 27,006,566 $ (1,259,895) State 93,941,343 93,941,343 89,466,739 (4,474,604) Federal 10,077,577 10,077,577 16,801,336 6,723,759 Other 915, , ,567 (118,030) TOTAL REVENUES 133,200, ,200, ,072, ,230 EXPENDITURES CURRENT Regular Instruction 73,145,846 73,145,846 72,290, ,090 Special Education 12,886,450 12,886,450 14,127,354 (1,240,904) Vocational Instruction 6,787,021 6,787,021 6,058, ,704 Compensatory Education 12,198,476 12,198,476 11,837, ,951 Other Instructional Programs 1,253,456 1,253, , ,964 Community Services 783, , ,463 (21,688) Support Services 17,666,580 17,666,580 15,971,100 1,695,480 Child Nutrition Services 4,257,583 4,257,583 4,341,959 (84,376) Pupil Transportation Services 6,817,393 6,817,393 6,081, ,268 CAPITAL OUTLAY Equipment 296, , ,131 15,047 TOTAL EXPENDITURES 136,092, ,092, ,375,222 3,717,536 Excess of Revenues Over (Under) Expenditures (2,891,780) (2,891,780) 1,696,986 4,588,766 OTHER FINANCING SOURCES (USES) Sale of Equipment - - 8,480 8,480 Total Other Financing Sources (Uses) - - 8,480 8,480 Excess of Revenues & Other Financing Sources Over (Under) Expenditures & Other Uses (2,891,780) (2,891,780) 1,705,466 4,597,246 FUND BALANCE-September 1 5,957,002 5,957,002 7,076,814 1,119,812 - FUND BALANCE -August 31 $ 3,065,222 $ 3,065,222 $ 8,782,280 $ 5,717,058 * Prepared on the GAAP Budgetary Basis of Accounting -56-

67 REQUIRED SUPPLEMENTARY INFORMATION AUBURN SCHOOL DISTRICT NO. 408 BUDGETARY COMPARISON SCHEDULE* SPECIAL REVENUE FUND (ASSOCIATED STUDENT BODY FUND) FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 Schedule A-2 BUDGETED AMOUNTS ACTUAL ORIGINAL FINAL AMOUNT VARIANCE REVENUES General $ 1,499,735 $ 1,499,735 $ 781,456 $ (718,279) Athletics 199, , ,676 22,276 Classes 257, , ,603 (112,738) Clubs 1,555,467 1,555,467 1,220,412 (335,055) Private Monies 58,060 58,060 51,489 (6,571) Total Revenues 3,570,003 3,570,003 2,419,636 (1,150,367) EXPENDITURES General 1,231,199 1,231, , ,457 Athletics 345, , ,368 47,983 Classes 258, , , ,482 Clubs 1,599,892 1,599,892 1,231, ,812 Private Monies 56,160 56,160 55, Total Expenditures 3,491,423 3,491,423 2,240,907 1,250,516 Excess of Revenues Over (Under) Expenditures 78,580 78, , ,149 FUND BALANCE - September 1 896, ,917 1,193, ,620 FUND BALANCE - August 31 $ 975,497 $ 975,497 $ 1,372,266 $ 396,769 *Prepared on the GAAP Budgetary Basis of Accounting. -57-

68 REQUIRED SUPPLEMENTARY INFORMATION AUBURN SCHOOL DISTRICT NO. 408 ACTUARIAL VALUATION OF POST EMPLOYMENT BENEFITS OTHER THAN PENSION SCHEDULE OF FUNDING PROGRESS Schedule A-3 Fiscal Year Actuarial Actuarial Acctuarial Unfunded Actuarial UAAL As a Ended Valuation Value of Accrued Accrued Liabilities Funded Covered Percentage of August 31 Date Assets Liabliity (UAAL) Ratio Payroll Covered Payroll 2009 August 31, 2009 $ - $ 39,459,390 $ 39,459,390 0% $ 86,000,573 46% -58-

69 Supplemental Data Supplemental data includes financial statements and schedules not required by the Governmental Accounting Standard Board (GASB), nor are they a part of the basic financial statements, but are presented for purposes of additional analysis. 59

70 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND COMPARATIVE BALANCE SHEETS AUGUST 31, 2009 AND 2008 Schedule B ASSETS Cash and Cash Equivalents $ 10,247,823 $ 7,723,996 Property Tax Receivable 12,331,851 11,062,511 Accounts Receivable, Net 90, ,420 Interest Receivable 13,044 20,518 Due From Other Funds 12,675 54,612 Due From Other Governments 859, ,047 Inventories, at Cost 478, ,835 TOTAL ASSETS $ 24,033,138 $ 20,493,939 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 823,012 1,090,518 Accrued Wages and Benefits Payable 1,972,037 1,120,111 Due To Other Governments 61, ,235 Due To Other Funds 35,499 7,500 Deferred Revenue 12,358,592 11,093,761 TOTAL LIABILITIES $ 15,250,858 $ 13,417,125 Fund Balance: Unreserved: Designated for Opening New School 1,800,000 1,800,000 Designated for Inventory Replacement 326, ,000 Designated for Self Insurance 300, ,000 Undesignated 6,356,280 4,650,814 TOTAL FUND BALANCE $ 8,782,280 $ 7,076,814 TOTAL LIABILITIES AND FUND BALANCE $ 24,033,138 $ 20,493,

71 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) Schedule B BUDGET ACTUAL VARIANCE ACTUAL REVENUES: Source: Local Taxes $ 22,960,334 $ 22,954,024 $ (6,310) $ 21,289,235 Local Non-Tax 5,306,127 4,052,542 (1,253,585) 4,122,975 State, General Purpose 73,467,700 69,162,544 (4,305,156) 68,138,093 State, Special Purpose 20,473,643 20,304,195 (169,448) 19,788,379 Federal, General Purpose 140, ,154 99, ,286 Federal, Special Purpose 9,936,830 16,561,182 6,624,352 9,555,183 Revenues from other sources 915, ,567 (118,030) 899,465 TOTAL REVENUES 133,200, ,072, , ,013,616 EXPENDITURES Current: Regular Instruction 73,145,846 72,290, ,090 65,011,968 Special Instruction 12,886,450 14,127,354 (1,240,904) 11,766,231 Vocational Instruction 6,787,021 6,058, ,704 6,270,243 Compensatory Education 12,198,476 11,837, ,951 11,932,553 Other Educational Programs 1,253, , , ,283 Community Services 783, ,463 (21,688) 762,284 Support Services 17,666,580 15,971,100 1,695,480 15,272,804 Child Nutrition Services 4,257,583 4,341,959 (84,376) 3,938,050 Pupil Transportation Services 6,817,393 6,081, ,268 5,857,742 Capital Outlay - Equipment 296, ,131 15, ,931 TOTAL EXPENDITURES 136,092, ,375,222 3,717, ,735,089 Excess of Revenues Over (Under) Expenditures (2,891,780) 1,696,986 4,588,766 2,278,527 OTHER FINANCING SOURCES (USES) Sale of Equipment - 8,480 8,480 4,345 Total Other Financing Sources (Uses) - 8,480 8,480 4,345 Excess of Revenues & Other Financing Sources Over (Under) Expenditures & Other Uses (2,891,780) 1,705,466 4,597,246 2,282,872 FUND BALANCE-September 1 5,957,002 7,076,814 1,119,812 4,793,942 FUND BALANCE -August 31 $ 3,065,222 $ 8,782,280 $ 5,717,058 $ 7,076,

72 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF REVENUES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) Schedule B-3 (Page 1 of 2) DESCRIPTION BUDGET ACTUAL VARIANCE ACTUAL LOCAL TAXES Local Property Tax $ 22,959,548 $ 22,953,484 $ (6,064) $ 21,287,336 Other Taxes (246) 1,899 TOTAL LOCAL TAXES 22,960,334 22,954,024 (6,310) 21,289,235 LOCAL NON-TAX Tuition & Fees, Unassigned 660, ,789 (147,868) 634,320 Summer School Tuition - 12,205 12,205 8,730 Sales of Goods and Supplies 90, ,692 45, ,107 Sales of Goods and Supplies, Vocational 902, ,230 (344,270) 785,168 Other Community Services 95,000 81,619 (13,381) 93,427 Food Services Sales 1,495,000 1,440,397 (54,603) 1,458,019 School Bus Revenue 17,200 - (17,200) 24,079 Investment Earnings 210, , ,742 52,762 Gifts & Donations 1,180, ,894 (742,906) 154,485 Fines & Damages 29,000 25,535 (3,465) 29,006 Rental of Property 385, ,427 (63,573) 380,546 Insurance Recoveries 30,000 - (30,000) 61,711 Local Non-Tax Unassigned 102, ,012 17, ,748 E-Rate 108,470 - (108,470) 191,867 TOTAL LOCAL NONTAX 5,306,127 4,052,542 (1,253,585) 4,122,975 STATE FUNDS, GENERAL PURPOSE Apportionment 70,068,890 65,537,090 (4,531,800) 64,917,041 Special Ed-Gen Apportionment 1,792,386 1,924, ,307 1,743,809 Local Effort Assistance 1,606,424 1,700,761 94,337 1,477,243 TOTAL STATE, GENERAL PURPOSE 73,467,700 69,162,544 (4,305,156) 68,138,093 STATE FUNDS, SPECIAL PURPOSE Special Purpose, Unassigned 10,840 2,045 (8,795) 3,350 Promoting Academic Success ,310 Special Education 7,474,454 8,220, ,615 6,940,721 Middle School Career & Tech Educ 16,000 3 (15,997) 16,029 Learning Assistance 1,466,580 1,477,205 10,625 1,153,524 Special Pilot Programs 379, , , ,375 Transitional Bilingual 1,419,861 1,536, ,211 1,331,905 Student Achievement 6,376,752 4,980,555 (1,396,197) 6,221,390 Highly Capable 132, ,018 (1,016) 123,777 Professional Development 236, , ,684 School Food Services 143, ,253 78, ,570 Transportation - Operations 2,816,946 2,986, ,091 2,703,744 Other State Agencies, Unassigned - 9,668 9,668 - TOTAL STATE, SPECIAL PURPOSE 20,473,643 20,304,195 (169,448) 19,788,

73 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF REVENUES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) Schedule B-3 (Page 2 of 2) DESCRIPTION BUDGET ACTUAL VARIANCE ACTUAL FEDERAL FUNDS, GENERAL PURPOSE Impact Aid $ 87,870 $ 188,745 $ 100,875 $ 166,831 Federal Forests 52,877 51,409 (1,468) 53,455 TOTAL FEDERAL, GENERAL PURPOSE 140, ,154 99, ,286 FEDERAL, SPECIAL PURPOSE Federal Stimulus-State Fiscal Stabilization - 6,340,684 6,340,684 - Special Purpose, Unassigned 175,000 - (175,000) 3,500 Special Education, Medicaid Reimbursement 175, ,937 54, ,547 Special Education 2,438,970 2,481,842 42,872 2,430,985 Vocational Education 87,593 84,717 (2,876) 113,585 Disadvantaged, Title I 1,891,901 1,954,717 62,816 1,811,227 School Improvement 602, ,254 9, ,897 Reading First - 118, ,210 13,970 Limited English Proficiency 231, ,838 20, ,185 Other Community Services 180, ,003 90, ,337 School Food Service 2,670,000 2,925, ,054 2,525,065 Federal Grants Through Other Agencies ,135 School Improvement, Federal 30,000 32,389 2,389 - Head Start 750, ,004 (140,168) 633,697 Indian Education 124, ,913 (4,487) 124,395 Medicaid Administrative Match 300, ,662 (123,338) 324,911 USDA Commodities 280, ,958 72, ,747 TOTAL FEDERAL, SPECIAL PURPOSE 9,936,830 16,561,182 6,624,352 9,555,183 REVENUES FROM OTHER DISTRICTS Transportation 22,250 - (22,250) 103,967 Non-High Participation 865, ,567 (74,280) 755,952 TOTAL REVENUES FROM OTHER DISTRICTS 888, ,567 (96,530) 859,919 REVENUES FROM OTHER AGENCIES Agency & Association Grants 27,500 6,000 (21,500) 39,546 TOTAL REVENUES FROM OTHER AGENCIES 27,500 6,000 (21,500) 39,546 REVENUES FROM OTHER FINANCING SOURCES Sale of Equipment - 8,480 8,480 4,345 TOTAL REVENUES FROM OTHER FINANCING SOURCES - 8,480 8,480 4,345 TOTAL REVENUES $ 133,200,978 $ 134,080,688 $ 879,710 $ 124,017,

74 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) Schedule B-4 (Page 1 of 2) PROGRAM BUDGET ACTUAL VARIANCE ACTUAL REGULAR INSTRUCTION Teaching $ 52,497,687 $ 51,867,456 $630,231 $ 46,249,076 Extracurricular 3,106,503 3,147,368 (40,865) 2,973,954 Instructional Supervision 1,067, ,976 89, ,337 Learning Resources - Library Services 2,857,791 2,846,583 11,208 2,465,698 Principals 8,291,447 8,229,479 61,968 7,719,352 Guidance and Counseling 2,944,178 2,994,121 (49,943) 2,588,862 Pupil Management and Safety 1,218,022 1,085, , ,118 Health Services - Psychologists, Nurses 1,162,777 1,142,596 20,181 1,104,571 Total Regular Instruction 73,145,846 72,290, ,090 65,011,968 SPECIAL INSTRUCTION Basic State Program 10,439,872 11,627,964 (1,188,092) 9,352,007 Supplemental Federal Program 2,416,614 2,434,594 (17,980) 2,357,970 Other 29,964 64,796 (34,832) 56,254 Total Special Instruction 12,886,450 14,127,354 (1,240,904) 11,766,231 VOCATIONAL INSTRUCTION Basic State Program 6,687,186 5,976, ,086 6,167,844 Middle School Career & Tech 16,000-16,000 4,517 Supplemental Federal Program 83,835 82,217 1,618 97,882 Total Vocational Instruction 6,787,021 6,058, ,704 6,270,243 COMPENSATORY EDUCATION Federal Remediation-Title I 1,835,039 1,895,346 (60,307) 1,756,955 Federal School Improvement ESEA 664, ,972 42, ,221 Reading First - 107,370 (107,370) 13,558 State Remediation 1,423,532 1,402,031 21,501 1,119,881 Special and Pilot Programs 382, ,218 (80,700) 374,663 Federal Head Start 731, , , ,164 Promoting Academic Success - 52,416 (52,416) 422,646 Federal Limited English Proficiency 223, ,784 (23,602) 221,378 State Transitional Bilingual 1,323,240 1,341,430 (18,190) 1,177,984 Student Achievement I 728 5,489,629 4,980, ,425 5,525,331 Federal Indian Education 125, ,750 8, ,772 Total Compensatory Education $ 12,198,476 $ 11,837,525 $ 360,951 $ 11,932,

75 AUBURN SCHOOL DISTRICT NO. 408 GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) Schedule B-4 (Page 2 of 2) PROGRAM BUDGET ACTUAL VARIANCE ACTUAL OTHER EDUCATIONAL PROGRAMS Summer School $ - $ 5,740 $ (5,740) $ 7,600 Highly Capable 115, ,558 (640) 106,612 Professional Development 227, ,610 20, ,904 Other Instructional Programs 909, , , ,167 Total Other Educational Programs 1,253, , , ,283 COMMUNITY SERVICES 783, ,463 (21,688) 762,284 SUPPORT SERVICES Board of Directors 311, , , ,683 Superintendent's Office 450, ,587 50, ,177 Business Services 1,474,930 1,337, ,106 1,271,554 Human Resources 1,213,433 1,132,120 81,313 1,050,556 Maintenance 3,318,591 3,035, ,228 2,961,315 Custodial 4,393,654 4,276, ,549 3,907,010 Utilities 4,538,989 3,729, ,187 3,535,995 Insurance 658, ,701 (27,899) 665,339 Building Security 267, ,223 (4,127) 236,568 Printing (2,525) (2,031) (494) 15,616 Information Technology 603, , , ,699 Warehouse 428, ,685 29, ,179 Motor Pool 10,400 10,882 (482) 16,113 Total Support Services 17,666,580 15,971,100 1,695,480 15,272,804 CHILD NUTRITION SERVICES 4,257,583 4,341,959 (84,376) 3,938,050 PUPIL TRANSPORTATION SERVICES 6,817,393 6,081, ,268 5,857,742 CAPITAL OUTLAY-EQUIPMENT 296, ,131 15, ,931 Total Expenditures $ 136,092,758 $ 132,375,222 $ 3,717,536 $ 121,735,

76 Schedule C-1 AUBURN SCHOOL DISTRICT NO. 408 SPECIAL REVENUE FUND (ASSOCIATED STUDENT BODY FUND) COMPARATIVE BALANCE SHEETS AUGUST 31, 2009 AND ASSETS Cash and Cash Equivalents $ 1,691,682 $ 1,633,516 Due From Other Funds 2,200 - Accrued Interest Receivable 1,705 3,058 Inventory of Supplies, at Cost 19,095 4,303 TOTAL ASSETS $ 1,714,682 $ 1,640,877 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 38, ,537 Due to Other Governments 11,974 20,711 Due To Other Funds 9,981 1,093 Deferred Revenue 282, ,999 Total Liabilities $ 342,416 $ 447,340 Fund Balance: Unreserved Fund Balance 1,372,266 1,193,537 Total Fund Balance $ 1,372,266 $ 1,193,537 TOTAL LIABILITIES AND FUND BALANCE $ 1,714,682 $ 1,640,

77 AUBURN SCHOOL DISTRICT NO. 408 SPECIAL REVENUE FUND (ASSOCIATED STUDENT BODY FUND) SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) Schedule C BUDGET ACTUAL VARIANCE ACTUAL REVENUES General $ 1,499,735 $ 781,456 $ (718,279) $ 705,657 Athletics 199, ,676 22, ,742 Classes 257, ,603 (112,738) 140,005 Clubs 1,555,467 1,220,412 (335,055) 1,078,102 Other 58,060 51,489 (6,571) 30,504 Total Revenues 3,570,003 2,419,636 (1,150,367) 2,136,010 EXPENDITURES Current: General 1,231, , , ,906 Athletics 345, ,368 47, ,061 Classes 258, , , ,622 Clubs 1,599,892 1,231, ,812 1,173,458 Other 56,160 55, ,297 Capital Outlay: Equipment Total Expenditures 3,491,423 2,240,907 1,250,516 2,149,344 Excess of Revenues Over (Under) Expenditures 78, , ,149 (13,334) FUND BALANCE - September 1 896,917 1,193, ,620 1,206,871 FUND BALANCE - August 31 $ 975,497 $ 1,372,266 $ 396,769 $ 1,193,

78 Schedule D-1 AUBURN SCHOOL DISTRICT NO. 408 DEBT SERVICE FUND (BOND FUND) COMPARATIVE BALANCE SHEETS AUGUST 31, 2009 AND ASSETS Cash and Cash Equivalent $ 8,600,866 $ 8,610,345 Property Tax Receivable 8,445,062 8,038,523 Accrued Interest Receivable 10,658 20,489 Due from Other Funds - - TOTAL ASSETS $ 17,056,586 $ 16,669,357 LIABILITIES AND FUND BALANCE Liabilities: Due to Other Governments 82, ,489 Deferred Revenue-Taxes Receivable 8,445,062 8,038,523 Total Liabilities $ 8,527,649 $ 8,185,012 Fund Balance: Unreserved Fund Balance 8,528,937 8,484,345 Total Fund Balance $ 8,528,937 $ 8,484,345 TOTAL LIABILITIES AND FUND BALANCE $ 17,056,586 $ 16,669,

79 Schedule D-2 AUBURN SCHOOL DISTRICT NO. 408 DEBT SERVICE FUND (BOND FUND) SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) BUDGET ACTUAL VARIANCE ACTUAL REVENUES Local Taxes $ 16,165,211 $ 16,119,117 $ (46,094) $ 16,526,624 Local Non-Tax 248, ,135 47,820 (39,445) Total Revenues 16,413,526 16,415,252 1,726 16,487,179 EXPENDITURES DEBT SERVICE Principal Retirement 10,940,000 10,940,000-10,780,000 Interest on Bonds 5,428,844 5,428,844-5,967,631 Bond Transfer Fees 4,500 1,816 2,684 1,814 Total Expenditures 16,373,344 16,370,660 2,684 16,749,445 Excess of Revenues Over Expenditures 40,182 44,592 4,410 (262,266) FUND BALANCE - September 1 8,860,555 8,484,345 (376,210) 8,746,611 FUND BALANCE -August 31 $ 8,900,737 $ 8,528,937 $ (371,800) $ 8,484,

80 Schedule E-1 AUBURN SCHOOL DISTRICT NO. 408 CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS AUGUST 31, 2009 AND ASSETS Cash and Cash Equivalent $ 17,654,262 $ 22,345,334 Property Tax Receivable 1,391,191 1,240,337 Accrued Interest Receivable 22,082 52,921 Due From Other Fund 33,299 - Due From Other Governments 448,471 4,172,414 TOTAL ASSETS $ 19,549,305 $ 27,811,006 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 646, ,416 Due to Other Governments 260, ,339 Due to Other Funds 2,694 53,519 Deferred Revenue 1,391,191 1,241,691 Total Liabilities $ 2,300,235 $ 1,946,965 Fund Balance: Unreserved: Designated for School Construction and Equipment 17,249,070 25,864,041 Total Fund Balance $ 17,249,070 $ 25,864,041 TOTAL LIABILITIES AND FUND BALANCE $ 19,549,305 $ 27,811,

81 Schedule E-2 AUBURN SCHOOL DISTRICT NO. 408 CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) BUDGET ACTUAL VARIANCE ACTUAL REVENUES Local Taxes $ 2,606,778 $ 2,588,939 $ (17,839) $ 2,181,905 Local Non-Tax 1,878,685 1,273,526 (605,159) 851,869 State, Special Purpose - 644, , ,518 TOTAL REVENUES 4,485,463 4,507,052 21,589 3,454,292 EXPENDITURES Capital Outlay Sites 10,053,995 9,180, ,434 7,560,147 Building 3,735,266 1,283,582 2,451,684 2,064,658 Equipment 5,210,739 2,582,578 2,628,161 2,939,087 Energy - 75,302 (75,302) - TOTAL EXPENDITURES 19,000,000 13,122,023 5,877,977 12,563,892 Excess Of Revenues Over (Under) Expenditures (14,514,537) (8,614,971) 5,899,566 (9,109,600) FUND BALANCE - September 1 16,592,542 25,864,041 9,271,499 34,973,641 ` FUND BALANCE - August 31 $ 2,078,005 $ 17,249,070 $ 15,171,065 $ 25,864,

82 Schedule F-1 AUBURN SCHOOL DISTRICT NO. 408 TRANSPORTATION VEHICLE FUND COMPARATIVE BALANCE SHEETS AUGUST 31, 2009 AND ASSETS Cash and Cash Equivalents $ 448,589 $ 298,807 Taxes Receivable 1,744 5,669 Interest Receivable 553 1,913 Due From Other Funds - 7,500 TOTAL ASSETS $ 450,886 $ 313,889 LIABILITIES AND FUND BALANCE Liabilities: Due to Other Governments 7,411 14,970 Deferred Revenue Tax Receivable 1,744 5,669 Total Liabilities $ 9,155 $ 20,639 Fund Balance: Unreserved 441, ,250 Total Fund Balance $ 441,731 $ 293,250 TOTAL LIABILITIES AND FUND BALANCE $ 450,886 $ 313,

83 Schedule F-2 AUBURN SCHOOL DISTRICT NO. 408 TRANSPORTATION VEHICLE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) BUDGET ACTUAL VARIANCE ACTUAL REVENUES Local Taxes $ - $ 3,135 $ 3,135 $ 5,920 Local Non-Tax 19,867 27,417 7,550 1,198 State, Special Purpose 625, ,387 75, ,673 TOTAL REVENUES 645, ,939 86, ,791 EXPENDITURES Capital Outlay: Equipment 900, , , ,717 TOTAL EXPENDITURES 900, , , ,717 Excess of Revenues (Under) Expenditures (254,544) 148, ,025 (204,926) OTHER FINANCING SOURCES (USES) Sales of Surplus Buses ,777 TOTAL OTHER FINANCING SOURCES(USES) ,777 Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Uses (254,544) 148, ,025 (179,149) FUND BALANCE - September 1 286, ,250 6, ,399 FUND BALANCE - August 31 $ 32,366 $ 441,731 $ 409,365 $ 293,

84 Schedule G-1 AUBURN SCHOOL DISTRICT NO. 408 PRIVATE PURPOSE TRUST COMPARATIVE STATEMENT OF FIDUCIARY NET ASSETS AUGUST 31, 2009 AND ASSETS Cash and Cash Equivalents $ 613,565 $ 615,321 Accounts Receivable Interest Receivable 837 1,628 TOTAL ASSETS $ 614,902 $ 616,949 LIABILITIES Accounts Payable Due to Other Governmental Units 5,691 11,220 Total Liabilities $ 6,191 $ 11,486 NET ASSETS $ 608,711 $ 605,

85 Schedule G-2 AUBURN SCHOOL DISTRICT NO. 408 PRIVATE PURPOSE TRUST STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) ADDITIONS: Donations $ 105,976 $ 97,929 Investment Earnings: 25, TOTAL ADDITIONS 131,438 98,040 DEDUCTIONS: Scholarships and Student Aid 128, ,582 CHANGES IN NET ASSETS 3,248 (54,542) NET ASSETS - September 1 605, ,005 NET ASSETS - August 31 $ 608,711 $ 605,

86 Schedule G-3 AUBURN SCHOOL DISTRICT NO. 408 EMPLOYEE BENEFIT TRUST FUND COMPARATIVE STATEMENT OF FIDUCIARY NET ASSETS AUGUST 31, 2009 AND ASSETS Cash and Cash Equivalents $ 197,741 $ 210,119 Interest Receivable TOTAL ASSETS $ 197,969 $ 210,608 LIABILITIES Due to Other Governments 1,664 3,316 Total Liabilities $ 1,664 $ 3,316 NET ASSETS Held In Trust For Employee Benefits 196, ,292 Total Net Assets $ 196,305 $ 207,

87 Schedule G-4 AUBURN SCHOOL DISTRICT NO. 408 EMPLOYEE BENEFIT TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 (WITH COMPARATIVE TOTALS FOR AUGUST 31, 2008) ADDITIONS Contributions from Plan Members $ 170,834 $ 158,170 Investment Earnings 7, TOTAL ADDITIONS 178, ,350 DEDUCTIONS Benefit Claims 188, ,450 Administrative Expenses 700 1,350 TOTAL DEDUCTIONS 189, ,800 CHANGES IN NET ASSETS (10,987) (9,450) NET ASSETS - September 1 207, ,742 NET ASSETS - August 31 $ 196,305 $ 207,

88 Schedule H-1 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF CHANGES IN LONG-TERM DEBT FOR THE FISCAL YEAR ENDED AUGUST 31, 2009 BALANCE BALANCE 9/1/2008 INCREASES DECREASES 8/31/2009 Governmental Bonds Payable 1997 UTGO Bonds $ 6,500,000 $ - $ 3,050,000 $ 3,450, UTGO Bonds 36,000, ,000, UTGO Refunding Bonds 26,505, ,000 26,315, UTGO Bonds 18,000,000-2,200,000 15,800, UTGO Bonds 20,000, ,000, UTGO Bonds 12,000,000-5,500,000 6,500,000 Total Bonds Payable 119,005,000-10,940, ,065,000 Unamortized Bond Premium/Discount 3,716, ,474 3,354,190 Unamortized Refunding Loss (414,145) - (276,097) (138,048) Net Bonds Payable 122,307,519-11,026, ,281,142 Compensated Absences 1,619,705 2,302,736 1,619,705 2,302,736 Net OPEB Obligation - 3,554, ,253 2,795,263 Total Long-Term Debt $ 123,927,224 $ 5,857,252 $ 13,405,335 $ 116,379,

89 Schedule H-2 AUBURN SCHOOL DISTRICT NO. 408 OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS DEBT SERVICE AUGUST 31, 2009 Original Issue Amount Original Issue Amount $38,000,000 Original Issue Amount Original Issue Amount Original Issue Amount Original Issue Amount $36,000,000 $27,785,000 $18,000,000 $20,000,000 $12,650,000 DUE 1997 Bond 2003 Bond 2004 Refunding Bond 2004 Bond 2005 Bond 2006 Bond TOTAL TOTAL DATE Dated 3/1/1997 Dated 5/8/2003 Dated 3/1/2004 Dated 8/1/2004 Dated 4/1/2005 Dated 7/25/2006 DEBT CALENDAR Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest SERVICE YEAR 12/1/09 3,450,000 86, , ,064 2,350, , ,000 5,500, ,063 13,879,671 13,879,671 6/1/ ,763 1,615, , , ,000-22,312 3,925,922 12/1/ ,762 1,600, , , , ,000 22,312 4,387,152 8,313,074 6/1/ ,763 1,830, , , ,000-11,063 4,081,904 12/1/ ,762 1,830, , , , ,000 11,063 4,552,165 8,634,069 6/1/ ,763 1,795, , , , ,978,654 12/1/ ,762 1,795, , , , , ,302,240 8,280,894 6/1/ , , , , ,109,242 12/1/ ,762 4,010, , , , , ,389,239 8,498,481 6/1/ ,763 2,015, , , , ,018,592 12/1/ ,762 2,015, , , , ,000-4,707,068 8,725,660 6/1/ , , , , ,915,796 12/1/ ,762 3,920, ,250 1,205, , , ,040,794 8,956,590 6/1/ ,763-97, , , ,785,411 12/1/ ,762 3,890,000 97,250 1,735, , , ,410,410 9,195,821 6/1/ , , , ,641,533 12/1/ ,030, , , , , ,796,532 9,438,065 6/1/ , , , ,480,683 12/1/ ,580, , , , , ,210,682 9,691,365 6/1/ , , , ,304,845 12/1/ ,170, , , , , ,649,845 9,954,690 6/1/ , , , ,121,920 12/1/ ,780, , , , , ,101,920 10,223,840 6/1/ , , , ,120 12/1/ ,440, , , , , ,573,120 10,496,240 6/1/ , , ,500 12/1/ ,300, , , ,007,500 9,715,000 6/1/ , ,000 12/1/ ,000, , ,500,000 11,000,000 6/1/ , ,000 12/1/ ,000, , ,250,000 10,500,000 3,450,000 86,250 36,000,000 19,485,412 26,315,000 5,220,242 15,800,000 7,433,743 20,000,000 15,000,000 6,500, , ,503, ,503,

90 Schedule I-1 AUBURN SCHOOL DISTRICT NO.408 SCHEDULE OF CAPITAL ASSETS BY LOCATION AUGUST 31, 2009 Construction Property Location Land Buildings in Progress Equipment Totals SENIOR HIGH SCHOOLS Auburn 800 4th Street N.E. $ 592,951 $ 26,774,183 $ - $ 1,242,591 $ 28,609,725 Auburn Riverside 501 Oravetz Rd 3,509,188 31,642, ,681 35,860,095 Auburn Mountainview th Ave SE 4,129,915 48,309, ,603 52,829,348 West Auburn 401 West Main Street 16,650 3,966,302-30,646 4,013,598 Auburn Memorial 801 4th Street N.E. 47,242 6,358,208-60,615 6,466,065 MIDDLE SCHOOLS Cascade th Street NE 121,486 8,495, ,397 8,722,576 Mt. Baker th Street SE 2,923,600 13,453, ,790 16,502,250 Olympic 1825 "K" Street SE 92,532 8,966,021-56,804 9,115,357 Rainier th Ave. SE 107,681 10,956,929-71,166 11,135,776 ELEMENTARY SCHOOLS Alpac 310 Milwaukee Blvd N. 83,007 4,788, ,820 5,000,741 Arthur Jacobsen nd Street SE 1,006,023 20,188, ,136 21,344,047 Chinook 3502 Auburn Way S. 32,985 3,513,839-85,564 3,632,388 Dick Scobee th Street NE 9,731 4,415,674-73,689 4,499,094 Evergreen Heights 5602 So 316th 22,223 2,151, ,328 2,278,607 Gildo Rey th Street SE 30,232 2,996, ,293 3,135,687 Hazelwood SE 304th Street 230,323 5,614,612-29,341 5,874,276 Ilalko 301 Oravetz Pl SE 2,007,182 6,770,908-98,131 8,876,221 Lake View SE 318th 408,702 4,273, ,844 4,790,197 Lakeland Hills 1020 Evergreen Way S.E. 3,093,020 14,472, ,437 17,723,034 Lea Hill th Ave. SE 21,620 3,774, ,440 3,914,065 Pioneer 2301 "M" Street SE 18,082 3,140, ,967 3,305,772 Terminal Park 1101 "D" Street SE 26,603 2,955,375-94,745 3,076,723 Washington 20 "E" Street NE 10,000 6,723,246-72,432 6,805,678 OTHER LOCATIONS James P. Fugate Center 915 4th Street NE 88,690 2,223,792-1,546,437 3,858,919 Administration Annex 502 4th Street NE 232, ,035-12, ,075 Support Services Center th Street SW 1,046,802 4,466,330-1,226,765 6,739,897 Transportation th Street SW 18 4,661,051-11,301,971 15,963,040 Portables Various Sites - 2,603, ,603,761 Miscellaneous Sites Various Sites 986, , ,198,164 Construction in Progress ,997,894-17,997,894 TOTALS $ 20,895,236 $ 259,522,913 $ 17,997,894 $ 18,355,027 $ 316,771,

91 Schedule I-2 AUBURN SCHOOL DISTRICT NO. 408 STATEMENT OF CHANGES IN CAPITAL ASSETS AUGUST 31, 2009 CAPITAL ADDITIONS DELETIONS CAPITAL ASSETS ASSETS CAPITAL ASSET TYPES 9/1/2008 8/31/2009 Land $ 20,895,236 $ - $ - $ 20,895,236 Building and Improvements 258,688, , ,522,913 Equipment 17,772,156 1,012,096 (429,225) 18,355,027 Construction In Progress 8,479,526 9,579,853 (61,485) 17,997,894 Totals at Historical Cost 305,835,850 11,425,930 (490,710) 316,771,070 Less: Accumulated Depreciation Building and Improvements (73,075,711) (5,206,305) - (78,282,016) Equipment (11,740,349) (965,414) 429,225 (12,276,538) Total Accumulated Depreciation (84,816,060) (6,171,719) 429,225 (90,558,554) Capital Assets, Net of Accumulated Depreciation $ 221,019,790 $ 5,254,211 $ (61,485) $ 226,212,

92 AUBURN SCHOOL DISTRICT NO. 408 SCHEDULE OF CAPITAL ASSETS BY FUNCTION AND ACTIVITY AUGUST 31, 2009 Schedule I-3 Construction Function and Activity Land Buildings in Progress Equipment Totals ADMINISTRATION Administration $ - $ - $ - $ 112,675 $ 112,675 General Buildings 321,336 2,876, ,198,163 Total Administration 321,336 2,876, ,675 3,310,838 INSTRUCTION Learning Resources ,792 72,792 Teaching ,334,183 1,334,183 Extracurricular ,362,964 2,362,964 School Buildings 19,527, ,518, , ,293,510 Total 19,527, ,518,705-4,017, ,063,449 CHILD NUTRITION SERVICES Operations , ,215 Total , ,215 PUPIL TRANSPORTATION Supervision 18 4,661, ,934 4,774,003 Maintenance ,897,384 10,897,384 Total 18 4,661,051-11,010,318 15,671,387 MAINTENANCE & OPERATIONS Supervision 1,046,802 4,466,330-41,488 5,554,620 Grounds Care , ,861 Operations of Plant , ,374 Maintenance , ,734 Total 1,046,802 4,466,330-1,336,457 6,849,589 OTHER SERVICES Information Technology ,404,731 1,404,731 Printing & Graphics ,729 37,729 Warehousing , ,238 Total ,604,698 1,604,698 CONSTRUCTION IN PROGRESS ,997,894-17,997,894 Total $ 20,895,236 $ 259,522,913 $ 17,997,894 $ 18,355,027 $ 316,771,

93 AUBURN SCHOOL DISTRICT NO. 408 SUMMARY AMORTIZATION SCHEDULE FOR ALL OUTSTANDING BONDS BOND PREMIUM, DISCOUNT, REFUNDING ADJUSTMENT FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J-1 Date Payment Interest Expense Premium/ Discount Amortized Unamortized Premium/ Discount Principal Refunding Adjustment Amortized Unamortized Refunding Adjustment Bond Carrying Value 03/13/97 $ - $ - $ - $ 312,815 $ - $ - $ - $ 38,312,815 06/01/97 2,497,237 2,146, , , ,166 2,650,525 93,213,006 12/01/97 4,606,387 2,640, ,894 1,965, ,166 2,490,359 91,407,535 06/01/98 3,435,342 2,334, ,257 1,100, ,166 2,330,193 82,377,064 12/01/98 6,263,918 2,428,281 45, ,624 3,790, ,664 3,617,493 98,989,131 06/01/99 2,958,344 2,662,707 45, , , ,664 3,360,829 98,950,158 12/01/99 6,788,219 2,657,582 45, ,350 4,085, ,664 3,104,165 95,076,185 06/01/00 2,906,340 2,560,703 45, , , ,664 2,847,501 94,987,212 12/01/00 7,195,040 2,554,403 45, ,076 4,595, ,664 2,590,837 90,603,239 06/01/01 2,881,864 2,436,227 45, , , ,664 2,334,173 90,414,266 12/01/01 7,363,364 2,427,727 45, ,802 4,890, ,664 2,077,509 85,735,293 06/01/02 2,833,099 2,287,462 45, , , ,664 1,820,845 85,446,320 12/01/02 8,422,223 2,276,586 45, ,528 6,100, ,664 1,564,181 79,557,347 06/01/03 2,745,188 2,099,551 45, , , ,664 1,307,517 79,168,374 12/01/03 11,015,228 3,102,020 98,208 2,412,808 7,815, ,664 1,050, ,456,955 06/01/04 3,129,866 2,275, ,535 3,594, , ,713 2,312, ,461,645 12/01/04 12,056,364 2,804, ,279 4,142,256 9,080, ,596 1,976, ,266,133 06/01/05 3,341,197 2,693, ,279 3,969, , ,597 1,639, ,955,451 12/01/05 12,854,138 3,333, ,607 4,494,170 9,330, ,596 1,302, ,486,240 06/01/06 3,286,724 2,921, ,609 4,569, , , , ,373,107 12/01/06 14,123,706 3,099, ,065 4,350,380 10,805, , , ,487,090 06/01/07 3,300,552 2,894, ,237 4,124, , , , ,218,901 12/01/07 13,713,753 2,892, ,242 3,897,901 10,595, , , ,535,708 06/01/08 3,033,878 2,667, ,237 3,716, , , , ,307,519 12/01/08 13,596,797 2,665, ,237 3,535,427 10,750, , , ,514,330 06/01/09 2,772,049 2,400, ,237 3,354, , , , ,281,142 12/01/09 13,879,671 2,398, ,237 3,172,953 11,300, ,048-99,937,953 06/01/10 3,925,922 2,141, ,002 3,003,951 1,615, ,153,951 12/01/10 4,387,152 2,118, ,002 2,834,949 2,100, ,884,949 06/01/11 4,081,904 2,094, ,753 2,677,196 1,830, ,897,196 12/01/11 4,552,165 2,064, ,753 2,519,443 2,330, ,409,443 06/01/12 3,978,654 2,036, ,690 2,372,753 1,795, ,467,753 12/01/12 4,302,240 2,005, ,690 2,226,063 2,150, ,171,063 06/01/13 2,109,242 1,962, ,690 2,079, ,024,373 12/01/13 6,389,239 1,962, ,690 1,932,683 4,280, ,597,683 06/01/14 4,018,592 1,856, ,690 1,785,993 2,015, ,435,993 12/01/14 4,707,068 1,820, ,690 1,639,303 2,740, ,549,

94 Date Payment Interest Expense Premium/ Discount Amortized Unamortized Premium/ Discount Principal Refunding Adjustment Amortized Unamortized Refunding Adjustment Bond Carrying Value 06/01/15 1,915,796 1,769, ,690 1,492, ,402,613 12/01/15 7,040,794 1,769, ,690 1,345,923 5,125, ,130,923 06/01/16 1,785,411 1,638, ,690 1,199, ,984,233 12/01/16 7,410,410 1,638, ,698 1,052,535 5,625, ,212,535 06/01/17 1,641,533 1,551,170 90, , ,122,172 12/01/17 7,796,532 1,551,169 90, ,809 6,155, ,876,809 06/01/18 1,480,683 1,390,320 90, , ,786,446 12/01/18 8,210,682 1,390,319 90, ,083 6,730, ,966,083 06/01/19 1,304,845 1,214,482 90, , ,875,720 12/01/19 8,649,845 1,214,482 90, ,357 7,345, ,440,357 06/01/20 1,121,920 1,031,557 90, , ,349,994 12/01/20 9,101,920 1,031,557 90, ,631 7,980, ,279,631 06/01/21 923, ,758 90, , ,189,269 12/01/21 9,573, ,758 90, ,907 8,650, ,448,907 06/01/22 707, ,708 37, , ,411,115 12/01/22 9,007, ,705 37,795 73,320 8,300, ,073,320 06/01/23 500, ,672 18,328 54, ,054,992 12/01/23 10,500, ,672 18,328 36,664 10,000, ,036,664 06/01/24 250, ,668 18,332 18, ,018,332 12/01/24 10,250, ,668 18,332-10,000, $ 312,624,277 $ 109,348,034 $ 6,006,243 $ 197,270,000 $ 6,011,

95 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 1997 BONDS FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J-2 Date Payment 1997 Unlimited Tax General Obligation Bond Issue Interest Expense Premium Amortized Unamortized Premium Principal Payment Bond Carrying Value 03/13/97 $ - $ - $ - $ 312,815 $ - $ 38,312,815 06/01/97 851, ,330 7, , ,000 37,954,995 12/01/97 995, ,480 7, ,175-37,947,175 06/01/98 2,095, ,480 7, ,355 1,100,000 36,839,355 12/01/98 973, ,480 7, ,535-36,831,535 06/01/99 1,223, ,480 7, , ,000 36,573,715 12/01/99 968, ,355 7, ,895-36,565,895 06/01/00 1,268, ,355 7, , ,000 36,258,075 12/01/00 961, ,055 7, ,255-36,250,255 06/01/01 1,361, ,055 7, , ,000 35,842,435 12/01/01 953, ,555 7, ,615-35,834,615 06/01/02 1,453, ,555 7, , ,000 35,326,795 12/01/02 942, ,680 7, ,975-35,318,975 06/01/03 1,542, ,680 7, , ,000 34,711,155 12/01/03 929, ,330 7, ,335-34,703,335 06/01/04 930, ,830 7,820 67, ,000 7,867,096 12/01/04 214, ,625 6,100 60,996-7,860,996 06/01/05 514, ,625 6,100 54, ,000 7,554,896 12/01/05 207, ,650 6,100 48,796-7,548,796 06/01/06 207, ,650 6,100 42,696-7,542,696 12/01/06 207, ,650 6,100 36,596-7,536,596 06/01/07 207, ,650 6,100 30,496-7,530,496 12/01/07 1,207, ,650 6,100 24,396 1,000,000 6,524,396 06/01/08 177, ,651 6,099 18,297-6,518,297 12/01/08 3,227, ,651 6,099 12,198 3,050,000 3,462,198 06/01/09 86,250 80,151 6,099 6,099-3,456,099 12/01/09 3,536,250 80,151 6,099-3,450,000 - $ 27,246,200 $ 15,061,804 $ 184,396 $ 12,000,000 Refunded in ,419 26,000,000 Total Original Issue $ 312,815 $ 38,000,

96 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 2003 BONDS FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J Unlimited Tax General Obligation Bond Issue Date Payment Interest Expense Premium Amortized Unamortized Premium Principal Bond Carrying Value 05/08/03 $ - $ - $ - $ 1,945,125 $ - $ 37,945,125 12/01/03 1,068,390 1,015,819 52,571 1,892,554-37,892,554 06/01/04 915, ,192 52,571 1,839,983-37,839,983 12/01/04 915, ,191 52,571 1,787,412-37,787,412 06/01/05 915, ,192 52,571 1,734,841-37,734,841 12/01/05 915, ,191 52,571 1,682,270-37,682,270 06/01/06 915, ,192 52,571 1,629,699-37,629,699 12/01/06 915, ,191 52,571 1,577,128-37,577,128 06/01/07 915, ,192 52,571 1,524,557-37,524,557 12/01/07 915, ,191 52,571 1,471,986-37,471,986 06/01/08 915, ,192 52,571 1,419,415-37,419,415 12/01/08 915, ,191 52,571 1,366,844-37,366,844 06/01/09 915, ,192 52,571 1,314,273-37,314,273 12/01/09 915, ,191 52,571 1,261,702-37,261,702 06/01/10 915, ,192 52,571 1,209,131-37,209,131 12/01/10 915, ,191 52,571 1,156,560-37,156,560 06/01/11 915, ,192 52,571 1,103,989-37,103,989 12/01/11 915, ,191 52,571 1,051,418-37,051,418 06/01/12 915, ,192 52, ,847-36,998,847 12/01/12 915, ,191 52, ,276-36,946,276 06/01/13 915, ,192 52, ,705-36,893,705 12/01/13 915, ,191 52, ,134-36,841,134 06/01/14 915, ,192 52, ,563-36,788,563 12/01/14 915, ,191 52, ,992-36,735,992 06/01/15 915, ,192 52, ,421-36,683,421 12/01/15 915, ,191 52, ,850-36,630,850 06/01/16 915, ,192 52, ,279-36,578,279 12/01/16 915, ,191 52, ,708-36,525,708 06/01/17 915, ,192 52, ,137-36,473,137 12/01/17 6,945, ,191 52, ,566 6,030,000 30,390,566 06/01/18 757, ,904 52, ,995-30,337,995 12/01/18 7,337, ,904 52, ,424 6,580,000 23,705,424 06/01/19 584, ,179 52, ,853-23,652,853 12/01/19 7,754, ,179 52, ,282 7,170,000 16,430,282 06/01/20 405, ,929 52, ,711-16,377,711 12/01/20 8,185, ,929 52, ,140 7,780,000 8,545,140 06/01/21 211, ,430 52,570 52,570-8,492,570 12/01/21 8,651, ,430 52,570-8,440,000 - $ 66,627,190 $ 28,682,065 $ 1,945,125 $ 36,000,

97 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM AND REFUNDING ADJUSTMENT 2004 BONDS FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J Unlimited Tax General Obligation Refunding Bonds (Refunded 1997 Bonds) Date Payment Interest Expense Refunding Unamortized Premium Unamortized Bond Carrying Principal Adjustment Refunding Amortized Premium Value Amortized Adjustment 03/02/04 $ - $ - $ - $ 1,464,510 $ - $ - $ 1,656,581 $ 27,592,929 06/01/04 278, ,908 56,327 1,408, ,049 1,518,532 27,674,651 12/01/04 1,121, ,144 56,327 1,351, , ,048 1,380,484 27,191,372 06/01/05 725, ,493 56,327 1,295, , ,049 1,242,435 27,098,094 12/01/05 549, ,744 56,327 1,239, ,048 1,104,387 27,179,815 06/01/06 724, ,743 56,327 1,182, , , ,338 27,086,537 12/01/06 547, ,994 56,327 1,126, , ,290 27,168,258 06/01/07 727, ,993 56,327 1,070, , , ,242 27,069,979 12/01/07 545, ,194 56,327 1,013, , ,193 27,151,701 06/01/08 730, ,194 56, , , , ,145 27,048,422 12/01/08 543, ,112 56, , , ,097 27,130,143 06/01/09 733, ,113 56, , , , ,048 27,021,865 12/01/09 541, ,737 56, , ,048-27,103,586 06/01/10 2,156, ,737 56, ,259 1,615, ,432,259 12/01/10 2,117, ,969 56, ,932 1,600, ,775,932 06/01/11 2,323, ,968 56, ,605 1,830, ,889,605 12/01/11 2,293, ,231 56, ,278 1,830, ,003,278 06/01/12 2,231, ,781 56, ,951 1,795, ,151,951 12/01/12 2,199, ,369 56, ,624 1,795, ,300,624 06/01/13 368, ,469 56, , ,244,297 12/01/13 4,378, ,468 56, ,970 4,010, ,177,970 06/01/14 2,283, ,219 56, ,643 2,015, ,106,643 12/01/14 2,247, ,697 56, ,316 2,015, ,035,316 06/01/15 195, ,923 56, , ,978,989 12/01/15 4,115, ,923 56, ,662 3,920, ,002,662 06/01/16 97,250 40,923 56,327 56, ,946,335 12/01/16 3,987,250 40,915 56,335-3,890, $ 38,761,471 $ 9,511,961 $ 1,464,510 $ 27,785,000 $ 1,656,

98 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 2004 BONDS FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J Unlimited Tax General Obligation Bond Issue Date Interest Premium Unamortized Bond Carrying Payment Principal Expense Amortized Premium Value 08/09/04 $ - $ - $ - $ 720,171 $ - $ 18,720,171 12/01/04 284, ,724 19, ,707-18,700,707 06/01/05 426, ,819 19, ,243-18,681,243 12/01/05 426, ,818 19, ,779-18,661,779 06/01/06 426, ,818 19, ,315-18,642,315 12/01/06 426, ,819 19, ,851-18,622,851 06/01/07 426, ,818 19, ,387-18,603,387 12/01/07 426, ,819 19, ,923-18,583,923 06/01/08 426, ,818 19, ,459-18,564,459 12/01/08 2,626, ,819 19, ,995 2,200,000 16,344,995 06/01/09 390, ,069 19, ,531-16,325,531 12/01/09 2,740, ,068 19, ,067 2,350,000 13,956,067 06/01/10 331, ,319 19, ,603-13,936,603 12/01/10 331, ,318 19, ,139-13,917,139 06/01/11 331, ,319 19, ,675-13,897,675 12/01/11 331, ,318 19, ,211-13,878,211 06/01/12 331, ,319 19, ,747-13,858,747 12/01/12 686, ,318 19, , ,000 13,484,283 06/01/13 324, ,219 19, ,819-13,464,819 12/01/13 594, ,218 19, , ,000 13,175,355 06/01/14 319, ,819 19, ,891-13,155,891 12/01/14 1,044, ,818 19, , ,000 12,411,427 06/01/15 304, ,319 19, ,963-12,391,963 12/01/15 1,509, ,318 19, ,499 1,205,000 11,167,499 06/01/16 272, ,934 19, ,035-11,148,035 12/01/16 2,007, ,934 19, ,571 1,735,000 9,393,571 06/01/17 225, ,306 19, ,107-9,374,107 12/01/17 350, ,306 19, , ,000 9,229,643 06/01/18 223, ,744 19, ,179-9,210,179 12/01/18 373, ,743 19, , ,000 9,040,715 06/01/19 220, ,631 19, ,251-9,021,251 12/01/19 395, ,631 19, , ,000 8,826,787 06/01/20 216, ,956 19,464 97,323-8,807,323 12/01/20 416, ,956 19,464 77, ,000 8,587,859 06/01/21 212, ,656 19,464 58,395-8,568,395 12/01/21 422, ,656 19,464 38, ,000 8,338,931 06/01/22 207, ,036 19,464 19,467-8,319,467 12/01/22 8,507, ,033 19,467-8,300,000 - $ 29,518,724 $ 10,798,553 $ 720,171 $ 18,000,

99 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 2005 BONDS FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J Unlimited Tax General Obligation Bonds Date Payment Interest Expense Premium Unamortized Bond Carrying Principal Amortized Premium Value 4/13/2005 $ - $ - $ - $ 714,800 $ - $ 20,714,800 12/1/ , ,339 18, ,472-20,696,472 6/1/ , ,672 18, ,144-20,678,144 12/1/ , ,672 18, ,816-20,659,816 6/1/ , ,672 18, ,488-20,641,488 12/1/ , ,672 18, ,160-20,623,160 6/1/ , ,672 18, ,832-20,604,832 12/1/ , ,672 18, ,504-20,586,504 6/1/ , ,672 18, ,176-20,568,176 12/1/ , ,672 18, ,848-20,549,848 6/1/ , ,672 18, ,520-20,531,520 12/1/ , ,672 18, ,192-20,513,192 6/1/ , ,672 18, ,864-20,494,864 12/1/ , ,672 18, ,536-20,476,536 6/1/ , ,672 18, ,208-20,458,208 12/1/ , ,672 18, ,880-20,439,880 6/1/ , ,672 18, ,552-20,421,552 12/1/ , ,672 18, ,224-20,403,224 6/1/ , ,672 18, ,896-20,384,896 12/1/ , ,672 18, ,568-20,366,568 6/1/ , ,672 18, ,240-20,348,240 12/1/ , ,672 18, ,912-20,329,912 6/1/ , ,672 18, ,584-20,311,584 12/1/ , ,672 18, ,256-20,293,256 6/1/ , ,672 18, ,928-20,274,928 12/1/ , ,672 18, ,600-20,256,600 6/1/ , ,672 18, ,272-20,238,272 12/1/ , ,672 18, ,944-20,219,944 6/1/ , ,672 18, ,616-20,201,616 12/1/ , ,672 18, ,288-20,183,288 6/1/ , ,672 18, ,960-20,164,960 12/1/ , ,672 18, ,632-20,146,632 6/1/ , ,672 18, ,304-20,128,304 12/1/ , ,672 18, ,976-20,109,976 6/1/ , ,672 18,328 91,648-20,091,648 12/1/ , ,672 18,328 73,320-20,073,320 6/1/ , ,672 18,328 54,992-20,054,992 12/1/ ,500, ,672 18,328 36,664 10,000,000 10,036,664 6/1/ , ,668 18,332 18,332-10,018,332 12/1/ ,250, ,668 18,332-10,000,000 - $ 39,166,667 $ 18,451,867 $ 714,800 $ 20,000,

100 AUBURN SCHOOL DISTRICT NO. 408 AMORTIZATION SCHEDULE BOND PREMIUM 2006 BONDS FOR THE YEAR ENDED AUGUST 31, 2009 Schedule J Unlimited Tax General Obligation Bonds Date Payment Interest Expense Premium Amortized Unamortized Premium Principal Bond Carrying Value 7/25/2006 $ - $ - $ - $ 265,884 $ - $ 12,915,884 12/1/ , ,284 28, , ,000 12,237,437 6/1/ , ,115 28, ,990-12,208,990 12/1/ , ,114 28, ,542-12,180,542 6/1/ , ,114 28, ,094-12,152,094 12/1/2008 5,783, ,115 28, ,646 5,500,000 6,623,646 6/1/ , ,615 28,448 95,198-6,595,198 12/1/2009 5,646, ,615 28,448 66,750 5,500,000 1,066,750 6/1/ ,312-22,312 44,438-1,044,438 12/1/ ,312-22,312 22, , ,126 6/1/ ,063-11,063 11, ,063 12/1/ ,063-11, ,000 - $ 14,351,856 $ 1,435,972 $ 265,884 $ 12,650,

101 Statistical Section Presentation included in the Statistical Section of the Comprehensive Annual Financial Report (CAFR) provide users detailed information as a context for understanding what the information in the financial statements, note disclosures and the supporting schedules say about the school district s overall financial health. The section is divided into five categories based on the following: A. Financial Trends: These schedules contain trend information to help the reader understand how the school district s financial performance and well-being have changed over time. 1. Net Assets by Component, Last Seven Fiscal Years 2. Changes in Net Assets, Last Seven Fiscal Years 3. Fund Balances, Governmental Funds, Last Ten Fiscal Years 4. Changes in Fund Balances, Governmental Funds, Last Ten Fiscal Years 5. Revenues by Source-fund Level, Last Ten Fiscal Years 6. General Expenditures by Function, Last Ten Fiscal Years 7. Interest Earnings on Investments, Last Ten Fiscal Years B. Revenue Capacity: These schedules present information to help the reader asses the school district s most significant local revenue source property tax. 8. Property Tax Levies and Collections, Last Ten Calendar Years 9. Assessed Value of Taxable Property and Property Tax Rates For All Overlapping Taxing Authorities C. Debt Capacity: These schedules present information to help the reader assess the affordability of the school district s current levels of outstanding debt and the district s ability to issue additional debt in the future. 10. Ratio of Annual Debt Service for General Bonded Debt to Total General Fund Expenditures, Last Ten Fiscal Years 11. Ratio of Net General Bonded Debt Per Capita Ratio of Net General Bonded Debt to Personal Income, Last Ten Fiscal Years 12. Statement of Direct and Overlapping Debt 13. Computation of Legal Debt Margin 14. Legal Debt Margin Information, Last Ten Fiscal Years D. Demographic and Economic Information: These schedules offer demographic and economic indicators to help the reader understand the environment within which the school district s financial activities take place. 15. Demographic and Economic Statistics, Last Ten Calendar Years 16. Principal Taxpayers, Current Year and Nine Years Ago 17. Property Value and Construction, Last Ten Years 18. Major Employer, Current Year and Nine Years Ago E. Operating Information: These schedules contain employment and operating data to help the reader understand how the information in the district s financial report relates to the services the district provides and the activities it performs. 19. Full Time Equivalent District Employees by Program, Last Ten Fiscal Years 20. Operating Statistics, Last Ten Fiscal Years 21. Capital Assets by Function, Last Seven Fiscal Years 22. Miscellaneous Statistics 91