PRELIMINARY OFFICIAL STATEMENT DATED JUNE 15, 2016

Transcription

1 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED JUNE 15, 2016 NEW ISSUE -- FULL BOOK-ENTRY RATINGS: S&P Global Ratings: A+ Moody s: Aa3 See RATING herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Refunding Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See TAX MATTERS herein. Dated: Date of Delivery $17,705,000 * OXNARD UNION HIGH SCHOOL DISTRICT (Ventura County, California) 2016 General Obligation Refunding Bonds Due: August 1, as shown on inside cover Authority and Purpose. The captioned General Obligation Refunding Bonds (the Refunding Bonds ) are being issued by the Oxnard Union High School District (the District ) pursuant to certain provisions of the California Government Code and a resolution of the Board of Trustees of the District adopted on May 18, 2016 (the Bond Resolution ). Proceeds of the Refunding Bonds will be applied to refund in whole or in part the District s outstanding 2001 General Obligation Refunding Bonds, Series A. See THE REFUNDING BONDS Authority for Issuance and Purpose of Issue; Financing Plan. Security. The Refunding Bonds are general obligation bonds of the District payable solely from ad valorem taxes. The Board of Supervisors of Ventura County has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District without limitation of rate or amount (except certain personal property which is taxable at limited rates) for the payment of principal of and interest on the Refunding Bonds. See SECURITY FOR THE REFUNDING BONDS. Redemption. The Refunding Bonds are subject to optional and mandatory sinking fund redemption (at bidder s option) prior to maturity under certain circumstances, as described herein. See THE REFUNDING BONDS Optional Redemption and Mandatory Sinking Fund Redemption. Book-Entry Only. The Refunding Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ). Purchasers will not receive physical certificates representing their interests in the Refunding Bonds. See THE REFUNDING BONDS Book- Entry Only System. Payments. The Refunding Bonds are dated the date of delivery and are being issued as current interest bonds. The Refunding Bonds accrue interest at the rates set forth on the inside cover page hereof, payable semiannually on each February 1 and August 1 until maturity, commencing February 1, Payments of principal of and interest on the Refunding Bonds will be paid by U.S. Bank National Association, as the designated paying agent, registrar and transfer agent (the Paying Agent ), to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Refunding Bonds. See THE REFUNDING BONDS. Bond Insurance. The District has applied for bond insurance to guarantee the scheduled payment of principal of and interest on the Refunding Bonds. Whether such insurance is obtained is at bidder s option and will be determined upon the sale of the Refunding Bonds. MATURITY SCHEDULE (see inside front cover) This cover page contains information for general reference only. It is not a summary of all the provisions of the Refunding Bonds. Prospective investors must read the entire Official Statement to obtain information essential to making an informed investment decision. The Refunding Bonds will be sold and awarded pursuant to a competitive bidding process to be held on June 23, 2016, as set forth in the Official Notice of Sale with respect to the Refunding Bonds. The Refunding Bonds will be offered when, as and if issued and accepted by the Purchaser, subject to the approval as to legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel to the District, and subject to certain other conditions. Jones Hall is also serving as Disclosure Counsel to the District. It is anticipated that the Refunding Bonds, in book-entry form, will be available for delivery through the facilities of DTC, on or about July 7, The date of this Official Statement is June, *Preliminary; subject to change.

2 MATURITY SCHEDULE * OXNARD UNION HIGH SCHOOL DISTRICT (Ventura County, California) 2016 General Obligation Refunding Bonds Base CUSIP : Maturity Date Principal Interest (August 1) Amount* Rate Yield Price CUSIP *Preliminary; subject to change. CUSIP Copyright 2016, CUSIP Global Services, managed by Standard & Poor s Capital IQ. Neither the District nor the Purchaser takes any responsibility for the accuracy of the CUSIP data.

3 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the Refunding Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract between any Refunding Bond owner and the District or the Purchaser. No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the District or the Purchaser to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the District or the Purchaser. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of the Refunding Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the District, in any press release and in any oral statement made with the approval of an authorized officer of the District or any other entity described or referenced herein, the words or phrases will likely result, are expected to, will continue, is anticipated, estimate, project, forecast, expect, intend and similar expressions identify forward looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the District or any other entity described or referenced herein since the date hereof. Involvement of Purchaser. The following statement has been included in this Official Statement on behalf of the Purchaser: The Purchaser has reviewed the information in this Official Statement pursuant to its responsibilities to investors under the federal securities laws, but the Purchaser does not guarantee the accuracy or completeness of such information. Stabilization of and Changes to Offering Prices. In connection with the offering of the Refunding Bonds, the Purchaser may over allot or effect transactions which stabilize or maintain the market price of such Refunding Bonds at a level above that which might otherwise prevail in the open market. Such stabilization, if commenced, may be discontinued at any time. The Purchaser may offer and sell the Refunding Bonds to certain securities dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Purchaser. Information in Official Statement. The information set forth in this Official Statement has been furnished by the District and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. Document Summaries. All summaries of the Bond Resolution or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions. No Securities Laws Registration. The Refunding Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Refunding Bonds have not been registered or qualified under the securities laws of any state. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Refunding Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the District, the County, the other parties described in this Official Statement, or the condition of the property within the District since the date of this Official Statement. Website. The District maintains a website. However, the information presented on the website is not a part of this Official Statement, is not incorporated herein by reference, and should not be relied upon in making an investment decision with respect to the Refunding Bonds.

4 OXNARD UNION HIGH SCHOOL DISTRICT (Ventura County, California) BOARD OF TRUSTEES OF THE DISTRICT Steve Hall, Ed.D., President Beatriz Herrera, Vice-President Karen Sher, Clerk Gary Davis, Member Wayne Edmonds, Member DISTRICT ADMINISTRATION Dr. Penelope Deleon, Superintendent Steve Dickinson, Assistant Superintendent, Administrative Services Patsy Thomas, Director of Fiscal Services PROFESSIONAL SERVICES FINANCIAL ADVISOR Dale Scott & Company, Inc. San Francisco, California BOND AND DISCLOSURE COUNSEL Jones Hall, A Professional Law Corporation San Francisco, California BOND REGISTRAR, TRANSFER AGENT, PAYING AGENT AND ESCROW AGENT U.S. Bank National Association, Los Angeles, California

5 TABLE OF CONTENTS Page INTRODUCTION... 1 The District... 1 Authority and Purpose of Issue; Financing Plan... 1 Sources of Payment for the Refunding Bonds... 2 Description of the Refunding Bonds... 2 Legal Matters... 2 Tax Matters... 2 Continuing Disclosure... 2 Bond Insurance... 3 Other Information... 3 THE REFINANCING PLAN... 4 The 2001 Bonds... 4 Escrow Fund... 4 SOURCES AND USES OF FUNDS... 5 THE REFUNDING BONDS... 6 Authority for Issuance... 6 Purpose of Issue... 6 General Description of the Refunding Bonds... 6 Paying Agent... 6 Optional Redemption... 7 Mandatory Sinking Fund Redemption... 7 Notice of Redemption... 8 Partial Redemption... 8 Right to Rescind Notice of Redemption... 8 Book-Entry Only System... 8 Registration, Transfer and Exchange of Bonds... 9 Defeasance... 9 DEBT SERVICE SCHEDULES SECURITY FOR THE REFUNDING BONDS Ad Valorem Taxes Debt Service Fund Not a County Obligation PROPERTY TAXATION Property Tax Collection Procedures Taxation of State-Assessed Utility Property Assessed Valuations Reassessments and Appeals of Assessed Value Typical Tax Rates Tax Levies and Delinquencies; Teeter Plan Major Taxpayers Direct and Overlapping Debt TAX MATTERS Tax Exemption Other Tax Considerations CONTINUING DISCLOSURE RATINGS COMPETITIVE SALE OF BONDS MISCELLANEOUS Legality for Investment Litigation Compensation of Certain Professionals Additional Information APPENDIX A - District General and Financial Information APPENDIX B - Audited Financial Statements of the District for Fiscal Year Ended June 30, 2015 APPENDIX C - General Information about Ventura County APPENDIX D - Form of Opinion of Bond Counsel APPENDIX E - Form of Continuing Disclosure Certificate APPENDIX F - DTC and the Book-Entry System APPENDIX G - Ventura County Investment Policy and Investment Report -i-

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7 $17,705,000 * OXNARD UNION HIGH SCHOOL DISTRICT (Ventura County, California) 2016 General Obligation Refunding Bonds INTRODUCTION This Official Statement, which includes the cover page, inside cover page and appendices hereto, provides information in connection with the sale and delivery by the Oxnard Union High School District (the District ) of the Oxnard Union High School District (Ventura County, California) 2016 General Obligation Refunding Bonds in the principal amount of $17,705,000 * (the Refunding Bonds ). This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Refunding Bonds to potential investors is made only by means of the entire Official Statement. The District The District is located in the southeastern portion of Ventura County (the County ). The District covers 300 square miles and includes the cities of Oxnard (the City ), Port Hueneme and Camarillo, as well as the Naval Base of Ventura County. The District currently operates seven comprehensive high schools, and one continuation school, one independent study high school and one adult education school. Enrollment in the District for the school year is approximately 16,565 students. For more information regarding the District and its finances, see Appendix A and B attached hereto. See also Appendix C hereto for demographic and other statistical information regarding the City and the County. Authority and Purpose of Issue; Financing Plan The Refunding Bonds will be issued under the provisions of Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the Bond Law ), and pursuant to a resolution adopted by the Board of Trustees of the District on May 18, 2016 (the Bond Resolution ). See THE REFUNDING BONDS - Authority for Issuance herein. The proceeds of the Refunding Bonds will be applied to refund all or part of the District s outstanding 2001 General Obligation Refunding Bonds, Series A (the 2001 Bonds ) of the District as more particularly identified under the caption THE REFINANCING PLAN, and to pay costs of issuance of the Refunding Bonds. See also SOURCES AND USES OF FUNDS herein. *Preliminary; subject to change.

8 Sources of Payment for the Refunding Bonds The Refunding Bonds are general obligation bonds of the District payable solely from ad valorem taxes. The Board of Supervisors of the County has the power and is obligated to annually levy an ad valorem tax for the payment of the Refunding Bonds and the interest thereon upon all property within the District subject to taxation without limitation of rate or amount (except certain personal property which is taxable at limited rates). See SECURITY FOR THE REFUNDING BONDS herein. Description of the Refunding Bonds Form of Bonds. The Refunding Bonds are being issued as bonds which will bear current interest and, will mature in the years and in the amounts as set forth on the inside cover page hereof. The Refunding Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Purchasers will not receive physical certificates representing their interest in the Refunding Bonds. See THE REFUNDING BONDS General Description of the Refunding Bonds and Book-Entry Only System, below and APPENDIX F DTC and the Book-Entry System. Redemption. The Refunding Bonds are subject to redemption prior to maturity as described in THE REFUNDING BONDS Optional Redemption and Mandatory Sinking Fund Redemption herein. Legal Matters Issuance of the Refunding Bonds is subject to the approving opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, as bond counsel ( Bond Counsel ), to be delivered in substantially the form attached hereto as Appendix D. Jones Hall, A Professional Law Corporation, San Francisco, California, will also serve as Disclosure Counsel to the District ( Disclosure Counsel ). Payment of the fees of Bond Counsel and Disclosure Counsel is contingent upon issuance of the Refunding Bonds. Tax Matters Assuming compliance with certain covenants and provisions of the Internal Revenue Code of 1986 (the Tax Code ), in the opinion of Bond Counsel, interest on the Refunding Bonds is excluded from gross income for federal income tax purposes although it may be includable in the calculation for certain taxes. Also, in the opinion of Bond Counsel, interest on the Refunding Bonds will be exempt from State of California personal income taxes. See TAX MATTERS herein. Continuing Disclosure The District has covenanted and agreed that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. The form of the Continuing Disclosure Certificate is included in Appendix E hereto. See also CONTINUING DISCLOSURE herein. -2-

9 Bond Insurance The District has applied for bond insurance to guarantee the scheduled payment of principal of and interest on the Refunding Bonds. Whether such insurance is obtained is at bidder s option and will be determined upon the sale of the Refunding Bonds. Other Information This Official Statement speaks only as of its date, and the information contained in this Official Statement is subject to change. Copies of documents referred to in this Official Statement and information concerning the Refunding Bonds are available from the District from the Superintendent s Office at 309 South K Street, Oxnard, California 93030; telephone (805) The District may impose a charge for copying, mailing and handling. This Official Statement is not to be construed as a contract with the purchasers of the Refunding Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each of such documents, statutes and constitutional provisions. The information set forth herein has been obtained from official sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. This Official Statement is submitted in connection with the sale of the Refunding Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. END OF INTRODUCTION -3-

10 THE REFINANCING PLAN The 2001 Bonds A bond election was held in the District on November 5, 1996 for the purpose of submitting to the qualified electors of the District the question whether bonds should be issued in the aggregate principal amount of $57,000,000 for the purpose, among others, of financing the acquisition of new classrooms and facilities to reduce overcrowding, and more than twothirds of the votes cast at said election were in favor of the issuance of such bonds. Pursuant to such authorization the District issued multiple series of general obligation bonds, and, in 2001, in order to realize debt service savings to the property tax payers of the District, the District issued the 2001 Bonds in the aggregate original principal amount of $31,705,000, dated as of May 17, The 2001 Bonds are subject to optional redemption on August 1, 2016, at a redemption price equal to 103.0% of the principal amount thereof together with accrued interest thereon to the redemption date, and in order to realize additional debt service savings to the property tax payers of the District, the District expects to issue the Refunding Bonds described herein to refinance the maturities of the 2001 Bonds described in the following table (the Refunded Bonds ). Escrow Fund OXNARD UNION HIGH SCHOOL DISTRICT Identification of Refunded 2001 Bonds* Principal Amount Redeemed Redemption Price (% of Par Amount Redeemed) Maturities to be Refunded CUSIP Redemption Date 02/01/ HC7 $960,000 08/01/ % 08/01/ HD5 85,000 08/01/ /01/ HE3 1,025,000 08/01/ /01/ HF0 85,000 08/01/ /01/ HG8 1,070,000 08/01/ /01/ HH6 90,000 08/01/ /01/ HJ2 1,150,000 08/01/ /01/ HK9 90,000 08/01/ /01/ HL7 15,645,000 08/01/ TOTAL -- $20,200, *Preliminary; subject to change. To be determined upon final pricing. CUSIP Copyright American Bankers Association. CUSIP data herein is provided by Standard & Poor s CUSIP Service Bureau, a division of McGraw Hill Companies, Inc. Neither the District nor the Underwriter is responsible for the accuracy of such data. The District will deliver a portion of the proceeds of the Refunding Bonds, to U.S. Bank National Association, as escrow agent (the Escrow Agent ), for deposit in an escrow fund (the "Escrow Fund") established under an Escrow Agreement (the Escrow Agreement ), entered into by and between the District and the Escrow Bank, with respect to the proceeds of the Refunding Bonds. On the Closing Date, the Escrow Agent will invest the funds on deposit in the Escrow Funds in certain federal securities consisting of either direct obligations of the U.S. Treasury or other obligations the timely payment of which is directly or indirectly guaranteed by the faith and -4-

11 credit of the United States of America, except for a minor portion which will be held in cash without investment. Amounts on deposit in the Escrow Fund will be applied to pay the interest and redemption price of the Refunded Bonds as summarized in the foregoing table. Sufficiency of the deposits in the Escrow Fund for such purposes will be verified by Causey Demgen & Moore P.C., certified public accountants, Denver, Colorado (the Verification Agent ). See ESCROW VERIFICATION herein. As a result of the deposit in the Escrow Fund and the delivery of the Verification Report, the Refunded Bonds will be defeased in accordance with the documents pursuant to which bonds were issued. The amounts held by the Escrow Agent in the Escrow Fund is pledged solely to the payment of the Refunded Bonds. The funds deposited in the Escrow Fund will not be available for the payment of debt service with respect to the Refunding Bonds. SOURCES AND USES OF FUNDS The estimated sources and uses of funds with respect to the Refunding Bonds are as follows: Sources of Funds Principal Amount of Refunding Bonds Plus Net Original Issue Premium Total Sources Uses of Funds Escrow Fund Costs of Issuance (1) Total Uses (1) All estimated costs of issuance including, but not limited to, Purchaser s discount, printing costs, and fees of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Paying Agent, the verification agent, bond insurance premium (if any) and the rating agency. [Remainder of page intentionally left blank] -5-

12 THE REFUNDING BONDS Authority for Issuance The Refunding Bonds will be issued under the provisions of the Bond Law and under the Bond Resolution. Purpose of Issue The Bonds are being issued by the District to provide funds to refinance outstanding general obligation bonds summarized herein under the heading THE REFINANCING PLAN. See DEBT SERVICE SCHEDULES herein for the combined debt service due with respect to the District s outstanding general obligation bonds. General Description of the Refunding Bonds The Refunding Bonds mature in the years and in the amounts as set forth on the inside cover page hereof. The Refunding Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Purchasers will not receive physical certificates representing their interest in the Refunding Bonds. See Book- Entry Only System below and APPENDIX F DTC and the Book-Entry System. The Refunding Bonds will be issued in denominations of $5,000 principal amount each or any integral multiple thereof. Interest on the Refunding Bonds is payable semiannually on each February 1 and August 1, commencing February 1, 2017 (each, an Interest Payment Date ). Each Refunding Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (i) it is registered and authenticated as of an Interest Payment Date, in which event it will bear interest from such date, or (ii) it is registered and authenticated prior to an Interest Payment Date and after the close of business on the fifteenth (15 th ) day of the month preceding the Interest Payment Date (each, a Record Date ), in which event it will bear interest from such Interest Payment Date, or (iii) it is registered and authenticated prior to July 15, 2016, in which event it will bear interest from the Delivery Date identified on the cover page hereof. Notwithstanding the foregoing, if interest on any Refunding Bond is in default at the time of authentication thereof, such Refunding Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Payments of principal of and interest on the Refunding Bonds will be paid by the Paying Agent to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Refunding Bonds. Paying Agent U.S. Bank National Association will act as the registrar, transfer agent, and paying agent for the Refunding Bonds (the Paying Agent ). As long as DTC is the registered owner of the Refunding Bonds and DTC's book-entry method is used for the Refunding Bonds, the Paying Agent will send all payments with respect to principal and interest on the Refunding Bonds, and any notice of redemption or other notices to owners of the Refunding Bonds, only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the Refunding Bonds called for redemption or of any other action covered by such notice. -6-

13 The Paying Agent, the District, the County and the Purchaser of the Refunding Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Refunding Bonds. Optional Redemption The Refunding Bonds maturing on or before August 1, 20 are not subject to redemption prior to maturity. The Refunding Bonds maturing on or after August 1, 20, are subject to redemption prior to maturity, at the option of the District, in whole or in part, from any available source of funds, on August 1, 20, or on any date thereafter, at a price equal to 100% of the principal amount thereof, without premium, together with accrued interest thereon to the redemption date. Mandatory Sinking Fund Redemption* The Refunding Bonds maturing on August 1, 20 (the Term Bonds ) are subject to mandatory sinking fund redemption on August 1, 20 and each August 1 thereafter in accordance with the schedule set forth below. The Term Bonds so called for mandatory sinking fund redemption shall be redeemed in the sinking fund payments amounts and on the dates set forth below, without premium, together with interest accrued thereon to the redemption date. If any Term Bonds are redeemed under the foregoing optional redemption provisions, the total amount of all future sinking fund payments with respect to such Term Bonds will be reduced by the aggregate principal amount of such Term Bonds so redeemed, to be allocated among such payments on a pro rata basis in integral multiples of $5,000. Term Bonds Maturing August 1, 20 Redemption Date (August 1) Sinking Fund Redemption *Identification of term bonds subject to mandatory sinking fund redemption at bidder s option. -7-

14 Notice of Redemption The Paying Agent is required to give notice of the redemption of the Refunding Bonds, at the expense of the District, to be mailed, first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the respective owners of any Refunding Bonds designated for redemption, at their addresses appearing on the registration books. Notice of any redemption of Refunding Bonds will specify: (a) that the Refunding Bonds or a designated portion thereof (in the case of redemption of the Refunding Bonds in part but not in whole) are to be redeemed, (b) the numbers and CUSIP numbers of the Refunding Bonds to be redeemed, (c) the date of notice and the date of redemption, (d) the place or places where the Refunding Bonds must be submitted for redemption, descriptive information about the Bonds, including the dated date, interest rate and stated maturity date. Such notice will further state that on the specified date there shall become due and payable upon each Refunding Bond to be redeemed, the portion of the principal amount of such Refunding Bond to be redeemed, together with interest accrued to said date, and redemption premium, if any, and that from and after such date interest with respect thereto shall cease to accrue and be payable. Neither failure to receive or failure to send any notice of redemption nor any defect in any such redemption notice so given shall affect the sufficiency of the proceedings for the redemption of the affected Refunding Bonds. Partial Redemption Upon the surrender of any Refunding Bond redeemed in part only, the District will execute and the Paying Agent will authenticate and deliver to the owner thereof, at the expense of the District, a new Refunding Bond or Refunding Bonds of the same maturity and of authorized denominations equal in aggregate amounts equal to the unredeemed portion of the Refunding Bonds surrendered. Such partial redemption will be valid upon payment of the amount required to be paid to such owner, and the County and the District will be released and discharged thereupon from all liability to the extent of such payment. Right to Rescind Notice of Redemption The District has the right to rescind any notice of the optional redemption of Refunding Bonds by written notice to the Paying Agent on or prior to the date fixed for redemption. Any notice of redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Refunding Bonds then called for redemption. The District and the Paying Agent will have no liability to the Refunding Bond owners or any other party related to or arising from such rescission of redemption. The Paying Agent will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Bond Resolution. Book-Entry Only System The Refunding Bonds will be registered initially in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), which has been appointed as securities depository for the Refunding Bonds, and registered ownership may not be transferred thereafter except as provided in the Bond Resolution. Purchasers will not receive certificates representing their interests in the Refunding Bonds. Principal of the Refunding Bonds will be paid by the Paying Agent to DTC, which in turn is obligated to remit such principal to its -8-

15 participants for subsequent disbursement to beneficial owners of the Refunding Bonds as described herein. See APPENDIX F DTC and the Book-Entry System. In the event that the securities depository (either DTC or its successor depository) determines not to continue to act as securities depository for the Refunding Bonds, or the District determines to terminate the depository as such, then the District will thereupon discontinue the book-entry system with such securities depository. In such event, the securities depository will cooperate with the District and the Paying Agent in the issuance of replacement Refunding Bonds by providing the Paying Agent with a list showing the interests of the Depository System Participants in the Refunding Bonds, and by surrendering the Refunding Bonds, registered in the name of the nominee of the securities depository, to the Paying Agent on or before the date such replacement Refunding Bonds are to be issued. Registration, Transfer and Exchange of Bonds The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Refunding Bonds, which will at all times be open to inspection by the District upon reasonable notice; and, upon presentation for such purpose, the Paying Agent will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Refunding Bonds as provided in the Bond Resolution. Any Refunding Bond may, in accordance with its terms, be transferred, upon the registration books required to be kept pursuant to the Bond Resolution, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Refunding Bond for cancellation at the Office at the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. The Paying Agent will require the payment by the owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Refunding Bond(s) shall be surrendered for transfer, the District will execute, and the Paying Agent will authenticate and deliver, a new Refunding Bond(s), for like aggregate principal amount. Refunding Bonds may be exchanged at the principal Office of the Paying Agent for a like aggregate principal amount of Refunding Bonds of authorized denominations and of the same maturity. The Paying Agent will require the payment by the owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. No transfers or exchanges of Refunding Bonds will be required to be made (a) fifteen days prior to the date established by the Paying Agent for selection of Refunding Bonds for redemption or (b) with respect to a Refunding Bond after such Refunding Bond has been selected for redemption. Defeasance The Refunding Bonds may be paid by the District, in whole or in part, in any one or more of the following ways: (a) by paying or causing to be paid the principal or redemption price of and interest on such Refunding Bonds, as and when the same become due and payable; -9-

16 (b) (c) by irrevocably depositing, in trust, at or before maturity, money or securities in the necessary amount (as provided in the Bond Resolution) to pay or redeem such Refunding Bonds; or by delivering to the Paying Agent, for cancellation by it, such Refunding Bonds. If the District pays all the Refunding Bonds that are outstanding and also pays or causes to be paid all other sums payable under the Bond Resolution by the District, then and in that case, at the election of the District, and notwithstanding that any Refunding Bonds have not been surrendered for payment, the Bond Resolution and other assets made under the Bond Resolution and all covenants, agreements and other obligations of the District under the Bond Resolution will cease, terminate, become void and be completely discharged and satisfied, except only as provided in the Bond Resolution. Upon the deposit, in trust, at or before maturity, of money or securities in the necessary amount (as described above to pay or redeem any Refunding Bond that is outstanding, whether upon or prior to its maturity date), then all liability of the District in respect of such Refunding Bond will cease and be completely discharged, except only that thereafter the owner thereof will be entitled only to payment of the principal of and interest on such Refunding Bond by the District, and the District will remain liable for such payment, but only out of such money or securities deposited with the Paying Agent as aforesaid for such payment. Whenever in the Bond Resolution it is provided or permitted that there be deposited with or held in trust by the Paying Agent or other financial institution money or securities in the necessary amount to pay or redeem any Refunding Bonds, the money or securities so to be deposited or held may include money or securities held by the Paying Agent in the funds and accounts established pursuant to the Bond Resolution and will be: (i) lawful money of the United States of America in an amount equal to the principal amount of such Refunding Bonds and all unpaid interest thereon to maturity; or (ii) Federal Securities (not callable by the issuer thereof prior to maturity), the principal of and interest on which when due, in the opinion of a certified public accountant delivered to the District, will provide money sufficient to pay the principal or redemption price of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Refunding Bonds to be paid, as such principal or redemption price and interest become due. As used in the foregoing defeasance provision, the term Federal Securities means United States Treasury notes, bonds, bills or certificates of indebtedness or those for which the faith and credit of the United States are pledged for the payment of principal and interest. -10-

17 DEBT SERVICE SCHEDULES Refunding Bonds. The following table shows the annual debt service schedule with respect to the Refunding Bonds (assuming no optional redemptions). OXNARD UNION HIGH SCHOOL DISTRICT Annual Debt Service Schedule Refunding Bonds Period Ending August 1 Refunding Principal Refunding Interest Refunding Total Debt Service Total -11-

18 Combined Debt Service Table. The District has other series of general obligation bonds and refunding general obligation bonds currently outstanding, which are secured by ad valorem taxes upon all property subject to taxation by the District. The following table shows the combined annual debt service schedule with respect to general obligation bonds secured by ad valorem taxes. See Appendix A under the heading DISTRICT FINANCIAL INFORMATION General Obligation Debt for additional information. OXNARD UNION HIGH SCHOOL DISTRICT Combined Annual Debt Service Schedule All Outstanding General Obligation Debt (1) Period Ending August Authorization (1) Authorization (2) Aggregate Debt Service Series D Bonds 2016 $3,833,411 $6,894,065 $663,435 $11,390, ,843,658 6,924,762 1,998,025 12,766, ,846,155 6,947,623 1,563,025 12,356, ,832,143 6,959,880 1,248,025 12,040, ,843,796 6,971,083 1,248,025 12,062, ,846,451 6,985,982 1,248,025 12,080, ,859,721 7,004,309 1,293,025 12,157, ,853,836 7,020,331 1,495,775 12,369, ,864,051 7,034,031 1,703,275 12,601, ,862,686 7,057,030 1,909,775 12,829, ,854,034 6,657,725 2,479,775 12,991, ,876,149 6,668,775 2,689,525 13,234, ,278,320 6,679,831 2,920,525 11,878, ,592,805 6,712,531 3,179,100 11,484, ,435 6,752,206 3,408,600 10,963, ,785,181 3,656,100 10,441, ,804,125 3,914,850 10,718, ,824,513 4,183,350 11,007, ,843,875 4,507,750 11,351, ,839,625 4,825,550 11,665, ,842, ,842, ,857, ,857, ,323, ,323, ,330, ,330, ,339, ,339,000 TOTAL $50,889,651 $161,059,659 $50,135,535 $262,084,846 (1) Debt service listed beneath each authorization includes refunding bonds issued to refinance said original debt. (2) Does not include portion of for the Series B Qualified School Construction Bonds to be paid by the Federal Government as a federal subsidy payment. -12-

19 SECURITY FOR THE REFUNDING BONDS Ad Valorem Taxes Refunding Bonds Payable from Ad Valorem Property Taxes. The Refunding Bonds are general obligations of the District, payable solely from ad valorem property taxes levied on taxable property within the District and collected by the County. The County is empowered and is obligated to annually levy ad valorem taxes for the payment of the Refunding Bonds and the interest thereon upon all property within the District subject to taxation by the District, without limitation of rate or amount (except certain personal property which is taxable at limited rates). In no event is the District obligated to pay principal of and interest and redemption premium, if any, on the Refunding Bonds out of any funds or properties of the District other than ad valorem taxes levied upon all taxable property in the District; provided, however, nothing in the Bond Resolution prevents the District from making advances of its own moneys howsoever derived to any of the uses or purposes permitted by law. Other Debt Payable from Ad Valorem Property Taxes. In addition to the District s general obligation bonds, there is other debt issued by entities with jurisdiction in the District, which is payable from ad valorem taxes levied on parcels in the District. See PROPERTY TAXATION Typical Tax Rates and Direct and Overlapping Debt below. Levy and Collection. The County will levy and collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service. Such taxes, when collected, will be deposited into a debt service fund for the Refunding Bonds, which is maintained by the County and which is irrevocably pledged for the payment of principal of and interest on the Refunding Bonds when due. District property taxes are assessed and collected by the County in the same manner and at the same time, and in the same installments as other ad valorem taxes on real property, and will have the same priority, become delinquent at the same times and in the same proportionate amounts, and bear the same proportionate penalties and interest after delinquency, as do the other ad valorem taxes on real property. Statutory Lien on Ad Valorem Tax Revenues. Pursuant to Senate Bill 222 effective January 1, 2016, voter approved general obligation bonds which are secured by ad valorem tax collections, including the Refunding Bonds, are secured by a statutory lien on all revenues received pursuant to the levy and collection of the property tax imposed to service those bonds. Said lien attaches automatically and is valid and binding from the time the bonds are executed and delivered. The lien is enforceable against the school district or community college district, its successors, transferees, and creditors, and all others asserting rights therein, irrespective of whether those parties have notice of the lien and without the need for any further act. Annual Tax Rates. The amount of the annual ad valorem tax levied by the County to repay the Refunding Bonds will be determined by the relationship between the assessed valuation of taxable property in the District and the amount of debt service due on the Refunding Bonds. Fluctuations in the annual debt service on the Refunding Bonds and the assessed value of taxable property in the District may cause the annual tax rate to fluctuate. Economic and other factors beyond the District s control, such as economic recession, deflation of land values, a relocation out of the District or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property -13-

20 caused by, among other eventualities, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed value within the District and necessitate a corresponding increase in the annual tax rate. Debt Service Fund The County will establish a Debt Service Fund (the Debt Service Fund ) for the Refunding Bonds, which will be established as a separate fund to be maintained distinct from all other funds of the County. All taxes levied by the County for the payment of the principal of and interest and premium (if any) on the Refunding Bonds will be deposited in the Debt Service Fund by the County promptly upon receipt. The Debt Service Fund is pledged for the payment of the principal of and interest and premium (if any) on the Refunding Bonds when and as the same become due. The County will transfer amounts in the Debt Service Fund to the Paying Agent to the extent necessary to pay the principal of and interest and premium (if any) on the Refunding Bonds as the same becomes due and payable. If, after payment in full of the Refunding Bonds and any other general obligation bond indebtedness of the District, any amounts remain on deposit in the Debt Service Fund, the County will transfer such amounts to the general fund of the District, to be applied solely in a manner which is consistent with the requirements of applicable state and federal tax law. Not a County Obligation The Bonds are payable solely from the proceeds of an ad valorem tax levied and collected by the County, for the payment of principal and interest on the Refunding Bonds. Although the County is obligated to collect the ad valorem tax for the payment of the Refunding Bonds, the Refunding Bonds are not a debt of the County. [Remainder of page intentionally left blank] -14-

21 Property Tax Collection Procedures PROPERTY TAXATION In California, property which is subject to ad valorem taxes is classified as secured or unsecured. The secured roll is that part of the assessment roll containing state assessed public utilities property and real property, the taxes on which create a lien on such property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County. Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value. Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. -15-

22 Taxation of State-Assessed Utility Property The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization ( SBE ) and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as unitary property, a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and operating nonunitary property (which excludes nonunitary property of regulated railways) is allocated to the counties of the State based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year. Assessed Valuations Assessed Valuation History. District s assessed valuation. The table following shows a recent history of the OXNARD UNION HIGH SCHOOL DISTRICT Assessed Valuation Fiscal Year through Fiscal Year Fiscal Year Local Secured Utility Unsecured Total Before Redevelopment Increment % Change $25,588,757,750 $236,844,457 $1,791,056,784 $27,616,658, ,096,675, ,382,878 1,902,717,014 31,193,775, % ,775,633, ,330,377 1,990,672,534 33,923,636, ,276,344, ,330,376 2,174,108,769 34,582,783, ,950,344, ,730,376 2,289,497,998 33,346,572,968 (3.6) ,888,098, ,588,675 2,189,518,194 33,197,205,275 (0.4) ,847,369, ,656,682 2,093,229,175 33,047,255,703 (0.5) ,205,863, ,356,953 2,067,778,765 33,395,999, ,011,495, ,354,469 2,149,501,773 34,310,352, ,241,204, ,986,889 2,161,904,948 36,547,096, ,881,808, ,056,032 2,255,275,129 38,260,139, Source: California Municipal Statistics, Inc. As indicated in the previous table, assessed valuations are subject to change in each year. Increases or decreases in assessed valuation may result from a variety of factors including but not limited to general economic conditions, supply and demand for real property in the area, government regulations such as zoning, and natural disasters such as earthquakes, fires, floods and droughts. With respect to droughts specifically, the State of California is currently facing water shortfalls, and on January 17, 2014, the Governor declared a state of drought emergency, calling on Californians to conserve water. As part of his declaration, the Governor directed State officials to assist agricultural producers and communities that may be economically impacted by dry conditions. Thereafter, the California State Water Resources Control Board (the Water Board ) issued a statewide notice of water shortages and potential future curtailment of water right diversions. On April 1, 2015, the Governor issued an executive order mandating certain conservation measures including a requirement that the Water Board -16-

23 impose restrictions to achieve a statewide 25% reduction in urban water usage through February 28, The District cannot predict or make any representations regarding the effects that the current drought has had, or, if it should continue, may have on the value of taxable property within the District, or to what extent the drought could cause disruptions to economic activity within the boundaries of the District. Assessed Valuation by Land Use. The property in the District is largely residential, with approximately 74.47% of secured assessed valuation of property in the District used for residential purposes, and 92.74% of all parcels used for residential purposes. The following table shows a breakdown of local secured property assessed value and parcels within the District by land use for fiscal year OXNARD UNION HIGH SCHOOL DISTRICT Local Secured Property Assessed Valuation and Parcels by Land Use Fiscal Year % of No. of % of Non-Residential: Assessed Valuation (1) Total Parcels Total Agricultural $1,951,174, % 1, % Commercial 3,040,966, , Vacant Commercial 100,755, Industrial 3,483,246, , Vacant Industrial 103,065, Recreational 131,704, Utility Roll/Power Plant 123,056, Government/Social/Institutional 133,244, Miscellaneous 126,627, Subtotal Non-Residential $9,191,841, % 5, % Residential: Single Family Residence $19,423,589, % 51, % Condominium/Townhouse 4,497,159, , Mobile Home 152,012, , Mobile Home Park 75,269, Residential Units 653,151, , Residential Units/Apartments 1,280,231, Hotel/Motel 217,363, Timeshare Parcels 624, , Vacant Residential 513,620, , Subtotal Residential $26,813,023, % 74, % Total $36,004,864, % 80, % (1) Local Secured Assessed Valuation; excluding tax-exempt property. Source: California Municipal Statistics, Inc. -17-

24 Assessed Valuation of Single Family Homes. Within the residential segment of land uses, the vast majority of residential units are single-family homes. The following table shows a breakdown of assessed valuation of single-family homes on a per parcel basis for fiscal year OXNARD UNION HIGH SCHOOL DISTRICT Per Parcel Assessed Valuation of Single Family Homes Fiscal Year No. of Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 51,266 $19,423,589,549 $378,879 $317, No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total $0 - $49,999 1, % 3.462% $ 72,391, % 0.378% $50,000 - $99,999 4, ,442, $100,000 - $149,999 2, ,971, $150,000 - $199,999 3, ,707, $200,000 - $249,999 5, ,214,941, $250,000 - $299,999 5, ,612,136, $300,000 - $349,999 5, ,778,330, $350,000 - $399,999 4, ,769,008, $400,000 - $449,999 3, ,493,041, $450,000 - $499,999 2, ,382,335, $500,000 - $549,999 2, ,153,155, $550,000 - $599,999 1, ,373, $600,000 - $649,999 1, ,731, $650,000 - $699,999 1, ,309, $700,000 - $749, ,896, $750,000 - $799, ,683, $800,000 - $849, ,820, $850,000 - $899, ,569, $900,000 - $949, ,838, $950,000 - $999, ,467, $1,000,000 and greater 1, ,880,438, Total 51, % $19,423,589, % (1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc. Reassessments and Appeals of Assessed Value There are general means by which assessed values can be reassessed or appealed that could adversely impact property tax revenues within the District. Appeals may be based on Proposition 8 of November 1978, which requires that for each January 1 lien date, the taxable value of real property must be the lesser of its base year value, annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. See CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Article XIIIA of the California Constitution in Appendix C. Under California law, property owners may apply for a Proposition 8 reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the County board of equalization or assessment appeals board. In most -18-

25 cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. These reductions are subject to yearly reappraisals and are adjusted back to their original values, adjusted for inflation, when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. A second type of assessment appeal involves a challenge to the base year value of an assessed property. Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date. Proposition 8 reductions may also be unilaterally applied by the County Assessor. The District cannot predict the changes in assessed values that might result from pending or future appeals by taxpayers or by reductions initiated by the County Assessor. Any reduction in aggregate District assessed valuation due to appeals, as with any reduction in assessed valuation due to other causes, will cause the tax rate levied to repay the Refunding Bonds to increase accordingly, so that the fixed debt service on the Refunding Bonds (and other outstanding general obligation debt of the District) may be paid. Typical Tax Rates Below are historical typical tax rates in a typical tax rate area (Tax Rate Area 3-001) within the District for the years through OXNARD UNION HIGH SCHOOL DISTRICT Typical Tax Rates per $100 of Assessed Valuation Fiscal Years through % General Fund Levy Oxnard School District Oxnard Union High School District Ventura Community College District Metropolitan Water District City of Oxnard Total Source: California Municipal Statistics, Inc. Tax Levies and Delinquencies; Teeter Plan The Board of Supervisors of the County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the Teeter Plan ), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, with respect to (i) the 1% ad valorem property tax (general fund apportionment) levied on real property in the County and (ii) for the County s levies for general obligation bond debt service. Under the Teeter Plan, each local taxing agency entitled to a portion of these levies may draw on the amount of -19-

26 uncollected secured taxes credited to its fund, in the same manner as if the amount credited had been collected; in exchange, such local taxing agencies forego any interest and penalties collected on delinquent taxes collected by the County. The District participates in the Teeter Plan, and thus receives 100% of its portion of these levies in exchange for foregoing any interest and penalties collected on delinquent taxes. Currently, the County also includes general obligation bond debt service in its Teeter Plan. So long as the Teeter Plan remains in effect, and the County continues to include the District in the Teeter Plan, the District s receipt of revenues with respect to the levy of its portion of ad valorem property taxes will not be dependent upon actual collections of the ad valorem property taxes by the County. However, under the statute creating the Teeter Plan, the Board of Supervisors could under certain circumstances terminate the Teeter Plan in its entirety and, in addition, the Board of Supervisors could terminate the Teeter Plan with respect to the District if the delinquency rate for all ad valorem property taxes levied within the District in any year exceeds 3%. In the event that the Teeter Plan were terminated with regard to the secured tax roll, the amount of the levy of ad valorem property taxes actually received by the District would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the District. [Remainder of page intentionally left blank] -20-

27 Major Taxpayers The following table shows the 20 largest taxpayers in the District as determined by local secured assessed valuation in fiscal year Each taxpayer listed below is a unique name listed on the tax rolls. The District cannot determine from County assessment records whether individual persons, corporations or other organizations are liable for tax payments with respect to multiple properties held in various names that in aggregate may be larger than is suggested by the table below. A large concentration of ownership in a single individual or entity results in a greater amount of tax collections which are dependent upon that property owner s ability or willingness to pay property taxes. OXNARD UNION HIGH SCHOOL DISTRICT Largest Local Secured Taxpayers % of Property Owner Primary Land Use Assessed Valuation Total (1) 1. Vintage CA Production LLC Oil & Gas Production $ 361,442, % 2. Proctor-Gamble Paper Products Industrial 331,568, Chelsea GCA Realty Partners Shopping Center 191,474, Essex Arbors LP Apartments 97,902, PEGH Investments LLC Industrial 96,429, SOCM I LLC Shopping Center 94,025, Essex Tierra Vista LP Apartments 88,994, Capri/KW Serenade LLC Apartments 87,047, NRG California South LP Ormond Beach Power Plant 85,304, CPG Partners LP Shopping Center 84,979, Duesenberg Investment Co. Office Building 70,128, MC Gaelic Group Industrial 67,203, BG Terminal CA LLC, Lessor Industrial 66,454, F Oliveira Ranch Co. Lessor Shopping Center 66,157, Corona River Park LLC Residential Development 62,156, Centro Watt Prop Owner 1 LLC Shopping Center 61,592, Marathon Land Inc. Agricultural 60,816, Houweling CA Property Inc. Agricultural 56,195, Spanish Hills Apartments LLC Apartments 55,726, Stag Camarillo 1 & 2 LP Industrial 54,500, $2,140,100, % (1) local secured assessed valuation: $36,004,864,564 Source: California Municipal Statistics, Inc. Direct and Overlapping Debt Set forth on the following page is a direct and overlapping debt report (the Debt Report ) prepared by California Municipal Statistics, Inc. dated as of May 1, The Debt Report is included for general information purposes only. The District has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long-term obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. -21-

28 Assessed Valuation: $38,260,139,693 OXNARD UNION HIGH SCHOOL DISTRICT Statement of Direct and Overlapping Bonded Debt Dated as of May 1, 2016 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/16 Metropolitan Water District 1.441% $ 1,338,185 Ventura County Community College District ,869,141 Oxnard Union High School District ,707,016 Hueneme School District ,813,671 Mesa Union School District ,295,000 Ocean View School District ,905,247 Oxnard School District ,643,758 Pleasant Valley School District ,720,000 Rio School District ,645,000 Somis Union School District ,925,000 City, County and Special District 1915 Act Bonds ,325,000 Community Facilities Districts ,829,600 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $689,016,618 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Ventura County General Fund Obligations % $119,841,909 Ventura County Superintendent of Schools Certificates of Participation ,358,518 Oxnard Union High School District Certificates of Participation ,363,000 Oxnard School District Certificates of Participation ,073,600 Rio School District Certificates of Participation ,845,000 Other School District Certificates of Participation ,117,900 City of Camarillo Certificates of Participation ,465,000 City of Oxnard General Fund Obligations ,441,597 City of Port Hueneme Certificates of Participation and Pension Obligation Bonds ,809,990 City of San Buenaventura Certificates of Participation ,032 Pleasant Valley Recreation and Park District Certificates of Participation ,280,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $254,607,546 OVERLAPPING TAX INCREMENT DEBT: $104,235,000 COMBINED TOTAL DEBT $1,047,859,164 (1) (1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Ratios to Assessed Valuation: Direct Debt ($161,707,016) % Total Direct and Overlapping Tax and Assessment Debt % Combined Direct Debt ($167,070,016) % Combined Total Debt % Ratios to Redevelopment Incremental Valuation ($3,937,094,016): Total Overlapping Tax Increment Debt % Source: California Municipal Statistics, Inc. -22-

29 TAX MATTERS Tax Exemption Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Refunding Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986, as amended (the Tax Code ) that must be satisfied subsequent to the issuance of the Refunding Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Refunding Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the ownership, sale or disposition of the Refunding Bonds, or the amount, accrual or receipt of interest on the Refunding Bonds. Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public (excluding bond houses and brokers) at which a Refunding Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Refunding Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded. Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Refunding Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Refunding Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Refunding Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Refunding Bonds who purchase the Refunding Bonds after the initial offering of a substantial amount of such maturity. Owners of such Refunding Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Refunding Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Refunding Bonds under federal individual and corporate alternative minimum taxes. -23-

30 Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Refunding Bond (said term being the shorter of the Refunding Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Refunding Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Refunding Bond is amortized each year over the term to maturity of the Refunding Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized bond premium is not deductible for federal income tax purposes. Owners of premium Refunding Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Refunding Bonds. California Tax Status. In the further opinion of Bond Counsel, interest on the Refunding Bonds is exempt from California personal income taxes. Form of Opinion. A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix D. Other Tax Considerations Owners of the Refunding Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Refunding Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Refunding Bonds other than as expressly described above, including any federal tax consequences arising with respect to the ownership, sale or disposition of the Refunding Bonds, or the amount, accrual or receipt of interest on the Refunding Bonds. Future legislation, if enacted into law, or clarification of the Tax Code may cause interest on the Refunding Bonds to be subject to, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Refunding Bonds from realizing the full current benefit of the tax status of such interest. For example, various proposals have been made in Congress and by the President that, if enacted, would subject interest on bonds that is otherwise excludable from gross income for federal income tax purposes, including interest on the Refunding Bonds, to a tax payable by certain bondholders that are individuals, estates or trusts with adjusted gross income in excess of certain specified thresholds. The introduction or enactment of any such future legislation or clarification of the Tax Code may also affect the market price for, or marketability of, the Refunding Bonds. Prospective purchasers of the Refunding Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no opinion. -24-

31 CONTINUING DISCLOSURE The District has covenanted for the benefit of holders and beneficial owners of the Refunding Bonds to provide certain financial information and operating data relating to the District by not later than nine (9) months following the end of the District s fiscal year (which currently would be by March 31 each year based upon the June 30 end of the District s fiscal year), commencing by March 31, 2017 with the report for the Fiscal Year (the Annual Report ), and to provide notices of the occurrence of certain enumerated events. The Annual Report and any event notices will be filed by the District with the Municipal Securities Rulemaking Board (the MSRB ). The specific nature of the information to be contained in an Annual Report or other notices is set forth below under the caption APPENDIX E Form of Continuing Disclosure Certificate. These covenants have been made in order to assist the Purchaser in complying with S.E.C. Rule 15c2-12(b)(5) (the Rule ). This Official Statement shall be deemed to represent financial information and operating data for fiscal year The District has made prior undertakings pursuant to the Rule with respect to prior issues of general obligation bonds and certificates of participation, which are described under APPENDIX A - DISTRICT GENERAL AND FINANCIAL INFORMATION - DISTRICT FINANCIAL INFORMATION - Existing Debt Obligations. In the previous five years, specific instances of non-compliance with prior undertakings are that notices of insured rating changes, while filed with respect to some outstanding debt issues, were not linked on the MSRB s Electronic Municipal Market Access ( EMMA ) to each applicable debt issuance. This filing discrepancy has since been remedied on EMMA. The District has retained Dale Scott & Co. as its dissemination agent to assist it in complying with its continuing disclosure undertakings for each of its debt issuances, including the undertaking in connection with the Refunding Bonds. RATINGS S&P Global Ratings, a Standard & Poor s Financial Services LLC business ( S&P ) and Moody s Investors Services ( Moody s ) have assigned the ratings of A+ and Aa3, respectively, to the Refunding Bonds. Such rating reflects only the view of S&P and Moody s and an explanation of the significance of such rating may be obtained only from S&P and Moody s. The District has provided certain additional information and materials to S&P and Moody s (some of which does not appear in this Official Statement). There is no assurance that such rating will continue for any given period of time or that the rating will not be revised downward or withdrawn entirely by S&P and Moody s, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Refunding Bonds. COMPETITIVE SALE OF BONDS The Refunding Bonds were sold pursuant to a competitive bidding process on June 23, 2016 pursuant to the terms set forth in an Official Notice of Sale (the Official Notice of Sale ) for the Refunding Bonds. The Refunding Bonds were awarded to (the Purchaser ), whose proposal represented the lowest true interest cost for the Refunding Bonds as determined in accordance with the Official Notice of Sale. The Purchaser has agreed to purchase the Refunding Bonds at a price of $, which is equal to the initial principal amount of -25-

32 the Refunding Bonds of $ plus an original issue premium of $, less a Purchaser s discount of $. The Purchaser intends to offer the Refunding Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. The Purchaser may offer and sell to certain dealers and others at a price lower than the offering prices stated on the inside cover page hereof. The offering price may be changed from time to time by the Purchaser. Legality for Investment MISCELLANEOUS Under provisions of the California Financial Code, the Refunding Bonds are legal investments for commercial banks in California to the extent that the Refunding Bonds, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and under provisions of the California Government Code, the Refunding Bonds are eligible to secure deposits of public moneys in California. Litigation No litigation is pending or threatened concerning the validity of the Refunding Bonds, and a certificate to that effect will be furnished to purchasers at the time of the original delivery of the Refunding Bonds. The District is not aware of any litigation pending or threatened that (i) questions the political existence of the District, (ii) contests the District's ability to receive ad valorem taxes or to collect other revenues or (iii) contests the District's ability to issue and sell the Refunding Bonds. The District may be or may become a party to lawsuits and claims which are unrelated to the Refunding Bonds or actions taken with respect to the Refunding Bonds and which have arisen in the normal course of operating the District. The District maintains certain insurance policies which provide coverage under certain circumstances and with respect to certain types of incidents. In the opinion of the District, there currently are no claims or actions pending which could have a material adverse affect on the financial position or operations of the District. The District cannot predict what types of claims may arise in the future. Compensation of Certain Professionals Payment of the fees and expenses of Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel to the District, and Dale Scott & Company, Inc., as financial advisor to the District, is contingent upon issuance of the Refunding Bonds. Additional Information The discussions herein about the Bond Resolution and the Continuing Disclosure Certificate are brief outlines of certain provisions thereof. Such outlines do not purport to be complete and for full and complete statements of such provisions reference is made to such documents. Copies of these documents are available from the Purchaser and following delivery of the Refunding Bonds will be on file at the offices of the Paying Agent in Los Angeles, California. -26-

33 References are also made herein to certain documents and reports relating to the District; such references are brief summaries and do not purport to be complete or definitive. Copies of such documents are available upon written request to the District. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or Owners of any of the Refunding Bonds. The execution and delivery of this Official Statement have been duly authorized by the District. OXNARD UNION HIGH SCHOOL DISTRICT By: Superintendent -27-

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35 APPENDIX A DISTRICT GENERAL AND FINANCIAL INFORMATION The information in this section concerning the operations of the District, its operating budget and the District's general fund finances is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Refunding Bonds is payable from the general fund of the District. The Refunding Bonds are payable solely from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof. See SECURITY FOR THE REFUNDING BONDS in the main body of the Official Statement. General Information DISTRICT GENERAL INFORMATION The Oxnard Union High School District is located in the southeastern portion of Ventura County. The District covers 300 square miles and includes the cities of Oxnard, Port Hueneme and Camarillo, as well as Navy Base Ventura County. The District currently operates seven comprehensive high schools, and one continuation school, one independent study high school and one adult education school. Enrollment in the District for the school year is approximately 16,565 students. Administration Board of Trustees. The District is governed by a five-member Board of Trustees, each member of which is elected to a four-year term. Elections for positions to the Board are held every two years. Current members of the Board of Trustees, together with their office and the date their term expires, are listed below: Name Office Term Expires Steve Hall, Ed.D. President November 2016 Beatriz Herrera Vice-President November 2018 Karen Sher Clerk November 2018 Wayne Edmonds Member November 2018 Gary Davis Member November 2016 Superintendent and Administrative Personnel. The Superintendent of the District, appointed by the Board, is responsible for management of the day-to-day operations and supervises the work of other District administrators. The Superintendent is Dr. Penelope Deleon and the Assistant Superintendent, Administrative Services is Mr. Steve Dickinson. A-1

36 Recent Enrollment Trends The following table shows enrollment history for the District since fiscal year with estimates for fiscal year and ANNUAL ENROLLMENT Fiscal Years through Oxnard Union High School District School Year Enrollment Percent Change , ,856 (0.2%) ,676 (1.1) , ,780 (0.1) , ,148 (1.6) ,584 (3.3) , Projection Source: Oxnard Union High School District. The District anticipates that enrollment will continue to be stable in the near future. Employee Relations The District currently has approximately 743 full-time equivalent ( FTE ) and part-time certificated employees and classified, management, and supervisory employees. The Oxnard Federation of Teachers and School Employees ( OFTSE ) is the bargaining agent for certificated employees and their contract expired on June 30, The OFTSE is the bargaining agent for classified employees (excluding campus supervisors) and Paraeducators and their contracts expire on June 30, 2018 and September 30, 2015, respectively. The California School Employees Association ( CSEA ) is the bargaining agent for classified campus supervisor employees, and their contracts expire on November 14, With respect to expired agreement, the parties operate pursuant to existing terms pending renegotiation. A-2

37 Education Funding Generally DISTRICT FINANCIAL INFORMATION School districts in California receive operating income primarily from two sources: the State funded portion which is derived from the State s general fund, and a locally funded portion, being the district s share of the one percent general ad valorem tax levy authorized by the California Constitution. As a result, decreases or deferrals in education funding by the State could significantly affect a school district s revenues and operations. From to , California school districts operated under general purpose revenue limits established by the State Legislature. In general, revenue limits were calculated for each school district by multiplying (1) the average daily attendance ( ADA ) for such district by (2) a base revenue limit per unit of ADA. The revenue limit calculations were adjusted annually in accordance with a number of factors designated primarily to provide cost of living increases and to equalize revenues among all California school districts of the same type. Funding of the District's revenue limit was provided by a mix of local property taxes and State apportionments of basic and equalization aid. Generally, the State apportionments amounted to the difference between the District's revenue limit and its local property tax revenues. The fiscal year State budget package replaced the previous K-12 finance system with a new formula known as the Local Control Funding Formula (the LCFF ). Under the LCFF, revenue limits and most state categorical programs were eliminated. School districts instead receive funding based on the demographic profile of the students they serve and gain greater flexibility to use these funds to improve outcomes of students. The LCFF creates funding targets based on student characteristics. For school districts and charter schools, the LCFF funding targets consist of grade span-specific base grants plus supplemental and concentration grants that reflect student demographic factors. The LCFF includes the following components: A base grant for each local education agency per unit of ADA, which varies with respect to different grade spans. The base grant is $2,375 more than the average revenue limit provided prior to LCFF implementation. The base grants will be adjusted upward each year to reflect cost-of-living increases. In addition, grades K-3 and 9-12 are subject to adjustments of 10.4% and 2.6%, respectively, to cover the costs of class size reduction in grades K-3 and the provision of career technical education in grades A 20% supplemental grant for English learners, students from low-income families and foster youth to reflect increased costs associated with educating those students. An additional concentration grant of up to 50% of a local education agency s base grant, based on the number of English learners, students from lowincome families and foster youth served by the local agency that comprise more than 55% of enrollment. An economic recovery target to ensure that almost every local education agency receives at least their pre-recession funding level, adjusted for inflation, at full implementation of the LCFF. A-3

38 The LCFF was implemented for fiscal year and will be phased in gradually. Beginning in fiscal year , an annual transition adjustment was required to be calculated for each school district, equal to each district s proportionate share of the appropriations included in the State budget (based on the percentage of each district s students who are low-income, English learners, and foster youth ( Targeted Students )), to close the gap between the prior-year funding level and the target allocation at full implementation of LCFF. In each year, districts will have the same proportion of their respective funding gaps closed, with dollar amounts varying depending on the size of a district s funding gap. Based on revenue projections, districts will reach what is referred to as full funding in eight years, being fiscal year This projection assumes that the State s economy will improve each year; if the economy falters it could take longer to reach full funding. The target LCFF amounts for State school districts and charter schools based on grade levels and Targeted Students is shown below. Grade Span Funding at Full LCFF Implementation (Target Amount) K-3 Class Size Reduction and 9-12 Adjustments Average Assuming 0% Targeted Students Average Assuming 25% Targeted Students Average Assuming 50% Targeted Students Average Assuming 100% Targeted Students Grade Span Base Grant (1) K-3 $6,845 $712 $7,557 $7,935 $8,313 $10, ,947 N/A 6,947 7,294 7,642 9, ,154 N/A 7,154 7,512 7,869 10, ,289 $216 8,505 8,930 9,355 12,119 (1) Does not include adjustments for cost of living. Source: California Department of Education. The new legislation included a hold harmless provision which provided that a district or charter school would maintain total revenue limit and categorical funding at least equal to its level, adjusted for changes in ADA. The LCFF includes an accountability component. Districts are required to increase or improve services for English language learners, low income, and foster youth students in proportion to supplemental and concentration grant funding received. All school districts, county offices of education, and charter schools are required to develop and adopt local control and accountability plans, which identify local goals in areas that are priorities for the State, including pupil achievement, parent engagement, and school climate. County superintendents review and provide support to the districts under their jurisdiction, and the Superintendent of Public Instruction performs a corresponding role for county offices of education. In addition, the Budget for fiscal year created the California Collaborative for Education Excellence to advise and assist school districts, county offices of education, and charter schools in achieving the goals identified in their plans. Under the LCFF and related legislation, the State will continue to measure student achievement through statewide assessments, produce an Academic Performance Index for schools and subgroups of students, determine the contents of the school accountability report card, and establish policies to implement the federal accountability system. A-4

39 District Accounting Practices The accounting practices of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California School Accounting Manual. This manual, according to Section of the California Education Code, is to be followed by all California school districts. District accounting is organized on the basis of fund groups, with each group consisting of a separate set of self-balancing accounts containing assets, liabilities, fund balances, revenues and expenditures. The major fund classification is the general fund which accounts for all financial resources not requiring a special fund placement. The District's fiscal year begins on July 1 and ends on June 30. District expenditures are accrued at the end of the fiscal year to reflect the receipt of goods and services in that year. Revenues generally are recorded on a cash basis, except for items that are susceptible to accrual (measurable and/or available to finance operations). Current taxes are considered susceptible to accrual. Revenues from specific state and federally funded projects are recognized when qualified expenditures have been incurred. State block grant apportionments are accrued to the extent that they are measurable and predictable. The State Department of Education sends the District updated information from time to time explaining the acceptable accounting treatment of revenue and expenditure categories. The Governmental Accounting Standards Board ( GASB ) published its Statement No. 34 Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments on June 30, Statement No. 34 provides guidelines to auditors, state and local governments and special purpose governments such as school districts and public utilities, on new requirements for financial reporting for all governmental agencies in the United States. Generally, the basic financial statements and required supplementary information should include (i) Management s Discussion and Analysis; (ii) financial statements prepared using the economic measurement focus and the accrual basis of accounting, (iii) fund financial statements prepared using the current financial resources measurement focus and the modified accrual method of accounting and (iv) required supplementary information. Financial Statements General. The District's Audited Financial Statements for the fiscal year ending fiscal year were prepared by Vavrinek, Trine, Day & Co., LLP, Certified Public Accountants, Rancho Cucamonga, California (the Auditor ). The District s charter school is dependent and their financial activities are accounted for in the District s general fund. Audited financial statements for the District for the fiscal year Ended June 30, 2015 and prior fiscal years are on file with the District and available for public inspection at the Superintendent s Office. See Appendix B hereto for the Audited Financial Statements. The District has not requested, and the auditor has not provided, any additional review of such financial statements in connection with their inclusion in the Official Statement. Copies of such financial statements will be mailed to prospective investors and their representatives upon written request to the District. A-5

40 General Fund Revenues, Expenditures and Changes in Fund Balance. The following table shows the District s General Fund audited income and expense statements for fiscal years through REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Years through (Audited) Oxnard Union High School District Revenues Audited Audited Audited Audited Audited Total Revenue Limit Sources (1) $91,618,835 $91,637,916 $91,296,687 $112,114,040 $128,028,428 Federal Revenues 11,846,846 12,782,699 8,677,450 8,262,374 8,167,204 Other State revenues 18,717,997 13,581,471 21,343,696 11,933,485 11,947,146 Other local revenues 10,634,321 12,319,527 6,728,146 9,072,090 10,551,366 Total Revenues 132,817, ,321, ,045, ,381, ,694,144 Expenditures Instruction 80,807,641 78,034,201 81,892,474 87,852,700 98,088,966 Supervision of instruction 3,463,626 3,319,258 3,194,869 3,307,720 4,148,662 Instructional library, media, and technology 1,810,683 1,875,058 1,498,618 1,516,897 1,579,971 School site administration 10,320,776 10,935,995 10,575,266 10,933,829 11,897,349 Home-to-school transportation 1,606,646 1,572,933 1,358,573 1,452,813 1,440,736 Food services 4, ,523 13,699 17,135 19,549 All other pupil services 9,960,353 10,528,834 9,806,985 10,231,274 11,495,310 Data processing 2,186,318 2,508,477 2,347,219 2,818,167 3,501,116 All other administration 5,301,628 5,065,677 5,666,585 5,447,163 5,660,619 Plant services 13,367,944 13,125,249 11,466,689 12,705,456 13,763,352 Facility acquisition and construction 330, , ,485 41,742 96,201 Ancillary services 2,196,714 2,303,264 2,235,673 2,454,690 2,750,774 Community services 121, ,839 86,845 89, ,017 Other outgo 473,784 1,269,988 1,302,026 1,493,131 1,751,067 Debt service: principal (2) 57, ,929 1,272,619 1,326,807 1,316,998 Debt service: interest (2) 74,461 1,559, , , ,726 Total Expenditures 132,084, ,916, ,212, ,089, ,998,413 Excess of Revenues Over/(Under) Expenditures 733,566 (2,594,444) (5,166,697) (707,399) 695,731 Other Financing Sources (Uses) Operating Transfer in Other sources ,003, Operating transfers out (3,192,291) (5,266,532) (889,971) (762,636) (839,187) Total Other Financing Sources (Uses) (3,192,291) (5,266,532) 113,848 (762,636) (839,187) Net change in fund balance (2,458,725) (7,860,976) (5,052,849) (1,470,035) (143,456) Fund Balance, July 1 (3) 27,907,775 25,449,050 17,558,074 12,535,225 11,065,190 Fund Balance, June 30 $25,449,050 $17,588,074 $12,535,225 $11,065,190 $10,921,734 (1) LCFF commended in fiscal year (2) Debt service includes early retirement incentives and other employee obligations. (3) In fiscal year the general fund beginning balance was restated due to GASB No. 54 and the reclassification of the Special Reserve Fund to the General Fund because it functions effectively as an extension of the General Fund. Source: District Audit Reports for fiscal years through A-6

41 District Budget and Interim Financial Reporting Budgeting Education Code Requirements. The District is required by provisions of the State Education Code to maintain a balanced budget each year, in which the sum of expenditures and the ending fund balance cannot exceed the sum of revenues and the carryover fund balance from the previous year. The State Department of Education imposes a uniform budgeting and accounting format for school districts. The budget process for school districts was substantially amended by Assembly Bill 1200 ( AB 1200 ), which became State law on October 14, Portions of AB 1200 are summarized below. School districts must adopt a budget on or before July 1 of each year. The budget must be submitted to the county superintendent within five days of adoption or by July 1, whichever occurs first. A district must be on a single budget cycle. The single budget is only readopted if it is disapproved by the county office of education, or as needed. The District is on a single budget cycle and adopts its budget on or before July 1. Revise to reflect AB The county superintendent will examine the adopted budget for compliance with the standards and criteria adopted by the State Board of Education and identify technical corrections necessary to bring the budget into compliance, will determine if the budget allows the district to meet its current obligations and will determine if the budget is consistent with a financial plan that will enable the district to meet its multi-year financial commitments. On or before September 15, the county superintendent will approve or disapprove the adopted budget for each school district. Budgets will be disapproved if they fail the above standards. The district board must be notified by September 15 of the county superintendent s recommendations for revision and reasons for the recommendations. The county superintendent may assign a fiscal advisor or appoint a committee to examine and comment on the superintendent s recommendations. The committee must report its findings no later than September 20. Any recommendations made by the county superintendent must be made available by the district for public inspection. The law does not provide for conditional approvals; budgets must be either approved or disapproved. No later than November 8, the county superintendent must notify the Superintendent of Public Instruction of all school districts whose budgets have been disapproved. For districts whose budgets have been disapproved, the district must revise and readopt its budget by September 8, reflecting changes in projected income and expense since July 1, including responding to the county superintendent s recommendations. The county superintendent must determine if the budget conforms with the standards and criteria applicable to final district budgets and not later than October 8, will approve or disapprove the revised budgets. If the budget is disapproved, the county superintendent will call for the formation of a budget review committee pursuant to Education Code Section Until a district s budget is approved, the district will operate on the lesser of its proposed budget for the current fiscal year or the last budget adopted and reviewed for the prior fiscal year. Interim Certifications Regarding Ability to Meet Financial Obligations. Under the provisions of AB 1200, each school district is required to file interim certifications with the county office of education as to its ability to meet its financial obligations for the remainder of the thencurrent fiscal year and, based on current forecasts, for the subsequent two fiscal years. The County Superintendent reviews the certification and issues either a positive, negative or qualified certification. A positive certification is assigned to any school district that will meet its financial obligations for the current fiscal year and subsequent two fiscal years. A negative certification is assigned to any school district that is deemed unable to meet its financial A-7

42 obligations for the remainder of the fiscal year or the subsequent fiscal year. A qualified certification is assigned to any school district that may not meet its financial obligations for the current fiscal year or two subsequent fiscal years. Under California law, any school district and office of education that has a qualified or negative certification in any fiscal year may not issue, in that fiscal year or in the next succeeding fiscal year, certificates of participation, tax anticipation notes, revenue bonds or any other debt instruments that do not require the approval of the voters of the district, unless the applicable county superintendent of schools determines that the district s repayment of indebtedness is probable. District s Budget Approval/Disapproval and Certification History. The District has not received any qualified or negative certifications of its financial reports in the past five years, nor have any of its budgets been disapproved. The District s more recent interim report, the Second Interim for Fiscal Year , received a positive certification. Copies of the District s budget, interim reports and certifications may be obtained upon request from the Superintendent s Office at 309 S. K Street, Oxnard, California 93030; telephone (805) The District may impose charges for copying, mailing and handling. A-8

43 District s Fiscal Year General Fund - Budget and Projections. The following table shows a summary of the Adopted Budget figures and the Second Interim projections, both for fiscal year REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Fiscal Year (Adopted Budget and Second Interim Projections) Oxnard Union High School District Revenues Adopted Budget Second Interim Projections LCFF/ Revenue Limits Sources $145,909,000 $146,079,911 Federal Revenues 7,978,829 8,322,273 Other State Revenues 15,845,382 16,935,836 Other Local Revenues 8,414,295 9,299,198 Total Revenues 178,147, ,637,218 Expenditures Certificated Salaries 77,764,779 79,313,627 Classified Salaries 23,910,287 25,306,085 Employee Benefits 42,060,023 43,409,943 Books and Supplies 9,348,963 10,870,065 Contract Services & Operating Exp. 14,899,279 14,884,234 Capital Outlay 810,870 1,879,397 Other Outgo (excluding indirect costs) 3,445,274 3,459,403 Other Outgo Transfers of Indirect Costs (306,230) (461,940) Total Expenditures 171,933, ,660,814 Excess of Revenues Over/(Under) Expenditures 6,214,261 1,976,404 Other Financing Sources (Uses) Operating transfers in Operating transfers out 1,448,087 1,719,521 Total Other Financing Sources (Uses) (1,448,087) (1,719,521) Net change in fund balance 4,766, ,883 Fund Balance, July 1 9,399,697 11,081,456 Fund Balance, June 30 $14,165,871 $11,338,339 Source: District Fiscal Year Second Interim Report. District Reserves. In general, the State requires that the California school districts maintain the equivalent of 3% of annual general fund expenditures in reserve to be available during financial crisis. The District has historically had an unrestricted reserve in excess of the 3% minimum requirement. In connection with legislation adopted in connection with the State s fiscal year Budget ( SB 858 ), the Education Code was amended to provide that, beginning in fiscal year , if a district s proposed budget includes a local reserve above the minimum recommended level, the governing board must provide the information for review at the annual public hearing on its proposed budget. In addition, SB 858 included a provision, which became effective upon the passage of Proposition 2 at the November 4, 2014 statewide election, which limits the amount of reserves which may be maintained at the District level. Specifically, the A-9

44 legislation, among other things, enacted Education Code Section , which became operative December 15, 2014, and provides that in any fiscal year immediately after a fiscal year in which a transfer is made to the State s Public School System Stabilization Account (the Proposition 98 reserve), a school district may not adopt a budget that contains a reserve for economic uncertainties in excess of twice the applicable minimum recommended reserve for economic uncertainties established by the State Board (for school districts with ADA over 400,000, the limit is three times the amount). Exemptions can be granted by the County Superintendent under certain circumstances. In August of 2015, Senate Bill 799 ( SB 799 ) was introduced into the State Senate in response to SB 858 proposing reforms to the reserve cap. SB 799 proposes a cap on unassigned reserves and special reserves for other than capital outlay of seventeen percent, with exemptions from the cap for school districts with less then 2,500 average daily attendance and basic aid districts. The District cannot predict how SB 858 or SB 799, if enacted, will impact its reserves and future spending. As of the date hereof, SB 799 has been approved by the State Senate and is pending approval in the State Assembly. See STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS. Attendance - Revenue Limit and LCFF Funding As described herein, prior to fiscal year , school districts in California derived most State funding based on a formula which considered a revenue limit per unit of ADA. With the implementation of the LCFF, commencing in fiscal year , school districts receive base funding based on ADA, and may also be entitled to supplemental funding, concentration grants and funding based on an economic recovery target. With implementation of the LCFF commencing in fiscal year , a school district, such as the District, which has property tax revenues which exceed its entitlement under the LCFF is entitled to keep its local property tax revenues which exceed its LCFF funding entitlement. A-10

45 The following table sets forth historical revenue limit and LCFF funding for the District through fiscal year (projected). Revenue Sources AVERAGE DAILY ATTENDANCE AND FUNDED REVENUE LIMIT/LCFF FUNDING Fiscal Years through Oxnard Union High School District Funded Revenue Fiscal Year P-2 ADA Base Revenue Limit/LCFF Funding Limit/LCFF Funding per ADA* ,060 $107,550,494 $7, , ,068,182 7, ,874 91,217,028 6, , ,594,094 7, (1) 14, ,475,594 7, , ,063,073 8, (2) 15, ,176,685 9,461 *For LCFF, average funding per ADA across grade spans. (1) LCFF Funding commenced in fiscal year (2) Projected. Source: Oxnard Unified School District. The District categorizes its general fund revenues into four sources, being LCFF, Federal Revenues, Other State Revenues and Local Revenues. Each of these revenue sources is described below. LCFF Sources. District funding is provided by a mix of (1) local property taxes and (2) State apportionments of funding under the LCFF. Generally, the State apportionments will amount to the difference between the District's LCFF funding entitlement and its local property tax revenues. Beginning in , Proposition 13 and its implementing legislation provided for each county to levy (except for levies to support prior voter-approved indebtedness) and collect all property taxes, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county. The principal component of local revenues is the school district s property tax revenues, i.e., the district s share of the local 1% property tax, received pursuant to Sections 75 and following and Sections 95 and following of the California Revenue and Taxation Code. Education Code Section 42238(h) itemizes the local revenues that are counted towards the base revenue limit before calculating how much the State must provide in equalization aid. Historically, the more local property taxes a district received, the less State equalization aid it is entitled to. Federal Revenues. The federal government provides funding for several District programs, including special education programs, programs under No Child Left Behind, the Individuals With Disabilities Education Act, and specialized programs such as Drug Free Schools. A-11

46 Other Local Revenues. In addition to property taxes, the District receives additional local revenues from items such as interest earnings, leases and rentals, and other local sources. District Retirement Systems Qualified employees of the District are covered under multiple-employer defined benefit pension plans maintained by agencies of the State. Certificated employees are members of the State Teachers Retirement System ( STRS ) and classified employees are members of the Public Employees Retirement System ( PERS ). Both STRS and PERS are operated on a Statewide basis. The information set forth below regarding the STRS and PERS programs, other than the information provided by the District regarding its annual contributions thereto, has been obtained from publicly available sources which are believed to be reliable but are not guaranteed as to accuracy or completeness, and should not to be construed as a representation by either the District or the Underwriter. Implementation of GASB Nos. 68 and 71. Commencing with fiscal year ended June 30, 2015, the District implemented the provisions of GASB Statement Nos. 68 and 71 which require certain new pension disclosures in the notes to its audited financial statements commencing with the audit for fiscal year Statement No. 68 generally requires the District to recognize its proportionate share of the unfunded pension obligation for STRS and PERS by recognizing a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year. As a result of the implementation of GASB Statement Nos. 68 and 71, the District has restated the beginning net position in the government wide Statement of Net Position, effectively decreasing net position as of July 1, 2014 by $110,386,704. The decrease results from recognizing the net pension liability, net of related deferred outflows of resources. The restatement does not include deferred inflows of resources, as this information was not available. See APPENDIX B - Audited Financial Statements of the District For Fiscal Year Ending June 30, 2015 and particularly Notes 1 and 13. STRS. All full-time certificated employees participate in STRS, a cost-sharing, multipleemployer contributory public employee retirement system. STRS provides retirement, disability and survivor benefits to plan members and beneficiaries under a defined benefit program. Benefit provisions and contribution amounts are established by State statutes, as legislatively amended. The program is funded through a combination of investment earnings and statutorily set contributions from three sources: employees, employers and the State. See Pension Reform Act of 2013 (Assembly Bill 340) below for further discussion. table. The District s contribution to STRS for recent fiscal years are set forth in the following A-12

47 STRS Contributions Oxnard Union High School District Fiscal Year Amount $5,080, ,057, ,962, ,146, ,937, * 8,107,282 *Projected from Second Interim Report. Source: Oxnard Union High School District. Historically, employee, employer and State contribution rates did not vary annually to account for funding shortfalls or surpluses in the STRS plan. In recent years, the combination of investment earnings and statutory contributions were not sufficient to pay actuarially required amounts. As a result, the STRS defined benefit program showed an estimated unfunded actuarial liability of approximately $76.2 billion as of June 30, 2015 (the date of the last actuarial valuation). In connection with the State s adoption of its fiscal year Budget, the Governor signed into law Assembly Bill 1469 ( AB 1469 ), which represents a legislative effort to address the unfunded liabilities of the STRS pension plan. AB 1469 addressed the funding gap by increasing contributions by employees, employers and the State. In particular, employer contribution rates are scheduled to increase through at least fiscal year , from a contribution rate of 8.88% in fiscal year to 19.1% in fiscal year Thereafter, employer contribution rates will be determined by the STRS board to reflect the contribution required to eliminate unfunded liabilities by June 30, The District s employer contribution rates for fiscal years and were 8.88% and 10.73%, respectively. Projected employer contribution rates for school districts (including the District) for fiscal year through fiscal year are set forth in the following table. PROJECTED EMPLOYER CONTRIBUTION RATES (STRS) Fiscal Years through Projected Employer Fiscal Year Contribution Rate (1) % (1) Expressed as a percentage of covered payroll. Source: AB 1469 PERS. All full-time and some part-time classified employees participate in PERS, an agent multiple-employer contributory public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State. PERS provides retirement, disability, and death benefits to plan members and beneficiaries. The District is part of a cost-sharing pool within PERS known as the Schools Pool. Benefit provisions are established by State statutes, as legislatively amended. Contributions to PERS A-13

48 are made by employers and employees. Each fiscal year, the District is required to contribute an amount based on an actuarially determined employer rate. The District s employer contributions to PERS for recent fiscal years are set forth in the following table. PERS Contributions Oxnard Union High School District Fiscal Year Amount $1,991, ,077, ,135, ,239, ,475, * 2,773,584 * Projected from Second Interim Report Source: Oxnard Union High School District. Like the STRS program, the PERS program has experienced an unfunded liability in recent years. The PERS unfunded liability, on a market value of assets basis, was approximately $8.7 billion as of June 30, 2014 (the date of the last actuarial valuation). To address this issue, the PERS board has taken a number of actions. In April 2013, for example, the PERS board approved changes to the PERS amortization and smoothing policy intended to reduce volatility in employer contribution rates. In addition, in April 2014, PERS set new contribution rates, reflecting new demographic assumptions and other changes in actuarial assumptions. The new rates and underlying assumptions, which are aimed at eliminating the unfunded liability of PERS in approximately 30 years, will be implemented for school districts beginning in fiscal year , with the costs spread over 20 years and the increases phased in over the first five years. The District s employer contribution rates for fiscal years and were % and %, respectively. Projected employer contribution rates for school districts (including the District) for fiscal year through fiscal year are set forth in the following table. PROJECTED EMPLOYER CONTRIBUTION RATES (PERS) Fiscal Years through (1) Projected Employer Fiscal Year Contribution Rate (2) % (1) Rates were estimated by PERS in 2014 using 2012 financial data. The PERS board is expected to approve official employer contribution rates for each fiscal year shown during the immediately preceding fiscal year. (2) Expressed as a percentage of covered payroll. Source: PERS California Public Employees Pension Reform Act of On September 12, 2012, the Governor signed into law the California Public Employees Pension Reform Act of 2013 A-14

49 ( PEPRA ), which impacted various aspects of public retirement systems in the State, including the STRS and PERS programs. In general, PEPRA (i) increased the retirement age for public employees depending on job function, (ii) capped the annual pension benefit payouts for public employees hired after January 1, 2013, (iii) required public employees hired after January 1, 2013 to pay at least 50% of the costs of their pension benefits (as described in more detail below), (iv) required final compensation for public employees hired after January 1, 2013 to be determined based on the highest average annual pensionable compensation earned over a period of at least 36 consecutive months, and (v) attempted to address other perceived abuses in the public retirement systems in the State. PEPRA applies to all public employee retirement systems in the State, except the retirement systems of the University of California, and charter cities and charter counties whose pension plans are not governed by State law. PEPRA s provisions went into effect on January 1, 2013 with respect to new State, school, and city and local agency employees hired on or after that date; existing employees who are members of employee associations, including employee associations of the District, have a five-year window to negotiate compliance with PEPRA through collective bargaining. PERS has predicted that the impact of PEPRA on employees and employers, including the District and other employers in the PERS system, will vary, based on each employer s current level of benefits. As a result of the implementation of PEPRA, new members must pay at least 50% of the normal costs of the plan, which can fluctuate from year to year. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn. With respect to the STRS pension program, employees hired after January 1, 2013 will pay the greater of either (1) fifty percent of the normal cost of their retirement plan, rounded to the nearest one-quarter percent, or (2) the contribution rate paid by then-current members (i.e., employees in the STRS plan as of January 1, 2013). The member contribution rate could be increased from this level through collective bargaining or may be adjusted based on other factors. Employers will pay at least the normal cost rate, after subtracting the member s contribution. The District is unable to predict the amount of future contributions it will have to make to PERS and STRS as a result of the implementation of PEPRA, and as a result of negotiations with its employee associations, or, notwithstanding the adoption of PEPRA, resulting from any legislative changes regarding the PERS and STRS employer contributions that may be adopted in the future. Additional Information. Additional information regarding the District s retirement programs is available in Note 13 to the District s audited financial statements attached hereto as APPENDIX B. In addition, both STRS and PERS issue separate comprehensive financial reports that include financial statements and required supplemental information. Copies of such reports may be obtained from STRS and PERS, respectively, as follows: (i) STRS, P.O. Box 15275, Sacramento, California ; and (ii) PERS, 400 Q Street, Sacramento, California More information regarding STRS and PERS can also be obtained at their websites, and respectively. The references to these Internet websites are shown for reference and convenience only and the information contained on such websites is not incorporated by reference into this Official Statement. The information contained on these websites may not be current and has not been reviewed by the District or the Underwriter for accuracy or completeness. A-15

50 Other Post-Employment Retirement Benefits The District implemented GASB Statement No. 45 for fiscal year ended June 30, Plan Description. The Oxnard Union High School District Retiree Health Benefits Plan (the Plan ) is a single-employer defined benefit healthcare plan administered by the Oxnard Union High School District. The Plan provides medical and dental insurance benefits to eligible retirees and their spouses. Membership of the Plan consist of 626 retirees and beneficiaries currently receiving benefits and 630 active plan members. Annual OPEB Cost and Net OPEB Obligation. The District s annual OPEB cost (expense) is calculated based on the annual required contribution ( ARC ), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. Funded Status and Funding Progress. A summary of the District s OPEB obligation, based on projected pay-as-you-go financing requirements, as shown in the District s audited financial statements as of June 30, 2015, is as follows: OPEB FUNDING PROGRESS Oxnard Union High School District Annual required contribution $18,040,000 Interest on net OPEB obligation 3,982,181 Adjustment to ARC (6,548,000) Annual OPEB cost (expense) 15,474,181 Contributions for the fiscal year (7,422,674) Change in net OPEB obligation 8,051,507 Net OPEB obligation- June 30, ,369,679 Net OPEB obligation- June 30, 2013 $74,421,186 The District s annual OPEB cost, the percentage of annual OPEB cost contributed, and the net OPEB obligation were as follows: NET OPEB OBLIGATION Fiscal Years through Oxnard Union High School District Fiscal Year Ended Annual OPEB Cost Actual Contribution % of Annual OPEB Cost Contributed Net OPEB Obligation 2012 $20,777,231 $8,043, % $45,104, ,426,242 6,913, ,616, ,009,000 7,255, ,369, ,474,181 7,422, ,421,186 A-16

51 A schedule of funding progress as of the most recent actuarial valuation is as follows: Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll July 1, 2013 $40,426,000 $205,904,000 $165,478, % $78,526, % For more information regarding the District s OPEB and assumptions used in the Actuarial Study, see Note 11 in the District s Audit in Appendix A hereto. Insurance Joint Powers Agreements The District is a member of the Ventura County Schools Self-funding Authority ( VCSSFA ) and the Coastal Schools Employee Benefits Organization ( CSEBO ) public entity risk pools. The District pays an annual premium to each entity for its workers compensation and property liability coverage and for its health and welfare benefits, respectively. The District also belongs to the Ventura County Fast Action School Transit Authority ( VCFAST ) joint powers authority ( JPA ). Payments for courier services are paid to the VCFAST. The relationships between the District, the pools, and the JPA are such that they are not component units of the District for financial reporting purposes. A-17

52 Existing Debt Obligations General Obligation Bonds. A schedule of the District s Long-Term General Obligation Debt is shown below: Principal Issue Date of Issue Maturity Date Original Principal Amount Outstanding July 1, Revenue Bonds April 20, 1999 August 1, 2027 $10,199,913 5,509, Refunding Bonds May 17, 2001 August 1, ,705,000 21,180, Election, Series A August 11, 2010 August 1, ,000,000 45,980, Election, Series B* April 28, 2011 August 1, ,052,103 3,182, Refunding Bonds May 3, 2012 August 1, ,435,000 8,330, Election, Series C January 23, 2014 August 1, ,000,000 47,800, Election, Series D January 27, 2016 August 1, ,945,000 30,945,000 Total $162,927,016 *Issued as Direct-Pay Qualified School Construction Bonds. Lease Financings. The District has caused the execution and delivery of leases and refinancing leases as described below in order the finance and refinance school facility projects Refunding Certificates. On November 15, 2000, the District, with the Ventura County Schools Public Facilities Financing Corporation, caused the execution and delivery of Certificates of Participation in the aggregate principal amount of $1,860,000 (the 2000 Certificates ), to refund outstanding Certificates of Participation. The 2000 Certificates mature November 1, 2019 and have interest rates ranging from 6.40% to 7.50% Refunding Certificates. On April 29, 2003, the District, with the Ventura County Schools Public Facilities Financing Corporation, caused the execution and delivery of Certificates of Participation in the aggregate principal amount of $3,970,000. The 2003 Certificates mature November 1, 2019 and have interest rates ranging from 2.0% to 4.3% Lease Revenue Bonds (Golden West Schools Financing Authority). On February 23, 2005, the Golden West Schools Financing Authority (the Authority ) issued its 2005 Lease Revenue Bonds (Oxnard Union High School District Financing) in the aggregate principal amount of $5,745,000 (the 2005 Bonds ), which are secured by lease payments (the 2005 Lease Payments ) made by the District under a Lease Agreement dated as of February 1, 2005 (the 2005 Lease ). The 2005 Bonds have a final maturity date of February 1, The District Board has authorized the refinancing of the 2005 Lease and related 2005 Bonds with the issuance of a 2016 Refinancing Lease, which is expected to be delivered in fiscal year Solar Lease Financing. On September 29, 2010, the District entered into a Lease Agreement with the Golden West Schools Financing Authority to provide financing in the principal amount of $19,067,726 on a private placement basis for an energy conservation (solar) project. Semi-annual lease payments payable from the general fund are due each March 29 and September 29, until September 29, A-18

53 Investment of District Funds In accordance with Government Code Section et seq., the Ventura County Treasurer manages funds deposited with it by the District. The County is required to invest such funds in accordance with California Government Code Sections et seq. In addition, counties are required to establish their own investment policies which may impose limitations beyond those required by the Government Code. See Appendix H for information regarding the County s investment policy and quarterly report. Effect of State Budget on Revenues Public school districts in California are dependent on revenues from the State for a large portion of their operating budgets. California school districts generally receive the majority of their operating revenues from various State sources. The primary source of funding for school districts is LCFF funding, which is derived from a combination of State funds and local property taxes (see Education Funding Generally above). State funds typically make up the majority of a district s LCFF funding. School districts also receive funding from the State for some specialized programs such as special education. The availability of State funds for public education is a function of constitutional provisions affecting school district revenues and expenditures (see CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS below), the condition of the State economy (which affects total revenue available to the State general fund), and the annual State budget process. The District cannot predict how education funding may further be changed in the future, or the state of the economy which in turn can impact the amounts of funds available from the State for education funding. See STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS below. A-19

54 STATE FUNDING OF EDUCATION; RECENT STATE BUDGETS General. The State requires that from all State revenues there first shall be set apart the moneys to be applied for support of the public school system and public institutions of higher education. School districts in California receive operating income primarily from two sources: (1) the State funded portion which is derived from the State s general fund, and (2) a locally funded portion, being the district s share of the one percent general ad valorem tax levy authorized by the California Constitution (see DISTRICT FINANCIAL INFORMATION Education Funding Generally above). School districts in California are dependent on revenues from the State for a large portion of their operating budgets. California school districts receive an average of about 55 percent of their operating revenues from various State sources. The availability of State funds for public education is a function of constitutional provisions affecting school district revenues and expenditures (see CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS below), the condition of the State economy (which affects total revenue available to the State general fund), and the annual State budget process. Decreases in State revenues may significantly affect appropriations made by the legislature to school districts. The following information concerning the State s budgets for the current and most recent preceding years has been compiled from publicly-available information provided by the State. Neither the District, the Underwriter nor the County is responsible for the information relating to the State s budgets provided in this section. Further information is available from the Public Finance Division of the State Treasurer s Office. The Budget Process. The State s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the Governor s Budget ). Under State law, the annual proposed Governor s Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor s Budget, the Legislature takes up the proposal. Under the State Constitution, money may be drawn from the State Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a majority vote of each House of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each House of the Legislature. Appropriations also may be included in legislation other than the Budget Act. Bills containing appropriations (including for K-14 education) must be approved by a majority vote in each House of the Legislature, unless such appropriations require tax increases, in which case they must be approved by a two-thirds vote of each House of the Legislature, and be signed by the Governor. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State Treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt. A-20

55 Recent State Budgets Certain information about the State budgeting process and the State Budget is available through several State of California sources. A convenient source of information is the State s website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only, the information contained within the websites may not be current and has not been reviewed by the District and is not incorporated herein by reference. The California State Treasurer Internet home page at under the heading Bond Information, posts various State of California Official Statements, many of which contain a summary of the current State Budget, past State Budgets, and the impact of those budgets on school districts in the State. The California State Treasurer s Office Internet home page at under the heading Financial Information, posts the State s audited financial statements. In addition, the Financial Information section includes the State s Rule 15c2-12 filings for State bond issues. The Financial Information section also includes the Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation from the State s most current Official Statement, which discusses the State budget and its impact on school districts. The California Department of Finance s Internet home page at under the heading California Budget, includes the text of proposed and adopted State Budgets. The State Legislative Analyst s Office prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst s Internet home page at under the heading Subject Area Budget (State). Prior Years Budgeting Techniques. Declining revenues and fiscal difficulties which arose in the State commencing in fiscal year led the State to undertake a number of budgeting strategies, which had subsequent impacts on local agencies within the State. These techniques included the issuance of IOUs in lieu of warrants (checks), the enactment of statutes deferring amounts owed to public schools, until a later date in the fiscal year, or even into the following fiscal year (known as statutory deferrals), trigger reductions, which were budget cutting measures which were implemented or could have been implemented if certain State budgeting goals were not met, among others, and the dissolution of local redevelopment agencies in part to make available additional funding for local agencies. Although the fiscal year State Budget is balanced and projects a balanced budget for the foreseeable future, largely attributable to the additional revenues generated due to the passage of Proposition 30 at the November 2, 2012 statewide election, there can be no certainty that budget-cutting strategies such as those used in recent years will not be used in the future should the State Budget again be stressed and if projections included in such budget do not materialize. A-21

56 State Budget: Significant Change in Education Funding. As described previously herein, the State Budget and its related implementing legislation enacted significant reforms to the State s system of K-12 education finance with the enactment of the LCFF. Significant reforms such as the LCFF and other changes in law may have significant impacts on the District s finances Adopted State Budget On June 24, 2015, Governor Brown signed the fiscal year State Budget Act (the State Budget ). The State Budget includes approximately $117.5 billion in State General Fund resources (including revenues, transfers and the prior year ending balance) and approximately $115.4 billion in planned State General Fund expenditures. By the end of fiscal year , the Budget Stabilization Account will have a total balance of $3.5 billion. The State Budget includes an approximately 0.8% percent State General Fund spending increase from the fiscal year State Budget Act (the State Budget ). The State Budget includes Proposition 98 funding of $68.4 billion for the fiscal year, which is approximately $7.6 billion more in Proposition 98 funding than in the State Budget. When combined with increases of $6.1 billion in fiscal years and as well as other one-time savings and adjustments in those years, the State Budget provides a $14.4 billion increased investment in K-14 education. The State Budget includes the following significant adjustments affecting California K-12 school districts: Local Control Funding Formula - An increase of $6 billion Proposition 98 General Fund to continue the State's transition to the LCFF. This formula commits most new funding to districts serving English language learners, students from low-income families, and youth in foster care. This increase will close the remaining funding implementation gap by more than 51 percent. Career Technical Education - The State Budget establishes the Career Technical Education ( CTE ) Incentive Grant Program and provides $400 million, $300 million, and $200 million Proposition 98 General Fund in fiscal year , fiscal year , and fiscal year , respectively, for local education agencies to establish new or expand high-quality CTE programs. School districts, county offices of education, and charter schools receiving funding under this program will be required to provide local-to-state matching funds of 1:1 in fiscal year , 1.5:1 in fiscal year , and 2:1 in fiscal year When determining grant recipients, the Department of Education and the State Board of Education will give priority to grant recipients that: (1) are establishing new programs; (2) serve a large number of English-learner, low-income, or foster youth students; (3) serve pupil groups with higher-than-average dropout rates; or (4) are located in areas of high unemployment. Educator Support - An increase of $500 million one-time Proposition 98 General Fund for education support. Of this amount, $490 million is for activities that promote educator quality and effectiveness, including beginning teacher and administrator support and mentoring, support for teachers who have been identified as needing improvement, and professional development that is aligned to the State academic content standards. These funds will be allocated to school districts, county offices of education, charter schools, and State special schools in an equal amount per certificated staff and are A-22

57 available for expenditure over the next three years. Additionally, $10 million is provided for the K-12 High Speed Network to provide professional development and technical assistance to local educational agencies related to network management. Special Education - The State Budget includes $60.1 million in Proposition 98 General Fund funding ($50.1 million ongoing and $10 million one-time) to implement selected program changes that improve service delivery and outcomes for all disabled students, with a particular emphasis on early education. K-12 High Speed Internet Access - An increase of $50 million in one-time funding to the Proposition 98 General Fund to support additional investments in internet connectivity and infrastructure. This builds on $26.7 million in one-time Proposition 98 funding that was provided in the State Budget to assist local educational agencies with securing required internet connectivity and infrastructure to implement the new computer-adaptive tests administered under Common Core. K-12 Deferrals - The State Budget provides $897 million in funding to the Proposition 98 General Fund to eliminate deferrals consistent with the revenue trigger included in the State Budget Proposed State Budget Proposed Budget. On January 7, 2016, Governor Brown presented his proposed budget for the fiscal year (the Proposed State Budget ) to the State Senate and Assembly. The Proposed State Budget proposes a multiyear plan that is balanced and that, among other items, provides for the following: contributions to both state budget reserves: the Special Fund for Economic Uncertainties, the state s discretionary reserve, and the Budget Stabilization Account, the state s constitutional rainy day fund, raising such reserves to $2.2 billion and $8 billion, respectively; an increase in funding for K-12 schools of $2.8 billion by raising the funding level under the LCFF to $14,184 per pupil in fiscal year (representing an increase of 5.4 percent over the LCFF funding level for fiscal year ); an increase of more than $1.2 billion in one-time discretionary general funds for school districts, charter schools and county offices of education to use at local discretion; a $1.6 billion early education block grant by combining three existing programs to promote local flexibility, focusing on disadvantaged students and improved accountability; $807 million for statewide deferred maintenance at levees, state parks, universities, community colleges, prisons, state hospitals, and other state facilities; a $3.1 billion cap-and-trade expenditure plan to reduce greenhouse gas emissions; and $710 million to pay for the costs of wildfires and for other effects of the drought. A-23

58 The complete Proposed State Budget is available from the California Department of Finance website at The District cannot, and does not, take any responsibility for the continued accuracy of such internet address or for the accuracy, completeness or timeliness of information posted on such address, and such information is not incorporated in this Official Statement by such reference. In May 2016, Governor Brown is expected to issue the May Revision to the Proposed State Budget to reflect updated revenue and expenditure estimates. The execution of the Proposed State Budget may be affected by numerous factors, including but not limited to: (i) shifts of costs from the federal government to the State, (ii) national, State and international economic conditions, (iii) litigation risk associated with proposed spending reductions, (iv) rising health care costs and (v) other factors, all or any of which could cause the revenue and spending projections in the Proposed State Budget to be unattainable. The District cannot predict the impact that the Proposed State Budget, or subsequent budgets, will have on its own finances and operations. Additionally, the District cannot predict the accuracy of any projections made in the Proposed State Budget. LAO Budget Overview. On January 11, 2016, the Legislative Analyst s Office (the LAO ), a nonpartisan State office that provides fiscal and policy information and advice to the State Legislature, released its report on the Proposed State Budget entitled, The Budget: Overview of the Governor s Budget (the Proposed Budget Overview ). In the Proposed Budget Overview, among other items, the LAO commends the State for its emphasis on increasing budget reserves. The LAO believes that this general approach is prudent and is the key to weathering the next recession with minimal disruption to public programs. Though the LAO anticipates the State s economic growth will continue in the near term, the LAO warns that the Proposition 98 minimum guarantee could decrease in fiscal year or future years if stock market prices were to drop or growth in the economy and personal income were to decline. The LAO notes that such a scenario serves as a caution against the State committing all available Proposition 98 funding for ongoing purposes Budget - May Revise. The Fiscal Year May Revise (the May Revise ) was released by Governor Brown on May 13, Revenue forecasts were reduced by $1.9 billion, and Proposition 2 s required contributions were reduced by $1.6 billion. The May Revise includes increasing General Fund spending by $5.5 billion for K 12 schools and community colleges pursuant to Proposition 98 and an additional $633 million saved in the Rainy Day Fund and $633 million to be used to pay down debts and liabilities pursuant to Proposition 2. New spending in three areas includes creating a tax credit to assist the State s lowest income workers, increased funding to California State University to keep tuition flat and assistance to University of California to aid in paying down unfunded pension liabilities, and providing health and other safety net services to certain currently undocumented immigrants. The May Revise continues to focus on the key elements of the Proposed State Budget by carrying out the Local Control Funding Formula, federal health care reform, public safety realignment, the Water Action Plan, and the Cap and Trade expenditure plan. A-24

59 LAO Comments on May Revise. On May 15, 2016, the LAO released its comments on the May Revise, which include: In its multiyear projections that accompany the May Revise, the administration projects that expenditures will outpace revenues and transfers in and The LAO will release an independent assessment of the economic and budgetary outlook for the State. Since January, the State has passed an extension of the Managed Care Organization tax and made several new ongoing budgetary commitments, some of which carry substantial ongoing costs for the State in future years. These changes, together with reduced estimates of revenues and reserves, mean there is now less capacity than there was in January to make additional budgetary commitments. Additional budgetary commitments leave the State budget somewhat more vulnerable to the next economic downturn. In the May Revise, the Governor lowered his proposed level of total reserves to $8.5 billion, nearly $2 billion lower than in his January proposal. The LAO suggests the Legislature adopt a robust target for budget reserves for the end of , being a target for total reserves that is at least as large as the $8.5 billion amount in the Governor s revised budget proposal. Availability of State Budgets. The complete State Budget and Proposed State Budget are available from the California Department of Finance website at The District can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated in this Official Statement by such reference. The information referred to above should not be relied upon in making an investment decision with respect to the Refunding Certificates. Uncertainty Regarding Future State Budgets. The District cannot predict what actions will be taken in future years by the State Legislature and the Governor to address the State s current or future budget deficits. Future State budgets will be affected by national and state economic conditions and other factors over which the District has no control. The District cannot predict what impact any future budget proposals will have on the financial condition of the District. To the extent that the State budget process results in reduced revenues to the District, the District will be required to make adjustments to its budgets. The State has not entered into any contractual commitment with the District, the County, or the Owners of the Bonds to provide State budget information to the District or the owners of the Bonds. Although they believe the State sources of information listed above are reliable, neither the District nor the Underwriter assumes any responsibility for the accuracy of the State Budget information set forth or referred to in this Official Statement or incorporated herein. However, the Bonds are secured by ad valorem taxes levied and collected on taxable property in the District, without limit as to rate or amount, and are not secured by a pledge of revenues of the District or its general fund. A-25

60 Legal Challenges to State Funding of Education The application of Proposition 98 and other statutory regulations has been the subject of various legal challenges in the past. The District cannot predict if or when there will be changes to education funding or legal challenges which may arise relating thereto. [Remainder of page intentionally left blank] A-26

61 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Principal of and interest on the Refunding Bonds are payable from the proceeds of an ad valorem tax levied by the County for the payment thereof. Articles XIIIA, XIIIB, XIIIC, and XIIID of the State Constitution, Propositions 62, 98, 111 and 218, and certain other provisions of law discussed below, are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the District to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the District to levy taxes for payment of the Refunding Bonds. The tax levied by the County for payment of the Refunding Bonds was approved by the District's voters in compliance with Article XIIIA and all applicable laws. Constitutionally Required Funding of Education The State Constitution requires that from all State revenues, there shall be first set apart the moneys to be applied by the State for the support of the public school system and public institutions of higher education. School districts receive a significant portion of their funding from State appropriations. As a result, decreases and increases in State revenues can significantly affect appropriations made by the State Legislature to school districts. Article XIIIA of the California Constitution Basic Property Tax Levy. On June 6, 1978, California voters approved Proposition 13 ("Proposition 13"), which added Article XIIIA to the State Constitution ("Article XIIIA"). Article XIIIA limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on (i) indebtedness approved by the voters prior to July 1, 1978, (ii) (as a result of an amendment to Article XIIIA approved by State voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the voters on such indebtedness (which provided the authority for the issuance of the Refunded Bonds), and (iii) (as a result of an amendment to Article XIIIA approved by State voters on November 7, 2000) bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Article XIIIA defines full cash value to mean "the county assessor s valuation of real property as shown on the tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership have occurred after the 1975 assessment". This full cash value may be increased at a rate not to exceed 2% per year to account for inflation. Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in other minor or technical ways. Both the United States Supreme Court and the California State Supreme Court have upheld the general validity of Article XIIIA. A-27

62 Legislation Implementing Article XIIIA. Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the annual adjustment not to exceed 2% are allocated among the various jurisdictions in the taxing area based upon their respective situs. Any such allocation made to a local agency continues as part of its allocation in future years. Inflationary Adjustment of Assessed Valuation. As described above, the assessed value of a property may be increased at a rate not to exceed 2% per year to account for inflation. On December 27, 2001, the Orange County Superior Court, in County of Orange v. Orange County Assessment Appeals Board No. 3, held that where a home s taxable value did not increase for two years, due to a flat real estate market, the Orange County assessor violated the 2% inflation adjustment provision of Article XIIIA, when the assessor tried to "recapture" the tax value of the property by increasing its assessed value by 4% in a single year. The assessors in most California counties, including the County, use a similar methodology in raising the taxable values of property beyond 2% in a single year. The State Board of Equalization has approved this methodology for increasing assessed values. On appeal, the Appellate Court held that the trial court erred in ruling that assessments are always limited to no more than 2% of the previous year s assessment. On May 10, 2004 a petition for review was filed with the California Supreme Court. The petition has been denied by the California Supreme Court. As a result of this litigation, the recapture provision described above may continue to be employed in determining the full cash value of property for property tax purposes. Article XIIIB of the California Constitution Article XIIIB ( Article XIIIB ) of the State Constitution, as subsequently amended by Propositions 98 and 111, respectively, limits the annual appropriations of the State and of any city, county, school district, authority or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and in population and for transfers in the financial responsibility for providing services and for certain declared emergencies. For fiscal years beginning on or after July 1, 1990, the appropriations limit of each entity of government shall be the appropriations limit for the fiscal year adjusted for the changes made from that fiscal year under the provisions of Article XIIIB, as amended. The appropriations of an entity of local government subject to Article XIIIB limitations include the proceeds of taxes levied by or for that entity and the proceeds of certain state subventions to that entity. Proceeds of taxes include, but are not limited to, all tax revenues and the proceeds to the entity from (a) regulatory licenses, user charges and user fees (but only to the extent that these proceeds exceed the reasonable costs in providing the regulation, product or service), and (b) the investment of tax revenues. Appropriations subject to limitation do not include (a) refunds of taxes, (b) appropriations for debt service, (c) appropriations required to comply with certain mandates of the courts or the federal government, (d) appropriations of certain special districts, (e) appropriations for all A-28

63 qualified capital outlay projects as defined by the legislature, (f) appropriations derived from certain fuel and vehicle taxes and (g) appropriations derived from certain taxes on tobacco products. Article XIIIB includes a requirement that all revenues received by an entity of government other than the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years. However, in the event that a school district s revenues exceed its spending limit, the district may in any fiscal year increase its appropriations limit to equal its spending by borrowing appropriations limit from the State. Article XIIIB also includes a requirement that 50% of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be transferred and allocated to the State School Fund under Section 8.5 of Article XVI of the State Constitution. Unitary Property Some amount of property tax revenue of the District is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions ( unitary property ). Under the State Constitution, such property is assessed by the State Board of Equalization ( SBE ) as part of a going concern rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the District) according to statutory formulae generally based on the distribution of taxes in the prior year. Articles XIIIC and XIIID of the California Constitution On November 5, 1996, the voters of the State of California approved Proposition 218, popularly known as the Right to Vote on Taxes Act. Proposition 218 added to the California Constitution Articles XIIIC and XIIID (respectively, Article XIIIC and Article XIIID ), which contain a number of provisions affecting the ability of local agencies, including school districts, to levy and collect both existing and future taxes, assessments, fees and charges. According to the Title and Summary of Proposition 218 prepared by the California Attorney General, Proposition 218 limits the authority of local governments to impose taxes and property-related assessments, fees and charges. Among other things, Article XIIIC establishes that every tax is either a general tax (imposed for general governmental purposes) or a special tax (imposed for specific purposes), prohibits special purpose government agencies such as school districts from levying general taxes, and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote; and also provides that the initiative power will not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. Article XIIIC further provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles XIII and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4. A-29

64 On November 2, 2010, Proposition 26 was approved by State voters, which amended Article XIIIC to expand the definition of tax to include any levy, charge, or exaction of any kind imposed by a local government except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor s burdens on, or benefits received from, the governmental activity. Article XIIID deals with assessments and property-related fees and charges, and explicitly provides that nothing in Article XIIIC or XIIID will be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development. While the provisions of Proposition 218 may have an indirect effect on the District, such as by limiting or reducing the revenues otherwise available to other local governments whose boundaries encompass property located within the District (thereby causing such local governments to reduce service levels and possibly adversely affecting the value of property within the District), the District does not believe that Proposition 218 will directly impact the revenues available to pay debt service on the Bonds. Proposition 98 On November 8, 1988, California voters approved Proposition 98, a combined initiative constitutional amendment and statute called the Classroom Instructional Improvement and Accountability Act (the Accountability Act ). Certain provisions of the Accountability Act have, however, been modified by Proposition 111, discussed below, the provisions of which became effective on July 1, The Accountability Act changes State funding of public education below the university level and the operation of the State s appropriations limit. The Accountability Act guarantees State funding for K-12 school districts and community college districts (hereinafter referred to collectively as K-14 school districts ) at a level equal to the greater of (a) the same percentage of general fund revenues as the percentage appropriated to such districts in , and (b) the amount actually appropriated to such districts from the general fund in the previous fiscal year, adjusted for increases in enrollment and changes in the cost of living. The Accountability Act permits the Legislature to suspend this formula for a oneyear period. The Accountability Act also changes how tax revenues in excess of the State appropriations limit are distributed. Any excess State tax revenues up to a specified amount A-30

65 would, instead of being returned to taxpayers, be transferred to K-14 school districts. Any such transfer to K-14 school districts would be excluded from the appropriations limit for K-14 school districts and the K-14 school district appropriations limit for the next year would automatically be increased by the amount of such transfer. These additional moneys would enter the base funding calculation for K 14 school districts for subsequent years, creating further pressure on other portions of the State budget, particularly if revenues decline in a year following an Article XIIIB surplus. The maximum amount of excess tax revenues which could be transferred to K 14 school districts is 4% of the minimum State spending for education mandated by the Accountability Act. Proposition 111 On June 5, 1990, the voters approved Proposition 111 (Senate Constitutional Amendment No. 1) called the Traffic Congestion Relief and Spending Limit Act of 1990 ( Proposition 111 ) which further modified Article XIIIB and Sections 8 and 8.5 of Article XVI of the State Constitution with respect to appropriations limitations and school funding priority and allocation. The most significant provisions of Proposition 111 are summarized as follows: Annual Adjustments to Spending Limit. The annual adjustments to the Article XIIIB spending limit were liberalized to be more closely linked to the rate of economic growth. Instead of being tied to the Consumer Price Index, the change in the cost of living is now measured by the change in California per capita personal income. The definition of change in population specifies that a portion of the State s spending limit is to be adjusted to reflect changes in school attendance. Treatment of Excess Tax Revenues. Excess tax revenues with respect to Article XIIIB are now determined based on a two-year cycle, so that the State can avoid having to return to taxpayers excess tax revenues in one year if its appropriations in the next fiscal year are under its limit. In addition, the Proposition 98 provision regarding excess tax revenues was modified. After any two-year period, if there are excess State tax revenues, 50% of the excess are to be transferred to K-14 school districts with the balance returned to taxpayers; under prior law, 100% of excess State tax revenues went to K-14 school districts, but only up to a maximum of 4% of the schools minimum funding level. Also, reversing prior law, any excess State tax revenues transferred to K-14 school districts are not built into the school districts base expenditures for calculating their entitlement for State aid in the next year, and the State s appropriations limit is not to be increased by this amount. Exclusions from Spending Limit. Two exceptions were added to the calculation of appropriations which are subject to the Article XIIIB spending limit. First, there are excluded all appropriations for qualified capital outlay projects as defined by the Legislature. Second, there are excluded any increases in gasoline taxes above the 1990 level (then nine cents per gallon), sales and use taxes on such increment in gasoline taxes, and increases in receipts from vehicle weight fees above the levels in effect on January 1, These latter provisions were necessary to make effective the transportation funding package approved by the Legislature and the Governor, which expected to raise over $15 billion in additional taxes from 1990 through 2000 to fund transportation programs. A-31

66 Recalculation of Appropriations Limit. The Article XIIIB appropriations limit for each unit of government, including the State, is to be recalculated beginning in fiscal year It is based on the actual limit for fiscal year , adjusted forward to as if Proposition 111 had been in effect. School Funding Guarantee. There is a complex adjustment in the formula enacted in Proposition 98 which guarantees K-14 school districts a certain amount of State general fund revenues. Under prior law, K-14 school districts were guaranteed the greater of (1) 40.9% of State general fund revenues (the first test ) or (2) the amount appropriated in the prior year adjusted for changes in the cost of living (measured as in Article XIIIB by reference to per capita personal income) and enrollment (the second test ). Under Proposition 111, schools will receive the greater of (1) the first test, (2) the second test, or (3) a third test, which will replace the second test in any year when growth in per capita State general fund revenues from the prior year is less than the annual growth in California per capita personal income (the third test ). Under the third test, schools will receive the amount appropriated in the prior year adjusted for change in enrollment and per capita State general fund revenues, plus an additional small adjustment factor. If the third test is used in any year, the difference between the third test and the second test will become a credit to schools which will be paid in future years when State general fund revenue growth exceeds personal income growth. Proposition 39 On November 7, 2000, California voters approved an amendment (commonly known as Proposition 39 ) to the California Constitution. This amendment (1) allows school facilities bond measures to be approved by 55 percent (rather than two-thirds) of the voters in local elections and permits property taxes to exceed the current 1 percent limit in order to repay the bonds and (2) changes existing statutory law regarding charter school facilities. As adopted, the constitutional amendments may be changed only with another Statewide vote of the people. The statutory provisions could be changed by a majority vote of both houses of the Legislature and approval by the Governor, but only to further the purposes of the proposition. The local school jurisdictions affected by this proposition are K-12 school districts, community college districts, including the District, and county offices of education. As noted above, the California Constitution previously limited property taxes to 1 percent of the value of property. Prior to the approval of Proposition 39, property taxes could only exceed this limit to pay for (1) any local government debts approved by the voters prior to July 1, 1978 or (2) bonds to acquire or improve real property that receive two-thirds voter approval after July 1, The 55% vote requirement authorized by Proposition 39 applies only if the local bond measure presented to the voters includes: (1) a requirement that the bond funds can be used only for construction, rehabilitation, equipping of school facilities, or the acquisition or lease of real property for school facilities; (2) a specific list of school projects to be funded and certification that the school board has evaluated safety, class size reduction, and information technology needs in developing the list; and (3) a requirement that the school board conduct annual, independent financial and performance audits until all bond funds have been spent to ensure that the bond funds have been used only for the projects listed in the measure. Legislation approved in June 2000 places certain limitations on local school bonds to be approved by 55 percent of the voters. These provisions require that the tax rate levied as the result of any single election be no more than $60 (for a unified school district), $30 (for an elementary school district or high school district), or $25 (for a community college district), per $100,000 of taxable property value. These requirements are not part of this proposition and can A-32

67 be changed with a majority vote of both houses of the Legislature and approval by the Governor. Proposition 1A and Proposition 22 On November 2, 2004, California voters approved Proposition 1A, which amended the State constitution to significantly reduce the State's authority over major local government revenue sources. Under Proposition 1A, the State cannot (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from local governments to schools or community colleges, (iii) change how property tax revenues are shared among local governments without two-thirds approval of both houses of the State Legislature or (iv) decrease Vehicle License Fee revenues without providing local governments with equal replacement funding. Under Proposition 1A, beginning, in , the State may shift to schools and community colleges a limited amount of local government property tax revenue if certain conditions are met, including: (i) a proclamation by the Governor that the shift is needed due to a severe financial hardship of the State, and (ii) approval of the shift by the State Legislature with a two-thirds vote of both houses. Under such a shift, the State must repay local governments for their property tax losses, with interest, within three years. Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 1A also amended the State Constitution to require the State to suspend certain State laws creating mandates in any year that the State does not fully reimburse local governments for their costs to comply with the mandates. This provision does not apply to mandates relating to schools or community colleges or to those mandates relating to employee rights. Proposition 22, a constitutional initiative entitled the Local Taxpayer, Public Safety, and Transportation Protection Act of 2010, approved on November 2, 2010, superseded many of the provision of Proposition 1A. This initiative amends the State constitution to prohibit the legislature from diverting or shifting revenues that are dedicated to funding services provided by local government or funds dedicated to transportation improvement projects and services. Under this proposition, the State is not allowed to take revenue derived from locally imposed taxes, such as hotel taxes, parcel taxes, utility taxes and sales taxes, and local public transit and transportation funds. Further, in the event that a local governmental agency sues the State alleging a violation of these provisions and wins, then the State must automatically appropriate the funds needed to pay that local government. This Proposition was intended to, among other things, stabilize local government revenue sources by restricting the State s control over local property taxes. Proposition 22 did not prevent the California State Legislature from dissolving State redevelopment agencies pursuant to AB 1X26, as confirmed by the decision of the California Supreme Court decision in California Redevelopment Association v. Matosantos (2011). Because Proposition 22 reduces the State s authority to use or reallocate certain revenue sources, fees and taxes for State general fund purposes, the State will have to take other actions to balance its budget, such as reducing State spending or increasing State taxes, and school and college districts that receive Proposition 98 or other funding from the State will be more directly dependent upon the State s general fund. Proposition 30 Proposition 30 appeared on the November 6, 2012 statewide ballot as an initiated constitutional amendment ( Proposition 30 ), and it was approved by State voters. A-33

68 Proposition 30 increased the State sales tax from 7.25 percent to 7.50 percent, increased personal income tax rates on higher income brackets for seven years, and temporarily imposed an additional tax on all retailers, at the rate of 0.25% of gross receipts from the sale of all tangible personal property sold in the State from January 1, 2013 to December 31, Proposition 30 also imposed an additional excise tax on the storage, use, or other consumption in the State of tangible personal property purchased from a retailer on and after January 1, 2013 and before January 1, This excise tax is levied at a rate of 0.25% of the sales price of the property so purchased. For personal income taxes imposed beginning in the taxable year commencing January 1, 2012 and ending December 31, 2018, Proposition 30 increased the marginal personal income tax rate by: (i) 1% for taxable income over $250,000 but less than $300,000 for single filers (over $340,000 but less than $408,000 for heads of household and over $500,000 but less than $600,000 for joint filers), (ii) 2% for taxable income over $300,000 but less than $500,000 for single filers (over $408,000 but less than $680,000 for heads of household and over $600,000 but less than $1,000,000 for joint filers), and (iii) 3% for taxable income over $500,000 for single filers (over $680,000 for heads of household and over $1,000,000 for joint filers). The revenues generated from the temporary tax increases are included in the calculation of the Proposition 98 minimum funding guarantee for school districts and community college districts. See Proposition 98 and Proposition 111 above. From an accounting perspective, the revenues generated from the temporary tax increases will be deposited into the State account created pursuant to Proposition 30 called the Education Protection Account (the EPA ). Pursuant to Proposition 30, funds in the EPA will be allocated quarterly, with 89% of such funds provided to schools districts and 11% provided to community college districts. The funds will be distributed to school districts and community college districts in the same manner as existing unrestricted per-student funding, except that no school district will receive less than $200 per unit of ADA and no community college district will receive less than $100 per full time equivalent student. The governing board of each school district and community college district is granted sole authority to determine how the moneys received from the EPA are spent, provided that, the appropriate governing board is required to make these spending determinations in open session at a public meeting and such local governing boards are prohibited from using any funds from the EPA for salaries or benefits of administrators or any other administrative costs. California Senate Bill 222 Senate Bill 222 ( SB 222 ) was signed by the California Governor on July 13, 2015 and became effective on January 1, SB 222 amended Section of the California Education Code and added Section to the California Government Code to provide that voter approved general obligation bonds which are secured by ad valorem tax collections are secured by a statutory lien on all revenues received pursuant to the levy and collection of the property tax imposed to service those bonds. Said lien shall attach automatically and is valid and binding from the time the bonds are executed and delivered. The lien is enforceable against the issuer, its successors, transferees, and creditors, and all others asserting rights therein, irrespective of whether those parties have notice of the lien and without the need for any further act. The effect of SB 222 is the treatment of general obligation bonds as secured debt in bankruptcy due to the existence of a statutory lien. A-34

69 Future Initiatives and Other Statutes Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID of the California Constitution and Propositions 98, 22, 26, 30 and 39 were each adopted as measures that qualified for the ballot under the State s initiative process. From time to time other initiative measures and legislation could be adopted further affecting District revenues or the District s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the District. [Remainder of page intentionally left blank] A-35

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71 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2015 B-1

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73 ANNUAL FINANCIAL REPORT JUNE 30, 2015

74 OXNARD UNION HIGH SCHOOL DISTRICT TABLE OF CONTENTS JUNE 30, 2015 FINANCIAL SECTION Independent Auditor's Report 2 Management's Discussion and Analysis 5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements Governmental Funds - Balance Sheet 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 18 Governmental Funds - Statement of Revenues, Expenditures, and Changes in Fund Balances 19 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 20 Fiduciary Funds - Statement of Net Position 22 Fiduciary Funds - Statement of Changes in Net Position 23 Notes to Financial Statements 24 REQUIRED SUPPLEMENTARY INFORMATION General Fund - Budgetary Comparison Schedule 66 Schedule of Other Postemployment Benefits (OPEB) Funding Progress 67 Schedule of the District's Proportionate Share of the Net Pension Liability 68 Schedule of the District Contributions 69 SUPPLEMENTARY INFORMATION Schedule of Expenditures of Federal Awards 71 Local Education Agency Organization Structure 73 Schedule of Average Daily Attendance 74 Schedule of Instructional Time 75 Reconciliation of Annual Financial and Budget Report With Audited Financial Statements 76 Schedule of Financial Trends and Analysis 77 Schedule of Charter Schools 78 Combining Statements - Non-Major Governmental Funds Combining Balance Sheet 79 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 80 Statements of Revenues, Expenditures, and Changes in Fund Balances by Object Governmental Funds 81 Non-Major Governmental Funds 82 Special Reserve Fund for Capital Outlay Projects - Sub-Fund Detail 83 Note to Supplementary Information 84 INDEPENDENT AUDITOR'S REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 87 Report on Compliance for Each Major Program and Report on Internal Control Over Compliance Required by the OMB Circular A Report on State Compliance 91

75 OXNARD UNION HIGH SCHOOL DISTRICT TABLE OF CONTENTS JUNE 30, 2015 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Summary of Auditor's Results 95 Financial Statement Findings 96 Federal Awards Findings and Questioned Costs 98 State Awards Findings and Questioned Costs 99 Summary Schedule of Prior Audit Findings 100 Management Letter 102

76 FINANCIAL SECTION 1

77 INDEPENDENT AUDITOR'S REPORT Governing Board Oxnard Union High School District Oxnard, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Oxnard Union High School District (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, issued by the California Education Audit Appeals Panel as regulations. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 2

78 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Oxnard Union High School District, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter - Change in Accounting Principles As discussed in Notes 1 and 16 to the financial statements, in 2015, the District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information, such as management's discussion and analysis on pages 5 through 14, and budgetary comparison and other postemployment benefit information, District's proportionate share of the net pension liability, and the District contributions on pages 66 and 69, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Oxnard Union High School District's basic financial statements. The accompanying supplementary information such as the combining and individual nonmajor fund financial statements and Schedule of Expenditures of Federal Awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the other supplementary information as listed on the table of contents, such as the introductory and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 3

79 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 7, 2015, on our consideration of the Oxnard Union High School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Oxnard Union High School District's internal control over financial reporting and compliance. Rancho Cucamonga, California December 7,

80 Board of Trustees 309 South K Street Oxnard, California (805) FAX (805) STEVE HALL, Ed.D. President BEATRIZ R. HERRERA Vice President WAYNE EDMONDS Clerk GARY DAVIS, Ed.D. Member KAREN M. SHER Member Administration ROBERT FRAISSE, Ph.D. Interim Superintendent THOMAS McCOY, Ed.D. Assistant Superintendent Educational Services ROBERT "ROCKY" VALLES, Ed.D. Assistant Superintendent Human Resources STEPHEN DICKINSON Assistant Superintendent Administrative Services Visit our Website at This section of Oxnard Union High School District's (the District) annual financial report presents our discussion and analysis of the District's financial performance during the fiscal year that ended on June 30, 2015, with comparative information from Please read it in conjunction with the District's financial statements, which immediately follow this section. OVERVIEW OF THE FINANCIAL STATEMENTS The Financial Statements The financial statements presented herein, include all of the activities of the Oxnard Union High School District and its component units using the integrated approach as prescribed by Government Accounting Standards Board (GASB) Statement No. 34. The Government-Wide Financial Statements present the financial picture of the District from the economic resources measurement focus using the accrual basis of accounting. These statements include all assets of the District, as well as all liabilities. Additionally, certain eliminations have occurred as prescribed by the statement in regards to interfund activity, payables, and receivables. The Fund Financial Statements include statements for each of two categories of activities: governmental and fiduciary. The Governmental Activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The Fiduciary Activities are prepared using the economic resources measurement focus and the accrual basis of accounting The Primary unit of the government is the Oxnard Union High School District. Students First: Every day, Every school, Every classroom Adolfo Camarillo Adult School Channel Islands Condor Frontier Hueneme Oxnard Pacifica Rancho Campana Rio Mesa 5

81 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 FINANCIAL HIGHLIGHTS OF THE PAST YEAR Total General Fund Revenue increased by percent from the previous fiscal year. The following table shows major revenue sources for fiscal year compared with fiscal year General Fund Revenue Comparison - Amount Change Local Control Funding Formula (Includes Property Taxes) $ 128,028,428 $ 112,114,040 $ 15,914,388 Federal Revenues 8,167,204 8,262,374 (95,170) Other State Revenues 11,947,146 11,933,485 13,661 Other Local Revenues 10,551,366 9,072,090 1,479,276 $ 158,694,144 $ 141,381,989 $ 17,312,155 Total General Fund Expenditures increased percent from the previous fiscal year. The following table shows expenditures for fiscal year compared with fiscal year General Fund Expenditure Comparison - Unrestricted and Restricted Change Percent Percent Percent Amount of Total Amount of Total Amount Change Certificated salaries $ 69,755, % $ 64,315, % $ 5,439, % Classified salaries 21,315, % 19,250, % 2,064, % Employee benefits 40,677, % 37,249, % 3,427, % Books and supplies 8,809, % 5,755, % 3,053, % Services and other 13,408, % 11,775, % 1,633, % Other outgo 748, % 1,337, % (588,149) % Capital outlay and debt service 3,283, % 2,405, % 877, % $ 157,998, % $ 142,089, % $ 15,909, % REPORTING THE DISTRICT AS A WHOLE The Statement of Net Position and the Statement of Activities The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities. These statements include all assets and liabilities of the District using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. 6

82 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 These two statements report the District's net position and changes in them. Net position is the difference between assets and deferred outflows of resources, and liabilities and deferred inflows resources, which is one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net position will serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The relationship between revenues and expenses is the District's operating results. Since the Board's responsibility is to provide services to our students and not to generate profit as commercial entities do, one must consider other factors when evaluating the overall health of the District. The quality of the education and the safety of our schools will likely be an important component in this evaluation. In the Statement of Net Position and the Statement of Activities, we present the District activities as follows: Governmental Activities - Most of the District's services are reported in this category. This includes the education of nine through grade twelve students, adult education students, the operation of child development activities, and the on-going effort to improve and maintain buildings and sites. Property taxes, State income taxes, user fees, interest income, Federal, State, and local grants, as well as general obligation bonds, finance these activities. REPORTING THE DISTRICT'S MOST SIGNIFICANT FUNDS Fund Financial Statements The fund financial statements provide detailed information about the most significant funds - not the District as a whole. Some funds are required to be established by State law and by bond covenants. However, management establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money that it receives from the U.S. Department of Education. Governmental Funds - Most of the District's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's programs. The differences of results in the governmental fund financial statements to those in the government-wide financial statements are explained in a reconciliation following each governmental fund financial statement. 7

83 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 THE DISTRICT AS TRUSTEE Reporting the District's Fiduciary Responsibilities The District is the trustee, or fiduciary, for funds held on behalf of others, like our funds for associated student body activities. The District's fiduciary activities are reported in the Statement of Fiduciary Net Position. We exclude these activities from the District's government-wide 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. THE DISTRICT AS A WHOLE Net Position The District's net position was ($53,553,896) for the fiscal year ended June 30, Of this amount, the District reported a deficit in their unrestricted net position of ($176,079,470). Restricted net position is reported separately to show legal constraints from debt covenants and enabling legislation that limit the School Board's ability to use net position for day-to-day operations. Our analysis below focuses on the net position (Table 1) and change in net position (Table 2) of the District's governmental activities. Table 1 Governmental Activities As Restated Assets Current and other assets $ 70,380,952 $ 110,625,449 Capital assets 236,681, ,617,691 Total Assets 307,061, ,243,140 Deferred Outflows of Resources 8,413,624 - Liabilities Current liabilities 19,151,429 16,519,745 Long-term obligations 231,348, ,483,877 Aggregate net pension liability 93,465, ,386,704 Total Liabilities 343,964, ,390,326 Deferred Inflows of Resources 25,064,765 - Net Position Net investment in capital assets 106,178, ,850,759 Restricted 16,346,815 20,352,257 Unrestricted (176,079,470) (166,350,202) Total Net Position $ (53,553,896) $ (43,147,186) 8

84 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 Changes in Net Position The results of this year's operations for the District as a whole are reported in the Statement of Activities on page 16. Table 2 takes the information from the Statement of Activities so you can see our total revenues for the year. Table 2 Governmental Activities Revenues Program revenues: Charges for services $ 1,099,794 $ 1,123,295 Operating grants and contributions 27,652,274 28,759,399 Capital grants and contributions General revenues: Federal and State aid not restricted 90,353,404 73,105,638 Property taxes 50,582,499 54,458,539 Other general revenues 7,794,136 2,947,250 Total Revenues 177,482, ,394,173 Expenses Instruction-related 132,522, ,052,955 Student support services 20,347,744 18,870,618 Administration 9,895,444 8,927,658 Maintenance and operations 13,496,429 12,681,283 Other 11,627,175 10,592,843 Total Expenses 187,888, ,125,357 Change in Net Position $ (10,406,710) $ (5,731,184) Governmental Activities Most of the District's services are reported in this category. This includes the education of grade nine through twelve students, adult education students, the operation of child development activities, and the on-going effort to improve and maintain buildings and sites. Property taxes, State income taxes, user fees, interest income, Federal, State, and local grants, as well as general obligation bonds, finance these activities. 9

85 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 In Table 3, we have presented the net cost of each of the District's largest functions - instruction-related, student support services, administration, maintenance and operations, and other (student cafeterias, libraries, staff development, community services, student clubs and athletics). Table 3 Net Cost of Services Instruction-related $ 112,674,909 $ 95,022,225 Student support services 13,638,652 12,404,201 Administration 8,823,728 6,811,472 Maintenance and operations 13,422,773 12,445,820 Other 10,576,687 9,558,893 Total $ 159,136,749 $ 136,242,611 THE DISTRICT'S FUNDS As the District completed this year, our governmental funds reported a combined fund balance of $60,561,526, which is a decrease of $36,805,584 from last year. This decrease is due mainly to significant increase in expenditures in the current year related to capital asset construction due to the prior year issuance of a general obligation bond. General Fund Budgetary Highlights The District is required to adopt its budget by June 30, each year. This was prior to adoption of the State budget. Over the course of the year, the District revises its budget as it attempts to deal with unexpected changes in revenues and expenditures. These revisions occur at the First Interim and Second Interim reporting periods. The final amendment to the budget was included with the Unaudited Actuals and was adopted on September 9, (A schedule showing the District's original and final budget amounts compared with amounts actually paid and received is provided in our annual report on page 66.) 10

86 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At June 30, 2015, the District had $236,681,017 in a broad range of capital assets (net of accumulative depreciation), including land, buildings, and furniture and equipment. This amount represents a net increase (including additions, deductions, and depreciation) of $28,063,326, or percent, from last year. Table 4 Governmental Activities Land $ 27,716,042 $ 27,716,042 Construction in process 51,689,439 16,304,183 Buildings and improvements 154,038, ,102,005 Furniture and equipment 3,237,448 3,495,461 Total $ 236,681,017 $ 208,617,691 Continued effort on the Career Technical Education facilities projects, swimming pools, solar projects and progress on the expansion school in Camarillo account for the majority of the $35,385,256 increase in Construction in Progress shown on Table 4. Depreciation accounts for the majority of change in Buildings and Improvements on the same schedule. Long-Term Obligations At the end of this year, the District had $237,561,808 in outstanding debt versus $235,483,877 last year, an increase of $2,077,931. Long-term obligations consisted of: Table 5 Governmental Activities As Restated General obligation bonds $ 135,706,701 $ 139,542,186 Premium on issuance 5,097,675 5,341,631 Certificates of participation 2,160,000 2,535,000 Municipal leases 4,080,000 4,285,000 Municipal lease discount (17,080) (18,300) Qualified energy conservation bonds 14,941,335 16,258,333 Compensated absences 1,171,991 1,170,348 Net OPEB obligation 74,421,186 66,369,679 Total $ 237,561,808 $ 235,483,877 11

87 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 The District's outstanding general obligation debt of $135,706,701 is below the assessed value cap for voter approved debt. Other obligations include certificates of participation, municipal leases, qualified energy conservation bonds, compensated absences, and postemployment benefits. We present more detailed information regarding our longterm obligations in Note 9 of the financial statements. Net Pension Liability At year-end, the District had a pension liability of $93,465,268. SIGNIFICANT ACCOMPLISHMENTS OF FISCAL YEAR ARE NOTED BELOW: Exceeded three percent State recommended reserve for economic uncertainties. Pay increase of 2.5 percent and a 0.5 percent one-time bonus. Received a $6 million California Career Pathways Trust grant. Increased Average Daily Attendance (ADA) by 1 percent. Reduced TRAN borrowing from $9.1 million to $6.8 million. ASSUMPTIONS USED AT ADOPTION OF BUDGET: Revenue Local Control Funding Formula (LCFF) was the source of revenue at budget adoption. LCFF Base Grant $8,491 per ADA. LCFF funded with.85 percent Cost of Living Adjustment (COLA). Anticipated unrestricted lottery revenue at $ per annual ADA and restricted lottery (Prop 20) revenue at $30.00 per ADA. Special Education received.85 percent COLA. Mandated Block Grant at $56 per ADA. Elimination of apportionment deferrals. 12

88 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 Expenditures Increase staff costs for three additional student days. Increase staff costs for two additional professional development days. Teacher Student ratio staffed at 28:1 No reduction/addition in benefit levels. Maintain retiree benefits as they now exist. CalSTRS expense budgeted at 9.5 percent. CalPERS expense budgeted at percent. Increase in Health and Welfare costs by 5 percent. School site allocation $160 per CBEDS. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES In considering the District Budget for the year, the District Board of Education and management used the following criteria: The key assumptions in our revenue forecast are: 1. LCFF projections include a 1.02 percent Cost of Living Adjustment, LCFF Gap Closed Percentage of percent and a one percent enrollment growth. 2. Federal revenues were projected for flat funding. 3. State revenues maintained at prior year funding levels. 4. Mandate Cost per ADA/One-Time Allocation at $601 per ADA Expenditures are based on the following forecasts: Staffing Ratio Grades nine through twelve 28:1 The major changes to expenditure items specifically addressed in the budget are: 1. Employee step and column increases. 2. Increase in CalSTRS employer contribution from 9.5 percent to percent. 3. Increase in health and welfare premium cost by 7 percent. 4. Required 3 percent contribution for Routine Restricted Maintenance Account. 13

89 OXNARD UNION HIGH SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need any additional financial information contact the Assistant Superintendent of Administrative Services at Oxnard Union High School District, 309 South K Street, Oxnard, California, or at steve.dickinson@ouhsd.k12.ca.us. 14

90 OXNARD UNION HIGH SCHOOL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2015 Governmental Activities ASSETS Deposits and investments $ 62,250,199 Receivables 1,505,689 Due from other governmental units 6,370,877 Stores inventories 254,187 Capital Assets Land and construction in progress 79,405,481 Other capital assets 296,508,531 Less: Accumulated depreciation (139,232,995) Capital assets, net of accumulated depreciation 236,681,017 Total Assets 307,061,969 DEFERRED OUTFLOWS OF RESOURCES Current year pension contribution 8,413,624 LIABILITIES Accounts payable 8,239,201 Interest payable 3,118,222 Due to other governments 742,961 Unearned revenue 837,264 Long-Term Obligations Current portion of long-term obligations other than pensions 6,233,781 Noncurrent portion of long-term obligations other than pensions 231,328,027 Total Long-Term Obligations 237,561,808 Aggregate net pension liability 93,465,268 Total Liabilities 343,964,724 DEFERRED INFLOWS OF RESOURCES Difference between projected and actual earnings on pension plan investments 25,064,765 NET POSITION Net investment in capital assets 106,178,759 Restricted for: Debt service 8,388,533 Capital projects 7,350,902 Educational programs 573,633 Other activities 33,747 Unrestricted (176,079,470) Total Net Position $ (53,553,896) The accompanying notes are an integral part of these financial statements. 15

91 OXNARD UNION HIGH SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 Net (Expenses) Revenues and Changes in Program Revenues Net Position Charges for Operating Capital Services and Grants and Grants and Governmental Functions/Programs Expenses Sales Contributions Contributions Activities Governmental Activities Instruction $ 110,540,190 $ 175,873 $ 16,322,244 $ 41 $ (94,042,032) Instruction-related activities: Supervision of instruction 4,423,221 8,814 2,894,931 - (1,519,476) Instructional library, media and technology 1,800,678-37,219 - (1,763,459) School site administration 15,757,977 3, ,851 - (15,349,942) Pupil services: Home-to-school transportation 1,792,813-16,240 - (1,776,573) Food services 6,207, ,789 4,109,786 - (1,541,203) All other pupil services 12,347,153 12,721 2,013,556 - (10,320,876) Administration: Data processing 3,535,100 6,331 19,942 - (3,508,827) All other administration 6,360,344 29,604 1,015,839 - (5,314,901) Plant services 13,496,429-73,656 - (13,422,773) Ancillary services 2,816,325-59,394 - (2,756,931) Community services 99, (99,561) Interest on long-term obligations 6,960, (6,960,222) Other outgo 1,751, , ,616 - (759,973) Total Governmental Activities $ 187,888,858 $ 1,099,794 $ 27,652,274 $ 41 (159,136,749) General revenues and subventions Property taxes, levied for general purposes 42,304,182 Property taxes, levied for debt service 7,067,363 Taxes levied for other specific purposes 1,210,954 Federal and State aid not restricted to specific purposes 90,353,404 Interest and investment earnings 90,735 Interagency revenues 193,353 Miscellaneous 7,510,048 Subtotal, General Revenues 148,730,039 Changes in Net Position (10,406,710) Net Position - Beginning 67,239,518 Restatement (110,386,704) Net Position - Beginning (As Restated) (43,147,186) Net Position - Ending $ (53,553,896) The accompanying notes are an integral part of these financial statements. 16

92 OXNARD UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET FOR THE YEAR ENDED JUNE 30, 2015 General Cafeteria Building Fund Fund Fund ASSETS Deposits and investments $ 8,584,800 $ 543,685 $ 26,417,280 Receivables 1,432,078 19,711 31,155 Due from other funds 1,111,044 15,455 - Due from other governments 5,752, ,925 - Stores inventories 221,640 32,547 - Total Assets $ 17,102,514 $ 1,229,323 $ 26,448,435 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 4,585,100 $ 84,949 $ 3,566,111 Due to other funds 15,455 1,110,627 - Due to other governments 742, Unearned revenue 837, Total Liabilities 6,180,780 1,195,576 3,566,111 Fund Balances: Nonspendable 231,640 32,547 - Restricted 573,633 1,200 22,882,324 Assigned 1,467, Unassigned 8,649, Total Fund Balances 10,921,734 33,747 22,882,324 Total Liabilities and Fund Balances $ 17,102,514 $ 1,229,323 $ 26,448,435 The accompanying notes are an integral part of these financial statements. 17

93 Capital Bond Interest Non-Major Total Facilities and Redemption Governmental Governmental Fund Fund Funds Funds $ 10,876,109 $ 11,003,292 $ 4,825,033 $ 62,250,199 9,571 9,538 3,636 1,505, ,126, ,370, ,187 $ 10,885,680 $ 11,012,830 $ 4,828,669 $ 71,507,451 $ 3,041 $ - $ - $ 8,239, ,126, , ,264 3, ,945, ,187 10,882,232 11,012, ,925 45,846, ,334,734 5,801, ,649,392 10,882,232 11,012,830 4,828,659 60,561,526 $ 10,885,680 $ 11,012,830 $ 4,828,669 $ 71,507,451 17

94 OXNARD UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Total Fund Balance - Governmental Funds $ 60,561,526 Amounts Reported for Governmental Activities in the Statement of Net Position are Different Because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of capital assets is: $ 375,914,012 Accumulated depreciation is: (139,232,995) Net Capital Assets 236,681,017 Expenditures relating to contributions made to pension plans were recognized on the modified accrual basis, but are not recognized on the accrual basis. 8,413,624 In governmental funds, unmatured interest on long-term obligations is recognized in the period when it is due. On the government-wide financial statements, unmatured interest on long-term obligations is recognized when it is incurred. (3,118,222) The difference between projected and actual earnings on pension plan investments are not recognized on the modified accrual basis, but are recognized on the accrual basis as an adjustment to pension expense. (25,064,765) Net pension liability is not due and payable in the current period, and is not reported as a liability in the funds. (93,465,268) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term obligations at year-end consist of: Bonds payable 135,007,016 Premium on issuance 5,097,675 Certificates of participation 2,160,000 Municipal lease 4,080,000 Discount on municipal lease (17,080) Qualified energy construction bonds 14,941,335 Compensated absences (vacations) 1,171,991 Net OPEB obligation 74,421,186 In addition, the District previously issued "capital appreciation" general obligation bonds. The cumulative capital accretion on the general obligation bonds is: 699,685 Total Long-Term Obligations (237,561,808) Total Net Position - Governmental Activities $ (53,553,896) The accompanying notes are an integral part of these financial statements. 18

95 OXNARD UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 General Cafeteria Building Fund Fund Fund REVENUES Local Control Funding Formula $ 128,028,428 $ - $ - Federal sources 8,167,204 4,124, ,304 Other State sources 11,947, ,933 - Other local sources 10,551, , ,750 Total Revenues 158,694,144 5,051, ,054 EXPENDITURES Current Instruction 98,088, Instruction related activities: Supervision of instruction 4,148, Instructional library, media, and technology 1,579, School site administration 11,897, Pupil services: Home-to-school transportation 1,440, Food services 19,549 5,591,203 - All other pupil services 11,495, Administration: Data processing 3,501, All other administration 5,660, ,767 - Plant services 13,763, Facility acquisition and construction 96,201-35,241,922 Ancillary services 2,750, Community services 100, Other outgo 1,751, Debt service Principal 1,316, Interest and other 387, Total Expenditures 157,998,413 5,763,970 35,241,922 Excess (Deficiency) of Revenues Over (Under) Expenditures 695,731 (712,765) (34,851,868) OTHER FINANCING SOURCES (USES) Transfers in - 695,107 - Transfers out (839,187) - - Net Financing Sources (Uses) (839,187) 695,107 - NET CHANGE IN FUND BALANCES (143,456) (17,658) (34,851,868) Fund Balances - Beginning 11,065,190 51,405 57,734,192 Fund Balances - Ending $ 10,921,734 $ 33,747 $ 22,882,324 The accompanying notes are an integral part of these financial statements. 19

96 Capital Bond Interest Non-Major Total Facilities and Redemption Governmental Governmental Fund Fund Funds Funds $ - $ - $ - $ 128,028, ,534,416-52,385-12,351,464 2,449,566 7,049,432 20,070 20,792,548 2,449,566 7,101,817 20, ,706, ,088, ,148, ,579, ,897, ,440, ,610, ,495, ,501,116 36, ,869, ,763,352 84,063-13,947 35,436, ,750, , ,751, ,000 3,900, ,000 5,796, ,415 6,603, ,999 7,281, ,702 10,503, , ,512,440 1,938,864 (3,401,670) (473,876) (36,805,584) 144, ,499 1,311,686 (472,499) - - (1,311,686) (328,419) - 472,499-1,610,445 (3,401,670) (1,377) (36,805,584) 9,271,787 14,414,500 4,830,036 97,367,110 $ 10,882,232 $ 11,012,830 $ 4,828,659 $ 60,561,526 19

97 OXNARD UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 Total Net Change in Fund Balances - Governmental Funds $ (36,805,584) Amounts Reported for Governmental Activities in the Statement of Activities are Different Because: Capital outlay to purchase or build capital assets are reported in governmental funds as expenditures, however, for governmental activities, those costs are shown in the Statement of Net Position and allocated over their estimated useful lives as annual depreciation expenses in the Statement of Activities. This is the amount by which capital outlay exceeds depreciation in the period. Capital outlay $ 36,134,155 Depreciation expense (8,044,149) Net Expense Adjustment 28,090,006 Loss on disposal of capital assets is reported in the government-wide Statement of Net Position, but is not recorded in the governmental funds. (26,680) In the Statement of Activities, certain operating expenses - compensated absences (vacations) and special termination benefits (early retirement) are measured by the amounts earned during the year. However, expenditures for these items in the governmental funds are measured by the amount of financial resources used (essentially, the amounts actually paid). This year, vacation earned was more than the amounts used by $1,643. (1,643) In the governmental funds, pension costs are based on employer contributions made to pension plans during the year. However, in the Statement of Activities, pension expense is the net effect of all changes in the deferred outflows, deferred inflows and net pension liability during the year. 270,295 Repayment of bond principal is an expenditure in the governmental funds, but it reduces long-term obligations in the Statement of Net Position and does not affect the Statement of Activities: General obligation bonds 3,900,000 Certificates of participation 375,000 Municipal leases 205,000 Qualified energy conservation bonds 1,316,998 The accompanying notes are an integral part of these financial statements. 20

98 OXNARD UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES (Continued) FOR THE YEAR ENDED JUNE 30, 2015 Governmental funds report the effect of premiums, discounts, and issuance costs when the debt is first issued, whereas the amounts are deferred and amortized over the life of the debt in the Statement of Activities. This amount is the net effect of the amortization of the related items: Premium on issuance for general obligation bonds $ 243,956 Discount on issuance for municipal leases (1,220) Combined Adjustment $ 242,736 In the Statement of Activities Other Postemployment Benefit Obligations (OPEB) are measured by an actuarially determined Annual Required Contribution (ARC). In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). This year, amounts contributed toward the OPEB obligation were less than the ARC by $8,051,507. (8,051,507) Interest on long-term obligations in the Statement of Activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. The additional interest reported in the Statement of Activities is the result of two factors. First, accrued interest on the general obligation bonds, certificates of participation, qualified energy bonds, and municipal lease bonds decreased by $143,184, and second, $64,515 of additional accumulated interest was accreted on the District's "capital appreciation" general obligation bonds. 78,669 Change in Net Position of Governmental Activities $ (10,406,710) The accompanying notes are an integral part of these financial statements. 21

99 OXNARD UNION HIGH SCHOOL DISTRICT FIDUCIARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2015 Associated Foundation Total Student Special Fiduciary Bodies Reserve Funds ASSETS Deposits and investments $ 1,345,284 $ 60,042 $ 1,405,326 Receivables Total Assets $ 1,345,284 $ 60,099 $ 1,405,383 LIABILITIES Due to student groups $ 1,345,284 $ - $ 1,345,284 NET POSITION Held in trust for scholarships 60,099 60,099 Total Net Position $ 60,099 $ 60,099 The accompanying notes are an integral part of these financial statements. 22

100 OXNARD UNION HIGH SCHOOL DISTRICT FIDUCIARY FUNDS STATEMENT OF CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2015 Foundation Special ADDITIONS Reserve Private donations $ 500 Interest 194 Total Additions 694 DEDUCTIONS Other expenditures 1,900 Change in Net Position (1,206) Net Position - Beginning 61,305 Net Position - Ending $ 60,099 The accompanying notes are an integral part of these financial statements. 23

101 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity The Oxnard Union High School District (the District) was organized under the laws of the State of California. The District operates under a locally elected five-member Board form of government and provides educational services to grades 9-12 as mandated by the State and/or Federal agencies. The District operates six high schools, two alternative education sites, and an adult education program. A reporting entity is comprised of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the District consists of all funds, departments, boards, and agencies that are not legally separate from the District. For Oxnard Union High School District, this includes general operations, food service, and student related activities of the District. Component Units Component units are legally separate organizations for which the District is financially accountable. Component units may include organizations that are fiscally dependent on the District in that the District approves their budget, the issuance of their debt or the levying of their taxes. In addition, component units are other legally separate organizations for which the District is not financially accountable but the nature and significance of the organization's relationship with the District is such that exclusion would cause the District's financial statements to be misleading or incomplete. The Oxnard Union High School District, the Ventura County Schools Public Facilities Financing Corporation, and the Golden West Schools Financing Authority (the Corporations) have a financial and operational relationship which meets the reporting entity definition criteria of the Government Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, for inclusion of the District's portion of the Corporations as component units of the District. Accordingly, the District's financial activities of the Corporations have been included in the Capital Facilities Fund, the Special Reserve Fund for Capital Outlay Projects, and the COP Debt Service Fund, in the financial statements of the District. Other Related Entities Charter School The District has an approved charter for Camarillo Academy of Progressive Education (CAPE) and Architecture, Construction and Engineering Charter High (ACE) pursuant to Education Code Section The charters are not considered a component unit of the District. Basis of Presentation - Fund Accounting The accounting system is organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The District's funds are grouped into two broad fund categories: governmental and fiduciary. 24

102 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following are the District's major and non-major governmental funds: Major Governmental Funds General Fund The General Fund is the chief operating fund for all districts. It is used to account for the ordinary operations of the District. All transactions except those accounted for in another fund are accounted for in this fund. Cafeteria Fund The Cafeteria Fund is used to account separately for Federal, State, and local resources to operate the food service program (Education Code Sections ) and is used only for those expenditures authorized by the governing board as necessary for the operation of the District's food service program (Education Code Sections and 38100). Building Fund The Building Fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146) and may not be used for any purposes other than those for which the bonds were issued. Capital Facilities Fund The Capital Facilities Fund is used primarily to account separately for monies received from fees levied on developers or other agencies as a condition of approving a development (Education Code Sections ). Expenditures are restricted to the purposes specified in Government Code Sections or to the items specified in agreements with the developer (Government Code Section 66006). Bond Interest and Redemption Fund The Bond Interest and Redemption Fund is used for the repayment of bonds issued for a district (Education Code Sections ). Non-Major Governmental Funds Capital Project Funds The Capital Project funds are used to account for financial resources that are restricted, committed, or assigned to the acquisition or construction of major capital facilities and other capital assets (other than those financed by proprietary funds and trust funds). County School Facilities Fund The County School Facilities Fund is established pursuant to Education Code Section to receive apportionments from the 1998 State School Facilities Fund (Proposition la), the 2002 State School Facilities Fund (Proposition 47), the 2004 State School Facilities Fund (Proposition 55), or the 2006 State Schools Facilities Fund (Proposition 1D) authorized by the State Allocation Board for new school facility construction, modernization projects, and facility hardship grants, as provided in the Leroy F. Greene School Facilities Act of 1998 (Education Code Section et seq.). Special Reserve Fund for Capital Outlay Projects The Special Reserve fund for Capital Outlay Projects exists primarily to provide for the accumulation of monies for capital outlay purposes (Education Code Section 42840). 25

103 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Debt Service Funds The Debt Service funds are used to account for the accumulation of restricted, committed, or assigned resources for and the payment of principal and interest on general long-term obligations. COP Debt Service Fund The COP Debt Service Fund is used to account for the interest and redemption of principal of Certificates of Participation. Fiduciary Funds Fiduciary funds reporting focuses on net position and changes in net position. Trust funds are used to account for the assets held by the District under a trust agreement for individuals, private organizations, or other governments and are therefore not available to support the District's own programs. The District's trust funds account for accumulation of resources for the payment of scholarships within the Foundation Special Reserve activities. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Such funds have no equity accounts since all assets are due to individuals or entities at some future time. The District's agency funds account for the accumulation of resources received from gifts or bequests pursuant to Education Code Section under which both earnings and principal may be used for purposes that support the District's own programs and where there is a formal trust agreement with the donor as well as the student body activities (ASB). Basis of Accounting - Measurement Focus Government-Wide Financial Statements The government-wide financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting. The government-wide financial Statement of Activities presents a comparison between direct expenses and program revenues for each governmental program. Direct expenses are those that are specifically associated with a service, program, or department and are therefore clearly identifiable to a particular function. Indirect expenses for centralized services and administrative overhead are allocated among the programs, functions, and segments using a full cost allocation approach. Program revenues include charges paid by the recipients of the goods or services offered by the programs and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. The comparison of program revenues and expenses identifies the extent to which each program or business segment is self-financing or draws from the general revenues of the District. Net position should be reported as restricted when constraints placed on net position are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The net position restricted for other activities result from special revenue funds and the restrictions on their net position. 26

104 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Fund Financial Statements Fund financial statements report detailed information about the District. The focus of governmental financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. Governmental Funds All governmental funds are accounted for using a flow of current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures, and changes in fund balances reports on the sources (revenues and other financing sources) and uses (expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide financial statements are prepared. Governmental fund financial statements therefore include reconciliation with brief explanations to better identify the relationship between the government-wide financial statements and the statements for the governmental funds on a modified accrual basis of accounting and the current financial resources measurement focus. Under this basis, revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable. Fiduciary Funds Fiduciary funds are accounted for using the flow of economic resources measurement focus and the accrual basis of accounting. Fiduciary funds are excluded from the government-wide financial statements, because they do not represent resources of the District. Revenues - Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter, to be used to pay liabilities of the current fiscal year. Generally, available is defined as collectible within 60 days. However to achieve comparability of reporting among California districts and so as not to distort normal revenue patterns, with specific respect to reimbursement grants and corrections to State-aid apportionments, the California Department of Education has defined available for districts as collectible within one year. The following revenue sources are considered to be both measurable and available at fiscal year-end: State apportionments, interest, certain grants, and other local sources. Non-exchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, certain grants, entitlements, and donations. Revenue from property taxes is recognized in the fiscal year in which the taxes are received. Revenue from certain grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include time and purpose requirements. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. 27

105 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Unearned Revenue Unearned revenue arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for unearned revenue is removed from the combined balance sheet and revenue is recognized. Certain grants received that have not met eligibility requirements are recorded as unearned revenue. On the governmental fund financial statements, receivables that will not be collected within the available period are also recorded as unearned revenue. Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable, and typically paid within 90 days. Principal and interest on longterm obligations, which has not matured, are recognized when paid in the governmental funds as expenditures. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds but are recognized in the entity-wide statements. Investments Investments held at June 30, 2015, with original maturities greater than one year are stated at fair value. Fair value is estimated based on quoted market prices at year-end. All investments not required to be reported at fair value are stated at cost or amortized cost. Fair values of investments in county and State investment pools are determined by the program sponsor. Stores Inventories Inventories consist of expendable food and supplies held for consumption. Inventories are stated at cost, on the first-in first-out basis weighted average basis. The costs of inventory items are recorded as expenditures in the governmental type funds when used. Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. General capital assets are long-lived assets of the District. The District maintains a capitalization threshold of $5,000. The District does not possess any infrastructure. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not capitalized, but are expensed as incurred. When purchased, such assets are recorded as expenditures in the governmental funds and capitalized in the government-wide financial Statement of Net Position. The valuation basis for general capital assets are historical cost, or where historical cost is not available, estimated historical cost based on replacement cost. Donated capital assets are capitalized at estimated fair market value on the date donated. Depreciation of capital assets is computed and recorded by the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows: buildings, 20 to 50 years; improvements, 5 to 50 years; equipment, 2 to 15 years. 28

106 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Interfund Balances On fund financial statements, receivables and payables resulting from short-term interfund loans are classified as "interfund receivables/payables". These amounts are eliminated in the Statement of Net Position. Compensated Absences Compensated absences are accrued as a liability as the benefits are earned. The entire compensated absence liability is reported on the government-wide Statement of Net Position. For governmental funds, the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employee resignations and retirements that occur prior to year end that have not yet been paid with expendable available financial resources. These amounts are reported in the fund from which the employees who have accumulated leave are paid. Sick leave is accumulated without limit for each employee at the rate of one day for each month worked. Leave with pay is provided when employees are absent for health reasons; however, the employees do not gain a vested right to accumulated sick leave. Employees are never paid for any sick leave balance at termination of employment or any other time. Therefore, the value of accumulated sick leave is not recognized as a liability in the District's financial statements. However, credit for unused sick leave is applicable to all classified school members who retire after January 1, At retirement, each member will receive.004 year of service credit for each day of unused sick leave. Credit for unused sick leave is applicable to all certificated employees and is determined by dividing the number of unused sick days by the number of base service days required to complete the last school year, if employed full-time. Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities, and long-term obligations are reported in the government-wide financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. However, claims and judgments, compensated absences, special termination benefits, and contractually required pension contributions that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they are due for payment during the current year. Bonds, capital leases, and long-term loans are recognized as liabilities in the governmental fund financial statements when due. Debt Issuance Costs, Premiums and Discounts In the government-wide financial statements and in the proprietary fund type financial statements, long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Debt premiums and discounts, as well as issuance costs, related to prepaid insurance costs are amortized over the life of the bonds using the straight-line method. In governmental fund financial statements, bond premiums and discounts, as well as debt issuance costs are recognized in the current period. The face amount of the debt is reported as other financing sources. Premiums received on debt issuance are also reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service expenditures. 29

107 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position also reports deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The District reports deferred outflows of resources for the current year pension contributions. In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The District reports deferred inflows of resources for the difference between projected and actual earnings on pension plan investments specific to the net pension liability. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the California State Teachers Retirement System (CalSTRS) and the California Public Employees' Retirement System (CalPERS) plan for schools (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalSTRS and CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Member contributions are recognized in the period in which they are earned. Investments are reported at fair value. Fund Balances - Governmental Funds As of June 30, 2015, fund balances of the governmental funds are classified as follows: Nonspendable - amounts that cannot be spent either because they are in nonspendable form or because they are legally or contractually required to be maintained intact. Restricted - amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments. Committed - amounts that can be used only for specific purposes determined by a formal action of the governing board. The governing board is the highest level of decision-making authority for the District. Commitments may be established, modified, or rescinded only through resolutions or other action as approved by the governing board. The District currently does not have any committed funds. Assigned - amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Under the District's adopted policy, only the governing board or chief business officer/assistant superintendent of business services may assign amounts for specific purposes. Unassigned - all other spendable amounts. 30

108 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Spending Order Policy When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the District considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the governing board has provided otherwise in its commitment or assignment actions. Minimum Fund Balance Policy The governing board adopted a minimum fund balance policy for the General Fund in order to protect the District against revenue shortfalls or unpredicted on-time expenditures. The policy requires a Reserve for Economic Uncertainties consisting of unassigned amounts equal to no less than three percent of General Fund expenditures and other financing uses. Net Position Net position represents the difference between assets and liabilities. Net position net of investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the District or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The District first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. The government-wide financial statements report $16,346,815 of restricted net position. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenditures in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds. Repayments from funds responsible for particular expenditures to the funds that initially paid for them are not presented on the financial statements. Interfund transfers are eliminated in the governmental activities column of the Statement of Activities. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 31

109 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Budgetary Data The budgetary process is prescribed by provisions of the California Education Code and requires the governing board to hold a public hearing and adopt an operating budget no later than July 1 of each year. The District governing board satisfied these requirements. The adopted budget is subject to amendment throughout the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of budget adoption with the legal restriction that expenditures cannot exceed appropriations by major object account. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all budget amendments have been accounted for. For budget purposes, on behalf payments have not been included as revenue and expenditures as required under generally accepted accounting principles. Property Tax Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. The County of Ventura bills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received. Change in Accounting Principles In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements No. 27 and No. 50 remain applicable for pensions that are not covered by the scope of this Statement. The scope of this Statement addresses accounting and financial reporting for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts that have the following characteristics: Contributions from employers and non-employer contributing entities to the pension plan and earnings on those contributions are irrevocable. Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms. 32

110 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Pension plan assets are legally protected from the creditors of employers, non-employer contributing entities, and the pension plan administrator. If the plan is a defined benefit pension plan, plan assets also are legally protected from creditors of the plan members. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about pensions also are addressed. Distinctions are made regarding the particular requirements for employers based on the number of employers whose employees are provided with pensions through the pension plan and whether pension obligations and pension plan assets are shared. Employers are classified in one of the following categories for purposes of this Statement: Single employers are those whose employees are provided with defined benefit pensions through singleemployer pension plans pension plans in which pensions are provided to the employees of only one employer (as defined in this Statement). Agent employers are those whose employees are provided with defined benefit pensions through agent multiple-employer pension plans pension plans in which plan assets are pooled for investment purposes but separate accounts are maintained for each individual employer so that each employer's share of the pooled assets is legally available to pay the benefits of only its employees. Cost-sharing employers are those whose employees are provided with defined benefit pensions through cost-sharing multiple-employer pension plans pension plans in which the pension obligations to the employees of more than one employer are pooled and plan assets can be used to pay the benefits of the employees of any employer that provides pensions through the pension plan. In addition, this Statement details the recognition and disclosure requirements for employers with liabilities (payables) to a defined benefit pension plan and for employers whose employees are provided with defined contribution pensions. This Statement also addresses circumstances in which a non-employer entity has a legal requirement to make contributions directly to a pension plan. The District has implemented the Provisions of this Statement for the year ended June 30, In November 2013, the GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date An Amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. 33

111 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Statement No. 68 requires a state or local government employer (or nonemployer contributing entity in a special funding situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year. If a state or local government employer or nonemployer contributing entity makes a contribution to a defined benefit pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period, Statement No. 68 requires that the government recognize its contribution as a deferred outflow of resources. In addition, Statement No. 68 requires recognition of deferred outflows of resources and deferred inflows of resources for changes in the net pension liability of a state or local government employer or nonemployer contributing entity that arise from other types of events. At transition to Statement No. 68, if it is not practical for an employer or nonemployer contributing entity to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions, paragraph 137 of Statement No. 68 required that beginning balances for deferred outflows of resources and deferred inflows of resources not be reported. Consequently, if it is not practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions, contributions made after the measurement date of the beginning net pension liability could not have been reported as deferred outflows of resources at transition. This could have resulted in a significant understatement of an employer or nonemployer contributing entity's beginning net position and expense in the initial period of implementation. This Statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. Statement No. 68, as amended, continues to require that beginning balances for other deferred outflows of resources and deferred inflows of resources related to pensions be reported at transition only if it is practical to determine all such amounts. The District has implemented the Provisions of this Statement for the year ended June 30, As the result of implementing GASB Statement No. 68, the District has restated the beginning net position in the government wide Statement of Net Position, effectively decreasing net position as of July 1, 2014 by $110,386,704. The decrease results from recognizing the net pension liability, net of related deferred outflows of resources. The restatement does not include deferred inflows of resources, as this information was not available. New Accounting Pronouncements In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. 34

112 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are not Within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68. The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The requirements of this Statement extend the approach to accounting and financial reporting established in Statement No. 68 to all pensions, with modifications as necessary to reflect that for accounting and financial reporting purposes, any assets accumulated for pensions that are provided through pension plans that are not administered through trusts that meet the criteria specified in Statement No. 68 should not be considered pension plan assets. It also requires that information similar to that required by Statement No. 68 be included in notes to financial statements and required supplementary information by all similarly situated employers and nonemployer contributing entities. This Statement also clarifies the application of certain provisions of Statements No. 67 and No. 68 with regard to the following issues: Information that is required to be presented as notes to the ten-year schedules of required supplementary information about investment-related factors that significantly affect trends in the amounts reported. Accounting and financial reporting for separately financed specific liabilities of individual employers and nonemployer contributing entities for defined benefit pensions. Timing of employer recognition of revenue for the support of nonemployer contributing entities not in a special funding situation. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. 35

113 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement No. 43, and Statement No. 50, Pension Disclosures. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees of other entities. The scope of this Statement includes OPEB plans defined benefit and defined contribution administered through trusts that meet the following criteria: Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable. OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms. OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected from creditors of the plan members. This Statement also includes requirements to address financial reporting for assets accumulated for purposes of providing defined benefit OPEB through OPEB plans that are not administered through trusts that meet the specified criteria. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. In June 2015, the GASB issued Statement No., 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency. This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. 36

114 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of State and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided with defined contribution OPEB. This Statement also addresses certain circumstances in which a nonemployer entity provides financial support for OPEB of employees of another entity. In this Statement, distinctions are made regarding the particular requirements depending upon whether the OPEB plans through which the benefits are provided are administered through trusts that meet the following criteria: Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable. OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms. OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, the OPEB plan administrator, and the plan members. The requirements of this Statement are effective for financial statements for periods beginning after June 15, Early implementation is encouraged. In June 2015, the GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify in the context of the current governmental financial reporting environment the hierarchy of generally accepted accounting principles (GAAP). The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015, and should be applied retroactively. Earlier implementation is permitted. 37

115 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 2 - DEPOSITS AND INVESTMENTS Summary of Deposits and Investments Deposits and investments as of June 30, 2015, were classified in the accompanying financial statements as follows: Governmental activities $ 62,250,199 Fiduciary funds 1,405,326 Total Deposits and Investments $ 63,655,525 Deposits and investments as of June 30, 2015, consisted of the following: Cash on hand and in banks $ 1,347,184 Cash in revolving 10,000 Investments 62,298,341 Total Deposits and Investments $ 63,655,525 Policies and Practices The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes; securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares of beneficial interest issued by diversified management companies, certificates of participation, obligations with first priority security; and collateralized mortgage obligations. Investment in County Treasury - The District is considered to be an involuntary participant in an external investment pool as the District is required to deposit all receipts and collections of monies with their County Treasurer (Education Code Section 41001). The fair value of the District's investment in the pool is reported in the accounting financial statements at amounts based upon the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis. 38

116 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 General Authorizations Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below: Maximum Maximum Maximum Authorized Remaining Percentage Investment Investment Type Maturity of Portfolio in One Issuer Local Agency Bonds, Notes, Warrants 5 years None None Registered State Bonds, Notes, Warrants 5 years None None U.S.. Treasury Obligations 5 years None None U.S.. Agency Securities 5 years None None Banker's Acceptance 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 1 year None None Reverse Repurchase Agreements 92 days 20% of base None Medium-Term Corporate Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None Joint Powers Authority Pools N/A None None Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District manages its exposure to interest rate risk by investing primarily in the County Pool. 39

117 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Weighted Average Maturity The District monitors the interest rate risk inherent in its portfolio by measuring the weighted average maturity of its portfolio. Information about the weighted average maturity of the District's portfolio is presented in the following schedule: Fair Maturity Investment Type Value Date Ventura County Investment Pool $ 60,968, * First American Prime Obligation Fund Class Y 566,223 7/1/2015 Local Agency Bonds - Duarte Unified School District 266,769 11/1/2019 Local Agency Bonds - Trinity River Authority 150,603 2/1/2019 Total $ 61,952,413 * Weighted average days to maturity. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by the California Government Code, the District's investment policy, or debt agreements, and the actual rating as of the year-end for each investment type. Minimum Legal Rating Investment Type Rating June 30, 2015 Fair Value Ventura County Investment Pool Not Required AAAf $ 60,968,818 First American Prime Obligation Fund Class Y Not Required Not Rated 566,223 Local Agency Bonds - Duarte Unified School District Not Required Not Rated 266,769 Local Agency Bonds - Trinity River Authority Not Required AA+ 150,603 Total Investments $ 61,952,413 Custodial Credit Risk - Deposits This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a policy for custodial credit risk for deposits. However, the California Government Code requires that a financial institution secure deposits made by State or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agency. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As of June 30, 2015, the District's bank balance was not exposed to custodial credit risk. 40

118 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 3 - RECEIVABLES Receivables at June 30, 2015, consisted of intergovernmental grants, entitlements, interest, and other local sources. All receivables are considered collectible in full. Capital General Cafeteria Building Facilities Fund Fund Fund Fund Federal Government Categorical aid $ 2,932,508 $ 567,991 $ - $ - State Government Categorical aid 1,886,221 49, Lottery 1,528, Local Government Interest 23, ,633 9,571 Other Local Sources 813,765 18, Total $ 7,185,030 $ 637,636 $ 31,155 $ 9,571 Federal Government Categorical aid State Government Categorical aid Lottery Local Government Interest Other Local Sources Total Bond Interest and Non-Major Total Redemption Governmental Governmental Fiduciary Fund Funds Activities Funds $ - $ - $ 3,500,499 $ ,936, ,528,622-9,538 3,636 78, ,219 - $ 9,538 $ 3,636 $ 7,876,566 $ 57 41

119 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 4 - CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30, 2015, was as follows: Balance Balance July 1, 2014 Additions Deductions June 30, 2015 Governmental Activities Capital Assets Not Being Depreciated: Land $ 27,716,042 $ - $ - $ 27,716,042 Construction in Progress 16,304,183 35,385,256-51,689,439 Total Capital Assets Not Being Depreciated 44,020,225 35,385,256-79,405,481 Capital Assets Being Depreciated: Land Improvements 43,888,777 65, ,568 43,731,709 Buildings and Improvements 241,744, ,744,916 Furniture and Equipment 10,348, ,399-11,031,906 Total Capital Assets Being Depreciated 295,982, , , ,508,531 Total Capital Assets 340,002,425 36,134, , ,914,012 Less Accumulated Depreciation: Land Improvements 27,690,358 1,063, ,888 28,557,722 Buildings and Improvements 96,841,330 6,039, ,880,815 Furniture and Equipment 6,853, ,412-7,794,458 Total Accumulated Depreciation 131,384,734 8,044, , ,232,995 Governmental Activities Capital Assets, Net $ 208,617,691 $ 28,090,006 $ 26,680 $ 236,681,017 Depreciation expense was charged to governmental functions as follows: Governmental Activities Instruction $ 4,504,724 School site administration 2,815,452 Home-to-school transportation 241,325 Food services 321,765 Plant services 160,883 Total Depreciation Expenses All Activities $ 8,044,149 42

120 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 5 - INTERFUND TRANSACTIONS Interfund Receivables/Payables (Due To/Due From) Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. Interfund receivable and payable balances at June 30, 2015, between major and non-major governmental funds are as follows: Due From Capital Non-Major General Cafeteria Facilities Governmental Due To Fund Fund Fund Funds Total General Fund $ - $ 1,110,627 $ 407 $ 10 $ 1,111,044 Cafeteria Fund 15, ,455 Total $ 15,455 $ 1,110,627 $ 407 $ 10 $ 1,126,499 The balance of $1,110,627 is due to the General Fund from the Cafeteria Fund for indirect costs, direct support, and transfers. All remaining balances resulted from the time lag between the date that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. 43

121 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Operating Transfers Interfund transfers for the year ended June 30, 2015, consisted of the following: Transfer From Capital General Facilities Transfer To Fund Fund Total Cafeteria Fund $ 695,107 $ - $ 695,107 Capital Facilities Fund 144, ,080 Non-Major Governmental Funds - 472, ,499 Total $ 839,187 $ 472,499 $ 1,311,686 The General Fund transferred to the Cafeteria Fund to cover expenditures. $ 695,107 The General Fund transferred to the Capital Facilities Fund for costs associated with facility usage. The Capital Facilities Fund transferred to the COP Debt Service Non-Major Governmental 144,080 Fund for debt service payments. 472,499 Total $ 1,311,686 Interfund transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 44

122 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 6 - ACCOUNTS PAYABLE Accounts payable at June 30, 2015, consisted of the following: Capital General Cafeteria Building Facilities Fund Fund Fund Fund Total Vendor payables $ 3,645,802 $ 71,679 $ - $ - $ 3,717,481 State principal apportionment 656, ,198 Salaries and benefits 1,026,061 13, ,039,331 Capital outlay - - 3,566,111 3,041 3,569,152 Total $ 5,328,061 $ 84,949 $ 3,566,111 $ 3,041 $ 8,982,162 NOTE 7 - UNEARNED REVENUE Unearned revenue at June 30, 2015, consisted of the following: General Fund Federal financial assistance $ 547,058 State categorical aid 281,631 Other local 8,575 Total $ 837,264 NOTE 8 - TAX AND REVENUE ANTICIPATION NOTES (TRANS) On July 3, 2014, the District issued $6,750,000 Tax and Revenue Anticipation Notes bearing interest at 2.0 percent. The notes were issued to supplement cash flows. Interest and principal were due and payable on June 30, By May 2015, the District had placed 100 percent of principal and interest in an irrevocable trust for the sole purpose of satisfying the notes. The District was not required to make any additional payments on the notes. 45

123 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 9 - LONG-TERM OBLIGATIONS Summary The changes in the District's long-term obligations during the year consisted of the following: Balance (As Restated) Balance Due in July 1, 2014 Additions Deductions June 30, 2015 One Year General obligation bonds $ 139,542,186 $ 64,515 $ 3,900,000 $ 135,706,701 $ 4,245,000 Premium on issuance 5,341, ,956 5,097,675 - Certificates of participation 2,535, ,000 2,160, ,000 Municipal leases 4,285, ,000 4,080, ,000 Municipal lease discount (18,300) - (1,220) (17,080) - Qualified energy conservation bonds 16,258,333-1,316,998 14,941,335 1,373,781 Compensated absences 1,170,348 1,643-1,171,991 - Net OPEB obligation 66,369,679 22,022,181 13,970,674 74,421,186 - $ 235,483,877 $ 22,088,339 $ 20,010,408 $ 237,561,808 $ 6,233,781 Payments for bonds associated with General Obligation Bonds are made in the Bond Interest and Redemption Fund. Payments on Certificates of Participation are made in the COP Debt Service Fund. Payments for Municipal Lease obligations are made in the General Fund, Special Reserve Fund for Capital Outlay Projects, and Capital Facilities Fund. Payments for Qualified Energy Construction Bonds are made in the COP Debt Service Fund. Payments for compensated absences are typically liquidated in the General Fund and the Non-Major Governmental Funds. Payments for Net pension liability and Net OPEB obligation are typically liquidated in the General Fund and the Non-Major Governmental Funds. 46

124 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 General Obligation Refunding Bonds Bonds Issued and Bonds Issue Maturity Interest Original Outstanding Principal Outstanding Date Date Rate Issue July 1, 2014 Accretion Redeemed June 30, 2015 April /1/ % - 5.8% $ 10,199,913 $ 6,655,083 $ 64,515 $ 405,000 $ 6,314,598 May /1/ % - 6.2% 31,705,000 22,190, ,000 21,260,000 August /1/ %-5.0% 50,000,000 47,705, ,000 46,865,000 April /1/ % 4,052,103 3,642, ,000 3,417,103 May /1/ %-5.0% 10,435,000 9,350, ,000 8,850,000 January /1/ %-5.0% 50,000,000 50,000,000-1,000,000 49,000,000 $ 156,392,016 $ 139,542,186 $ 64,515 $ 3,900,000 $ 135,706, Series A Series A of the 1999 Revenue General Obligation Refunding Bonds were issued in April These bonds were issued to refund the 1997 General Obligation Bonds, Series B. The Taxable General Obligation Refunding Bonds, 1999 Series A were issued for $10,199,913, with interest rates ranging from 4.6 percent to 5.8 percent. The refunding bonds mature at various dates with the final maturity of August 1, The remaining balance for Series A of the 1999 General Obligation Bonds is $6,314, Series A Series A of the 2001 General Obligations Refunding Bond were issued May 17, These bonds were issued to refund the 1997 General Obligation Bonds Series C, D, and E. The Taxable General Obligation Refunding Bonds, 2001 Series A were issued for $31,705,000, with interest rates ranging from 4.0 percent to 6.2 percent. The refunding bonds mature at various dates with the final maturity of August 1, The remaining balance for Series A of the 2001 General Obligation Bonds is $21,260, Series A Series A of the 2004 General Obligation Refunding Bonds were issued in August These bonds were issued to refund the 2008 General Obligation Bond Anticipation Notes, Series A and Series B and to finance the construction and modernization of school facilities. The Taxable General Obligation Bonds, 2004 Series A were issued for $50,000,000, with interest rates ranging from 3.0 percent to 5.0 percent. The bonds mature at various dates with the final maturity of August 1, At June 30, 2015, the principal balance outstanding was $46,865,000 and unamortized premium was $1,649, Series Qualified School Construction Bonds In April 2011, the District issued the 2011 Qualified School Construction Bonds in the amount of $4,052,103. The notes mature August 2025, with an interest rate of 5.31 percent. The bonds were issued for the purpose of financing the acquisition and construction of educational facilities and projects. At June 30, 2015, the principal balance outstanding was $3,417,

125 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, Series The 2012 General Obligation Refunding Bonds were issued in May These bonds were issued to refund the 2003 General Obligation Bonds, Series A. The Taxable General Obligation Bonds, 2012 Series were issued for $10,435,000, with interest rates ranging from 3.0 percent to 5.0 percent. The bonds mature at various dates with the final maturity of August 1, At June 30, 2015, the principal balance outstanding was $8,850,000 and unamortized premium was $560, Series C Series C of the 2004 General Obligation Refunding Bonds were issued in January These bonds were issued to finance the construction and modernization of school facilities. The Taxable General Obligation Bonds, 2004 Series C were issued for $50,000,000, with interest rates ranging from 3.0 percent to 5.0 percent. The bonds mature at various dates with the final maturity of August 1, At June 30, 2015, the principal balance outstanding was $49,000,000 and unamortized premium was $2,887,506. The future debt service requirements for the six General Obligation Bonds are as follows: Principal Including Accreted Current Accreted Fiscal Year Interest to Date Interest Interest Total 2016 $ 4,245,000 $ 6,551,998 $ 68,334 $ 10,865, ,510,000 6,358,017 72,378 10,940, ,745,000 6,136,363 76,662 10,958, ,975,000 5,889,544 81,200 10,945, ,255,000 5,624,285 86,006 10,965, ,624,387 23,583, ,230 54,718, ,647,314 15,586, ,592 46,363, ,150,000 9,422,019-33,572, ,375,000 3,249,988-26,624, ,180,000 79,500-3,259,500 Total $ 135,706,701 $ 82,481,640 $ 1,025,402 $ 219,213,743 Certificates of Participation During the fiscal year, the District issued Certificates of Participation in the amount of $1,860,000, to refund the outstanding balance of the Certificates of Participation. The 2000 certificates mature during the fiscal year with interest rates ranging from 6.40 percent to 7.50 percent. The balance of the 2000 Certificates of Participation outstanding at June 30, 2015, was $625,000. In April 2003, the District issued the 2003 Refunding Certificates of Participation in the amount of $3,970,000. The 2003 certificates mature in the fiscal year with interest rates ranging from 2.0 percent to 4.3 percent. The balance of the 2003 Refunding Certificates of Participation outstanding at June 30, 2015, was $1,535,

126 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The future debt service requirements for the two Certificates of Participation are as follows: Fiscal Year Principal Interest Total 2016 $ 400,000 $ 88,425 $ 488, ,000 70, , ,000 51, , ,000 31, , ,000 10, ,560 Total $ 2,160,000 $ 252,899 $ 2,412,899 Municipal Leases During the fiscal year, the District entered into a lease agreement to finance the purchase of a parcel of land for the future construction of a high school in the Camarillo area. The lease carries an interest rate of 4.5 percent. The lease will be fully paid in At June 30, 2015, the principal balance outstanding was $4,080,000 and unamortized discount was $17,080. The debt service requirements for the leases are as follows: Fiscal Year Principal Interest Total 2016 $ 215,000 $ 174,972 $ 389, , , , , , , , , , , , , ,475, ,887 1,995, ,430, ,250 1,594,250 Total $ 4,080,000 $ 1,472,824 $ 5,552,824 Qualified Energy Conservation Bonds In September 2010, the District entered into a lease agreement with the Golden Schools Financing Authority. The notes mature August 2027, with an interest rate of 5.5 percent. The bonds were issued for the purpose of financing the acquisition and construction of educational facilities and projects. At June 30, 2015, the principal balance outstanding was $14,941,

127 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The debt service requirements for the bonds are as follows: Fiscal Year Principal Interest Total 2016 $ 1,373,781 $ 884,157 $ 2,257, , ,279 1,695, , ,777 1,684, ,005, ,827 1,696, ,069, ,579 1,707, ,994,787 2,284,007 8,278, ,668, ,917 4,237,984 Total $ 14,941,335 $ 6,617,543 $ 21,558,878 Accumulated Unpaid Employee Vacation The long-term portion of accumulated unpaid employee vacation for the District at June 30, 2015, amounted to $1,171,991. Accumulated vacation will be paid by the fund for which the employee worked. Other Postemployment Benefits (OPEB) Obligation The District's annual required contribution for the year ended June 30, 2015, was $18,040,000, and contributions made by the District during the year were $7,422,674. Interest on the net OPEB obligation and adjustments to the annual required contribution were $3,982,181 and ($6,548,000), respectively, which resulted in an increase to the net OPEB obligation of $8,051,507. As of June 30, 2015, the net OPEB obligation was $74,421,186. See Note 11 for additional information regarding the OPEB obligation and the postemployment benefits plan. 50

128 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 10 - FUND BALANCES Fund balances are composed of the following elements: Capital General Cafeteria Building Facilities Fund Fund Fund Fund Nonspendable Revolving cash $ 10,000 $ - $ - $ - Stores inventories 221,640 32, Total Nonspendable 231,640 32, Restricted Legally restricted programs 573,633 1, Capital projects ,882,324 10,882,232 Debt services Total Restricted 573,633 1,200 22,882,324 10,882,232 Assigned PY mandated funds 1,006, Donations 11, Adult Education CalWORKs 34, HHS youth risk behavior survey US fund balance 299, Me Too fund balance 114, Fund 401 Certificate of Participation Fund 402 Rancho Campana start up Total Assigned 1,467, Unassigned Reserve for economic uncertainties 8,649, Total $ 10,921,734 $ 33,747 $ 22,882,324 $ 10,882,232 51

129 Bond Interest and Non-Major Redemption Governmental Fund Funds Total $ - $ - $ 10, , , , ,764,556 11,012, ,925 11,506,755 11,012, ,925 45,846, ,006, , , , ,443-1,629,716 1,629,716-2,705,018 2,705,018-4,334,734 5,801, ,649,392 $ 11,012,830 $ 4,828,659 $ 60,561,526 51

130 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 11 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENT BENEFITS (OPEB) OBLIGATION Plan Description The Oxnard Union High School District Retiree Health Benefits Plan (the Plan) is a single-employer defined benefit healthcare plan administered by the Oxnard Union High School District. The Plan provides medical and dental insurance benefits to eligible retirees and their spouses. Membership of the Plan consists of 626 retirees and beneficiaries currently receiving benefits and 630 active plan members. Separate financial statements are prepared for the Trust. Contribution Information The contribution requirements of Plan members and the District are established and may be amended by the District and the Oxnard Federation of Teachers (OFT), the local California Service Employees Association (CSEA), and unrepresented groups. The required contribution is based on projected pay-as-you-go financing requirements. For fiscal year , the District contributed $7,422,674 to the Plan, of which $6,971,945 was used for current premiums, and $450,729 was a contribution to the Retiree Benefits Trust. Annual OPEB Cost and Net OPEB Obligation The District's annual other postemployment benefits (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation to the Plan: Annual required contribution $ 18,040,000 Interest on net OPEB obligation 3,982,181 Adjustment to annual required contribution (6,548,000) Annual OPEB cost (expense) 15,474,181 Contributions made (7,422,674) Increase in net OPEB obligation 8,051,507 Net OPEB obligation, beginning of year 66,369,679 Net OPEB obligation, end of year $ 74,421,186 52

131 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Trend Information Trend information for annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation is as follows: Year Ended Annual OPEB Actual Percentage Net OPEB June 30, Cost Contribution Contributed Obligation 2013 $ 20,426,242 $ 6,913, % $ 58,616, ,009,000 7,255, % 66,369, ,474,181 7,422, % 74,421,186 Funded Status and Funding Progress A schedule of funding progress as of the most recent actuarial valuation is as follows: Actuarial Accrued Liability Unfunded UAAL as a Actuarial Actuarial (AAL) - AAL Funded Percentage of Valuation Value of Entry Age (UAAL) Ratio Covered Covered Payroll Date Assets (a) Normal (b) (b - a) (a / b) Payroll (c) ([b - a] / c) July 1, 2013 $ 40,426,000 $ 205,904,000 $ 165,478, % $ 78,526, % Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, investment returns, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 53

132 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 In the July 1, 2013, actuarial valuation, the entry age normal method was used. The actuarial assumptions included a six percent investment rate of return. Healthcare cost trend rates ranged from an initial 7 percent to an ultimate rate of 5 percent. The remaining amortization period at June 30, 2015, was 23 years. The actuarial value of assets was determined to be $40,426,000 in this actuarial valuation. The allocation of OPEB cost is based on years of service. NOTE 12 - RISK MANAGEMENT Description The District's risk management activities are recorded in the General Fund. Employee health programs are administered by the General Fund through payments made to Coastal Schools Employee Benefits Organization, a public entity risk pool. The Oxnard Union High School District also participates in the Ventura County Schools Self-Funding Authority public entity risk pool (JPA) for the workers' compensation, property, and liability programs. Refer to Note 15 for additional information regarding the JPAs. For insured programs, there have been no significant reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. Employee Medical Benefits The District has contracted with the Coastal Schools Employee Benefits Organization (CSEBO) to provide employee health benefits. CSEBO is a shared risk pool comprised of members in Ventura County. Rates are set through an annual calculation process. The District pays a monthly contribution, which is placed in a common fund from which claim payments are made for all participating districts. Claims are paid for all participants regardless of claims flow. The Board of Directors has a right to return monies to a district subsequent to the settlement of all expenses and claims if a district withdraws from the pool. NOTE 13 - EMPLOYEE RETIREMENT SYSTEMS Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Academic employees are members of the California State Teachers' Retirement System (CalSTRS) and classified employees are members of the California Public Employees' Retirement System (CalPERS). 54

133 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The District implemented GASB Statements No. 68 and No. 71 for the fiscal year ended June 30, As a result, the District reported its proportionate share of the net pension liabilities, pension expense, and deferred inflow of resources for each of the above plans and a deferred outflow of resources for each of the above plans as follows: Proportionate Deferred Proportionate Proportionate Share of Net Outflow of Share of Deferred Share of Pension Plan Pension Liability Resources Inflow of Resources Pension Expense CalSTRS $ 72,419,094 $ 5,937,953 $ 17,833,064 $ 6,287,843 CalPERS 21,046,174 2,475,671 7,231,701 1,863,710 Total $ 93,465,268 $ 8,413,624 $ 25,064,765 $ 8,151,553 The details of each plan are as follows: California State Teachers' Retirement System (CalSTRS) Plan Description The District contributes to the State Teachers Retirement Plan (STRP) administered by the California State Teachers' Retirement System (CalSTRS). STRP is a cost-sharing multiple-employer public employee retirement system defined benefit pension plan. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers' Retirement Law. A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2013, annual actuarial valuation report, Defined Benefit Program Actuarial Valuation. This report and CalSTRS audited financial information are publically available reports that can be found on the CalSTRS website under Publications at: Benefits Provided The STRP provides retirement, disability and survivor benefits to beneficiaries. Benefits are based on members' final compensation, age, and years of service credit. Members hired on or before December 31, 2012, with five years of credited service are eligible for the normal retirement benefit at age 60. Members hired on or after January 1, 2013, with five years of credited service are eligible for the normal retirement benefit at age 62. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service. The STRP is comprised of four programs: Defined Benefit Program, Defined Benefit Supplement Program, Cash Balance Benefit Program, and Replacement Benefits Program. The STRP holds assets for the exclusive purpose of providing benefits to members and beneficiaries of these programs. CalSTRS also uses plan assets to defray reasonable expenses of administering the STRP. Although CalSTRS is the administrator of the STRP, the state is the sponsor of the STRP and obligor of the trust. In addition, the state is both an employer and nonemployer contributing entity to the STRP. The District contributes exclusively to the STRP Defined Benefit Program, thus disclosures are not included for the other plans. 55

134 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The STRP provisions and benefits in effect at June 30, 2015, are summarized as follows: STRP Defined Benefit Program Hire date On or before December 31, 2012 On or after January 1, 2013 Benefit formula 2% at 60 2% at 62 Benefit vesting schedule 5 Years of Service 5 Years of Service Benefit payments Monthly for Life Monthly for Life Retirement age Monthly benefits as a percentage of eligible compensation 2.0% - 2.4% 2.0% - 2.4% Required employee contribution rate 8.15% 8.15% Required employer contribution rate 8.88% 8.88% Required state contribution rate 5.95% 5.95% Contributions Required member District and State of California contributions rates are set by the California Legislature and Governor and detailed in Teachers' Retirement Law. The contributions rates are expressed as a level percentage of payroll using the entry age normal actuarial method. In accordance with AB 1469, employer contributions into the CalSTRS will be increasing to a total of 19.1 percent of applicable member earnings phased over a seven year period. The contribution rates for each plan for the year ended June 30, 2015, are presented above and the District's total contributions were $5,937,953. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related state support and the total portion of the net pension liability that was associated with the District were as follows: Total Net Pension Liability, Including State Share: District's proportionate share of net pension liability $ 72,419,094 State's proportionate share of the net pension liability associated with the District 43,729,775 Total $ 116,148,869 The net pension liability was measured as of June 30, The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts and the State, actuarially determined. At June 30, 2015, the District's proportion was percent. 56

135 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 For the year ended June 30, 2015, the District recognized pension expense of $6,287,843 and revenue of $3,775,292 for support provided by the State. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Pension contributions subsequent to measurement date $ 5,937,953 $ - Differences between projected and actual earnings on pension plan investments - 17,833,064 Total $ 5,937,953 $ 17,833,064 The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, The deferred inflow of resources will be amortized over a closed five-year period and will be recognized in pension expense as follows: Year Ended June 30, Amortization 2016 $ 4,458, ,458, ,458, ,458,266 Total $ 17,833,064 Actuarial Methods and Assumptions Total pension liability for STRP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement: Valuation date June 30, 2013 Measurement date June 30, 2014 Experience study July 1, 2006 through June 30, 2010 Actuarial cost method Entry age normal Discount rate 7.60% Investment rate of return 7.60% Consumer price inflation 3.00% Wage growth 3.75% CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are based on RP2000 series tables adjusted to fit CalSTRS experience. 57

136 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. The best estimate ranges were developed using capital market assumptions from CalSTRS general investment consultant. Based on the model for CalSTRS consulting actuary' investment practice, a best estimate range was determined be assuming the portfolio is re-balanced annually and that the annual returns are log normally distributed and independently from year to year to develop expected percentile for the long-term distribution of annualized returns. The assumed asset allocation is based on board policy for target asset allocation in effect on February 2, 2012, the date the current experience study was approved by the board. Best estimates of 10-year geometric real rates of return and the assumed asset allocation for each major asset class used as input to develop the actuarial investment rate of return are summarized in the following table: Long-term Assumed Asset Expected Real Asset Class Allocation Rate of Return Global equity 47% 4.50% Private equity 12% 6.20% Real estate 15% 4.35% Inflation sensitive 5% 3.20% Fixed income 20% 0.20% Cash/liquidity 1% 0.00% Discount Rate The discount rate used to measure the total pension liability was 7.60 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.60 percent) and assuming that contributions, benefit payments and administrative expense occurred midyear. Based on these assumptions, the STRP's fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability. The following presents the District's proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate: Net Pension Discount Rate Liability 1% decrease (6.60%) $ 112,882,427 Current discount rate (7.60%) $ 72,419,094 1% increase (8.60%) $ 38,680,027 58

137 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 California Public Employees Retirement System (CalPERS) Plan Description Qualified employees are eligible to participate in the School Employer Pool (SEP) under the California Public Employees' Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees' Retirement Law. A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2013 annual actuarial valuation report, Schools Pool Actuarial Valuation, and the Risk Pool Actuarial Valuation Report, Safety, This report and CalPERS audited financial information are publically available reports that can be found on the CalPERS website under Forms and Publications at: Benefits Provided CalPERS provide service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of service credit, a benefit factor, and the member's final compensation. Members hired on or before December 31, 2012, with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. Members hired on or after January 1, 2013, with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The Basic Death Benefit is paid to any member's beneficiary if the member dies while actively employed. An employee's eligible survivor may receive the 1957 Survivor Benefit if the member dies while actively employed, is at least age 50 (or 52 for members hired on or after January 1, 2013), and has at least five years of credited service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law. The CalPERS provisions and benefits in effect at June 30, 2015, are summarized as follows: School Employer Pool (CalPERS) Hire date On or before December 31, 2012 On or after January 1, 2013 Benefit formula 2% at 55 2% at 62 Benefit vesting schedule 5 Years of Service 5 Years of Service Benefit payments Monthly for Life Monthly for Life Retirement age Monthly benefits as a percentage of eligible compensation 1.1% - 2.5% 1.0% - 2.5% Required employee contribution rate 7.000% 6.000% Required employer contribution rate % % 59

138 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Contributions Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Total plan contributions are calculated through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The contributions rates are expressed as percentage of annual payroll. The contribution rates for each plan for the year ended June 30, 2015, are presented above and the total District contributions were $2,475,671. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions As of June 30, 2015, the District reported net pension liabilities for its proportionate share of the CalPERS net pension liability totaling $21,046,174. The net pension liability was measured as of June 30, The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts, actuarially determined. At June 30, 2015, the District's proportion was percent. For the year ended June 30, 2015, the District recognized pension expense of $1,863,710. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Pension contributions subsequent to measurement date $ 2,475,671 $ - Differences between projected and actual earnings on pension plan investments - 7,231,701 Total $ 2,475,671 $ 7,231,701 60

139 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, The deferred inflow of resources will be amortized over a closed five-year period and will be recognized in pension expense as follows: Year Ended June 30, Amortization 2016 $ 1,807, ,807, ,807, ,807,926 Total $ 7,231,701 Actuarial Methods and Assumptions Total pension liability for the SEP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement: Valuation date June 30, 2013 Measurement date June 30, 2014 Experience study July 1, 1997 through June 30, 2011 Actuarial cost method Entry age normal Discount rate 7.50% Investment rate of return 7.50% Consumer price inflation 2.75% Wage growth 3.00% Mortality assumptions are based on mortality rates resulting from the most recent CalPERS experience study adopted by the CalPERS Board. For purposes of the post-retirement mortality rates, those revised rates include five years of projected ongoing mortality improvement using Scale AA published by the Society of Actuaries. 61

140 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first ten years) and the longterm (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-Term Assumed Asset Expected Real Asset Class Allocation Rate of Return Global equity 47% 5.25% Global fixed income 19% 0.99% Private equity 12% 6.83% Real estate 11% 4.50% Inflation sensitive 6% 0.45% Infrastructure and Forestland 3% 4.50% Liquidity 2% -0.55% Discount Rate The discount rate used to measure the total pension liability was 7.50 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Based on these assumptions, the School Employer Pool fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability. The following presents the District's proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate: Net Pension Discount rate Liability 1% decrease (6.50%) $ 36,919,794 Current discount rate (7.50%) $ 21,046,174 1% increase (8.50%) $ 7,782,165 62

141 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 Social Security As established by Federal law, all public sector employees who are not members of their employer's existing retirement system (CalSTRS or CalPERS) must be covered by Social Security or an alternative plan. The District has elected to use Social Security as its alternative plan. The District's and employee's contributions are in accordance with Federal laws. On Behalf Payments The State of California makes contributions to CalSTRS on behalf of the District. These payments consist of State General Fund contributions to CalSTRS in the amount of $3,404,408 (5.679 percent of annual payroll). Contributions are no longer appropriated in the annual Budget Act for the legislatively mandated benefits to CalPERS. Therefore, there is no on behalf contribution rate for CalPERS.). Under accounting principles generally accepted in the United States of America, these amounts are to be reported as revenues and expenditures. Accordingly, these amounts have been included in the budget amounts recorded in these financial statements. On behalf payments have been excluded from the calculation of available reserves, and have not been included in the budget amounts reported in the General Fund - Budgetary Comparison Schedule. NOTE 14 - COMMITMENTS AND CONTINGENCIES Grants The District received financial assistance from Federal and State agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30, Litigation The District is involved in various litigation arising from the normal course of business. In the opinion of management and legal counsel, the disposition of all litigation pending is not expected to have a material adverse effect on the overall financial position of the District at June 30,

142 OXNARD UNION HIGH SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 15 - PARTICIPATION IN PUBLIC ENTITY RISK POOLS AND JOINT POWERS AUTHORITY The District is a member of the Ventura County Schools Self-funding Authority (VCSSFA) and the Coastal Schools Employee Benefits Organization (CSEBO) public entity risk pools. The District pays an annual premium to each entity for its workers' compensation and property liability coverage and for its health and welfare benefits, respectively. The District also belongs to the Ventura County Fast Action School Transit Authority (VCFAST) joint powers authority (JPA). Payments for courier services are paid to the VCFAST. The relationships between the District, the pools, and the JPA are such that they are not component units of the District for financial reporting purposes. The entity has budgeting and financial reporting requirements independent of member units and the financial statements are not presented in these financial statements; however, fund transactions between the entity and the District are included in these statements. Audited financial statements are available from the respective entities. During the year ended June 30, 2015, the District made payments of $896,709, $22,479,363, and $4,108 to VCSSFA, CSEBO, and VCFAST, respectively. NOTE 16 - RESTATEMENT OF PRIOR YEAR NET POSITION The District adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in the current year. As a result, the effect on the current fiscal year is as follows: Statement of Net Position Net Position - Beginning $ 67,239,518 Restatement - Net pension liability from the adoption of GASB Statement No. 68 (110,386,704) Net Position - Beginning as Restated $ (43,147,186) 64

143 REQUIRED SUPPLEMENTARY INFORMATION 65

144 OXNARD UNION HIGH SCHOOL DISTRICT GENERAL FUND BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2015 Variances - Positive (Negative) Budgeted Amounts Actual Final Original Final (GAAP Basis) to Actual REVENUES Local Control Funding Formula $ 125,462,631 $ 127,926,374 $ 128,028,428 $ 102,054 Federal sources 7,518,907 9,184,040 8,167,204 (1,016,836) Other State sources 5,023,005 9,903,305 11,947,146 2,043,841 Other local sources 8,494,601 9,279,479 10,551,366 1,271,887 Total Revenues 1 146,499, ,293, ,694,144 2,400,946 EXPENDITURES Current Certificated salaries 67,285,809 70,532,304 69,755, ,798 Classified salaries 19,916,543 21,173,256 21,315,303 (142,047) Employee benefits 36,884,149 38,673,150 40,677,464 (2,004,314) Books and supplies 6,512,390 9,154,885 8,809, ,625 Services and operating expenditures 13,510,615 14,342,435 13,408, ,476 Capital outlay 941,433 1,118, , ,503 Other outgo 1,137,615 1,508,137 1,578,297 (70,160) Debt service Principal 1,316,998 1,316,998 1,316,998 - Interest 324, , ,726 (63,375) Total Expenditures 1 147,829, ,143, ,998, ,506 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,330,759) (1,850,721) 695,731 2,546,452 OTHER FINANCING SOURCES (USES) Transfers in 5, Transfers out (684,517) (814,775) (839,187) (24,412) Net Financing Sources (Uses) (679,160) (814,775) (839,187) (24,412) NET CHANGE IN FUND BALANCE (2,009,919) (2,665,496) (143,456) 2,522,040 Fund Balance - Beginning 11,065,190 11,065,190 11,065,190 - Fund Balance - Ending $ 9,055,271 $ 8,399,694 $ 10,921,734 $ 2,522,040 1 On behalf payments of $3,404,048 are included in the actual revenues and expenditures, but have not been included in the budgeted amounts. 66

145 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2015 Actuarial Accrued Liability Unfunded UAAL as a Actuarial Actuarial (AAL) - AAL Funded Percentage of Valuation Value of Entry Age (UAAL) Ratio Covered Covered Payroll Date Assets (a) Normal (b) (b - a) (a / b) Payroll (c) ([b - a] / c) July 1, 2010 $ 33,711,000 $ 204,300,000 $ 170,589, % $ 85,601, % July 1, ,584, ,944, ,360, % 88,645, % July 1, ,426, ,904, ,478, % 78,526, % 67

146 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF THE DISTRICT PROPORTIONATE SHARE OF THE NET PENSION LIABILITY FOR THE YEAR ENDED JUNE 30, 2015 CalSTRS 2015 District's proportion of the net pension liability (asset) % District's proportionate share of the net pension liability (asset) $ 72,419,094 State's proportionate share of the net pension liability (asset) associated with the District 43,729,775 Total $ 116,148,869 District's covered - employee payroll $ 62,381,127 District's proportionate share of the net pension liability (asset) as a percentage of its covered - employee payroll % Plan fiduciary net position as a percentage of the total pension liability 77% CalPERS District's proportion of the net pension liability (asset) % District's proportionate share of the net pension liability (asset) $ 21,046,174 District's covered - employee payroll $ 19,571,570 District's proportionate share of the net pension liability (asset) as a percentage of its covered - employee payroll % Plan fiduciary net position as a percentage of the total pension liability 83% Note: In the future, as data become available, ten years of information will be presented. 68

147 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF DISTRICT CONTRIBUTIONS FOR THE YEAR ENDED JUNE 30, 2015 CalSTRS 2015 Contractually required contribution $ 5,937,953 Contributions in relation to the contractually required contribution 5,937,953 Contribution deficiency (excess) $ - District's covered - employee payroll $ 66,868,840 Contributions as a percentage of covered - employee payroll 8.88% CalPERS Contractually required contribution $ 2,475,671 Contributions in relation to the contractually required contribution 2,475,671 Contribution deficiency (excess) $ - District's covered - employee payroll $ 21,033,738 Contributions as a percentage of covered - employee payroll 11.77% Note: In the future, as data become available, ten years of information will be presented. 69

148 SUPPLEMENTARY INFORMATION 70

149 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 Pass-Through Entity Federal Grantor/Pass-Through CFDA Identifying Program Grantor/Program Number Number Expenditures U.S. DEPARTMENT OF EDUCATION Passed through California Department of Education (CDE): Adult Education - Basic Grants to States Cluster Adult Basic Education - Adult Basic Education & ESL A $ 426,028 Adult Basic Education - Adult Secondary ,382 Adult Basic Education - English Literacy and Civics Education A ,061 Total Adult Education - Basic Grants to States Cluster 572,471 Carl D. Perkins Vocational and Technical Education Act of 1998 Secondary Education ,737 Passed through Ventura County Special Education Local Plan Area: Individuals with Disabilities Act (IDEA) Basic Local Assistance Entitlement, Part B, Section ,288,541 No Child Left Behind Act (NCLB) Title I, Part A Cluster Title I, Part A - Basic Grants Low Income and Neglected ,647,789 NCLB - School wide Programs ,475,259 Total Title I, Part A Cluster 3,123,048 Title I, Part C Cluster Title I, Part C, Migrant Ed (Regular and Summer Program) ,210 Title I, Part C, Migrant Ed Summer Program ,940 Total Title I, Part C Cluster 494,150 Title I, Part G - Advanced Placement (AP) Test Fee Reimbursement Program B ,008 Title II, Part A - Improving Teacher Quality Local Grants ,440 Title III Cluster Title III - Immigrant Education Program ,413 Title III - Limited English Proficient (LEP) Student Program ,009 Total Title III Cluster 179,422 Safe and Supportive Schools Programmatic Intervention (S3) ,301 Total U.S. Department of Education 7,650,118 See accompanying note to supplementary information. 71

150 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) FOR THE YEAR ENDED JUNE 30, 2015 Pass-Through Entity Federal Grantor/Pass-Through CFDA Identifying Program Grantor/Program Number Number Expenditures U.S. DEPARTMENT OF REHABILITATION Workability II, Transitions Partnership $ 239,066 U.S. DEPARTMENT OF AGRICULTURE Passed through California Department of Education (CDE): Child Nutrition Cluster Especially Needy Breakfast ,146,720 National School Lunch Program ,744,056 Food Distribution ,132 Total U.S. Department of Agriculture 4,124,908 U.S. DEPARTMENT OF DEFENSE Junior Reserve Officer Training Corps - Air Force [1] 139,844 U.S. DEPARTMENT OF INTERIOR National Park Services - Anacapa Island Restoration Project [1] 15,011 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through California Department of Health Services: Medicaid Cluster Medi-Cal Billing Option ,157 Medi-Cal Administrative Activities Program ,802 Total Medicaid Cluster 627,959 Youth Risk Behavior Survey Participant Grant Total U.S. Department of Health and Human Services 628,359 Total Federal Programs $ 12,797,306 [1] Pass-Through Entity Identifying Number not available. See accompanying note to supplementary information. 72

151 OXNARD UNION HIGH SCHOOL DISTRICT LOCAL EDUCATION AGENCY ORGANIZATION STRUCTURE JUNE 30, 2015 ORGANIZATION The Oxnard Union High School District was established in 1901 and consists of an area comprising approximately 300 square miles. The District operates six high schools, two alternative education sites, and an adult education program. There were no boundary changes during the year. GOVERNING BOARD MEMBER OFFICE TERM EXPIRES Steven Hall President 2016 Beatriz Herrera Vice President 2018 Wayne Edmonds Clerk 2018 Karen Sher Member 2018 Gary Davis Member 2016 ADMINISTRATION Gabe Soumakian, Ed.D Stephen Dickinson Robert "Rocky" Valles, Ed.D Lisa Brown Superintendent Assistant Superintendent, Administrative Services Assistant Superintendent, Human Resources Assistant Superintendent, Educational Services See accompanying note to supplementary information. 73

152 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE FOR THE YEAR ENDED JUNE 30, 2015 Final Report Second Period Annual Report Report Regular ADA Ninth through twelfth 15, , Extended Year Special Education Ninth through twelfth Special Education, Nonpublic, Nonsectarian Schools Ninth through twelfth Extended Year Special Education, Ninth through twelfth Total ADA 15, , See accompanying note to supplementary information. 74

153 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF INSTRUCTIONAL TIME FOR THE YEAR ENDED JUNE 30, 2015 Reduced Number of Days Minutes Minutes Actual Traditional Multitrack Grade Level Requirement Requirement Minutes Calendar Calendar Status Grades ,800 63,000 Grade 9 65, N/A Complied Grade 10 65, N/A Complied Grade 11 65, N/A Complied Grade 12 65, N/A Complied See accompanying note to supplementary information. 75

154 OXNARD UNION HIGH SCHOOL DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2015 Summarized below are the fund balance reconciliation between the Unaudited Actual Financial Report and the audited financial statements. General Fund FUND BALANCE Balance, June 30, 2015, Unaudited Actuals $ 11,081,454 Decrease in: Accounts receivable (159,720) Balance, June 30, 2015, Audited Financial Statement $ 10,921,734 See accompanying note to supplementary information. 76

155 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2015 (Budget) GENERAL FUND Revenues $ 178,147,506 $ 158,694,144 $ 141,381,989 $ 128,045,979 Other sources and transfers in ,003,819 Total Revenues and Other Sources 178,147, ,694, ,381, ,049,798 Expenditures 171,933, ,998, ,089, ,212,676 Other uses and transfers out 1,448, , , ,971 Total Expenditures and Other Uses 173,381, ,837, ,852, ,102,647 DECREASE IN FUND BALANCE $ 4,766,174 $ (143,456) $ (1,470,035) $ (5,052,849) ENDING FUND BALANCE $ 15,687,908 $ 10,921,734 $ 11,065,190 $ 12,535,225 AVAILABLE RESERVES 2 $ 10,584,447 $ 8,649,392 $ 6,491,160 $ 9,594,132 AVAILABLE RESERVES AS A PERCENTAGE OF TOTAL OUTGO 3 6.1% 5.6% 4.7% 7.3% LONG-TERM OBLIGATIONS N/A $ 237,561,808 $ 235,483,877 $ 180,023,089 AVERAGE DAILY ATTENDANCE AT P-2 15,274 15,297 15,053 14,736 The General Fund balance has decreased by $1,613,491 over the past two years. The fiscal year budget projects an increase of $4,766,174 (43.64 percent). For a district this size, the State recommends available reserves of at least three percent of total General Fund expenditures, transfers out, and other uses (total outgo). The District has incurred operating deficits in each of the past three years but anticipates incurring an operating surplus during the fiscal year. Total long-term obligations have increased/decreased by $57,538,719 over the past two years. Average daily attendance has increased by 561 over the past two years. A decline of 23 ADA is anticipated during fiscal year Budget 2016 is included for analytical purposes only and has not been subjected to audit. 2 Available reserves consist of all unassigned fund balances and all funds reserved for economic uncertainty contained within the General Fund. 3 On behalf payments of $3,404,048, $3,298,801, and $3,279,694, has been excluded from the calculation of available reserves for the fiscal years ending June 30, 2015, 2014, and 2013, respectively. See accompanying note to supplementary information. 77

156 OXNARD UNION HIGH SCHOOL DISTRICT SCHEDULE OF CHARTER SCHOOLS FOR THE YEAR ENDED JUNE 30, 2015 Name of Charter School Camarillo Academy of Progressive Education Architecture, Construction and Engineering Charter High (ACE) Included in Audit Report No No See accompanying note to supplementary information. 78

157 OXNARD UNION HIGH SCHOOL DISTRICT NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2015 County Special Reserve COP Total School Fund for Debt Non-Major Facilities Capital Outlay Service Governmental Fund Projects Fund Funds ASSETS Deposits and investments $ - $ 4,331,108 $ 493,925 $ 4,825,033 Receivables 10 3,626-3,636 Total Assets $ 10 $ 4,334,734 $ 493,925 $ 4,828,669 LIABILITIES AND FUND BALANCES Liabilities: Due to other funds $ 10 $ - $ - $ 10 Fund Balances: Restricted , ,925 Assigned - 4,334,734-4,334,734 Total Fund Balances - 4,334, ,925 4,828,659 Total Liabilities and Fund Balances $ 10 $ 4,334,734 $ 493,925 $ 4,828,669 See accompanying note to supplementary information. 79

158 OXNARD UNION HIGH SCHOOL DISTRICT NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2015 County Special Reserve COP Total School Fund for Debt Non-Major Facilities Capital Outlay Service Governmental Fund Projects Fund Funds REVENUES Other local sources $ 41 $ 12,529 $ 7,500 $ 20,070 EXPENDITURES Current Administration: Facility acquisition and construction 13, ,947 Debt service Principal , ,000 Interest and other , ,999 Total Expenditures 13, , ,946 Excess (Deficiency) of Revenues Over (Under) Expenditures (13,526) 12,149 (472,499) (473,876) OTHER FINANCING SOURCES (USES) Transfers in , ,499 Net Financing Sources (Uses) , ,499 NET CHANGE IN FUND BALANCES (13,526) 12,149 - (1,377) Fund Balances - Beginning 13,526 4,322, ,925 4,830,036 Fund Balances - Ending $ - $ 4,334,734 $ 493,925 $ 4,828,659 See accompanying note to supplementary information. 80

159 OXNARD UNION HIGH SCHOOL DISTRICT GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BY OBJECT FOR THE YEAR ENDED JUNE 30, 2015 General Cafeteria Building Fund Fund Fund REVENUES Local Control Funding Formula $ 128,028,428 $ - $ - Federal sources 8,167,204 4,124, ,304 Other State sources 11,947, ,933 - Other local sources 10,551, , ,750 Total Revenues 158,694,144 5,051, ,054 EXPENDITURES Current Expenditures Certificated salaries 69,755, Classified salaries 21,315,303 1,907,058 - Employee benefits 40,677, ,071 - Books and supplies 8,809, ,831 - Services and operating expenditures 13,408,956 2,357,243 (68,400) Other outgo 1,578, ,767 - Capital outlay 748,900-35,310,322 Debt service - principal 1,316, Debt service - interest and other 387, Total Expenditures 157,998,413 5,763,970 35,241,922 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 695,731 (712,765) (34,851,868) OTHER FINANCING SOURCES (USES) Operating transfers in - 695,107 - Operating transfers out (839,187) - - Total Other Financing Sources (Uses) (839,187) 695,107 - NET CHANGE IN FUND BALANCES (143,456) (17,658) (34,851,868) FUND BALANCES, BEGINNING OF YEAR 11,065,190 51,405 57,734,192 FUND BALANCES, END OF YEAR $ 10,921,734 $ 33,747 $ 22,882,324 See accompanying note to supplementary information. 81

160 Bond Capital Interest and Non-Major Total Facilities Redemption Governmental Governmental Fund Fund Funds Funds $ - $ - $ - $ 128,028, ,534,416-52,385-12,351,464 2,449,566 7,049,432 20,070 20,792,548 2,449,566 7,101,817 20, ,706, ,755, ,222, ,674, ,139,091 48,364-13,947 15,760, ,751,067 74, ,134, ,000 3,900, ,000 5,796, ,404 6,603, ,999 7,278, ,702 10,503, , ,512,440 1,938,864 (3,401,670) (473,876) (36,805,584) 144, ,499 1,311,686 (472,499) - - (1,311,686) (328,419) - 472,499-1,610,445 (3,401,670) (1,377) (36,805,584) 9,271,787 14,414,500 4,830,036 97,367,110 $ 10,882,232 $ 11,012,830 $ 4,828,659 $ 60,561,526 81

161 OXNARD UNION HIGH SCHOOL DISTRICT NON-MAJOR GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BY OBJECT FOR THE YEAR ENDED JUNE 30, 2015 County Special Reserve COP School Fund for Debt Non-Major Facilities Capital Outlay Service Governmental Fund Projects Fund Funds REVENUES Other local sources $ 41 $ 12,529 $ 7,500 $ 20,070 EXPENDITURES Current expenditures Services and operating expenditures 13, ,947 Debt service - principal , ,000 Debt service - interest and other , ,999 Total Expenditures 13, , ,946 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (13,526) 12,149 (472,499) (473,876) OTHER FINANCING SOURCES (USES) Operating transfers in , ,499 NET CHANGE IN FUND BALANCE (13,526) 12,149 - (1,377) FUND BALANCE, BEGINNING OF YEAR 13,526 4,322, ,925 4,830,036 FUND BALANCE, END OF YEAR $ - $ 4,334,734 $ 493,925 $ 4,828,659 See accompanying note to supplementary information. 82

162 OXNARD UNION HIGH SCHOOL DISTRICT SPECIAL RESERVE FUND FOR CAPITAL OUTLAY PROJECTS SUB-FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BY OBJECT FOR THE YEAR ENDED JUNE 30, 2015 Total E-Rate Special Reserve Certificates Internal Fund for of ACHS Connections Capital Outlay Participation Growth Provision Projects REVENUES Other local sources $ 5,192 $ 4,234 $ 3,103 $ 12,529 EXPENDITURES Current expenditures Capital outlay Excess (Deficiency) of Revenues Over (Under) Expenditures 5,192 4,234 2,723 12,149 NET CHANGE IN FUND BALANCES 5,192 4,234 2,723 12,149 FUND BALANCE - BEGINNING OF YEAR 1,624,523 1,235,917 1,462,145 4,322,585 FUND BALANCES - END OF YEAR $ 1,629,715 $ 1,240,151 $ 1,464,868 $ 4,334,734 See accompanying note to supplementary information. 83

163 OXNARD UNION HIGH SCHOOL DISTRICT NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2015 NOTE 1 - PURPOSE OF SCHEDULES Schedule of Expenditures of Federal Awards The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the District and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the United States Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. The following schedule provides reconciliation between revenues reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances, and the related expenditures reported on the Schedule of Expenditures of Federal Awards. The reconciling amounts consist primarily of (Medi-Cal Billing Option) funds that in the previous period were recorded as revenues but were unspent. These unspent balances have been expended in the current period. CFDA Number Amount Description Total Federal Revenues From the Statement of Revenues, Expenditures, and Changes in Fund Balances: $ 12,534,416 Medi-Cal Billing Option ,890 Total Schedule of Expenditures of Federal Awards $ 12,797,306 Local Education Agency Organization Structure This schedule provides information about the District's boundaries and schools operated, members of the governing board, and members of the administration. Schedule of Average Daily Attendance (ADA) Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of State funds are made to school districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs. Schedule of Instructional Time The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. The District neither met nor exceeded its target funding. This schedule presents information on the amount of instructional time offered by the District and whether the District complied with the provisions of Education Code Sections through Districts must maintain their instructional minutes at the requirements, as required by Education Code Section

164 OXNARD UNION HIGH SCHOOL DISTRICT NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2015 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balance of all funds reported on the Unaudited Actual Financial Report to the audited financial statements. Schedule of Financial Trends and Analysis This schedule discloses the District's financial trends by displaying past years' data along with current year budget information. These financial trend disclosures are used to evaluate the District's ability to continue as a going concern for a reasonable period of time. Schedule of Charter Schools This schedule lists all Charter Schools chartered by the District, and displays information for each Charter School on whether or not the Charter School is included in the District audit. Non-Major Governmental Funds - Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances The Non-Major Governmental Funds Combining Balance Sheet and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances are included to provide information regarding the individual funds that have been included in the Non-Major Governmental Funds column on the Governmental Funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances. Statements of Revenues, Expenditures, and Changes in Fund Balances by Object These statements present the revenues and expenditures for the major funds, the non-major funds, and the Special Reserve Fund for Capital Outlay Projects sub-funds categorized by object. Special Reserve Fund for Capital Outlay Projects Sub-Fund Detail Statement of Revenues, Expenditures, and Changes in Fund Balances by Object These statements present the revenues and expenditures for the Special Reserve Fund for Capital Outlay Projects sub-funds categorized by object. 85

165 INDEPENDENT AUDITOR'S REPORTS 86

166 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Governing Board Oxnard Union High School District Oxnard, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Oxnard Union High School District (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Oxnard Union High School District's basic financial statements, and have issued our report thereon dated December 7, Emphasis of Matter - Change in Accounting Principles As discussed in Note 16 to the financial statements, the District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Our opinion is not modified with respect to this matter. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Oxnard Union High School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Oxnard Union High School District's internal control. Accordingly, we do not express an opinion on the effectiveness of Oxnard Union High School District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 87

167 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item that we consider to be a significant deficiency. Compliance and Other Matters As part of obtaining reasonable assurance about whether Oxnard Union High School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of Oxnard Union High School District in a separate letter dated December 7, Oxnard Union High School District's Response to Findings Oxnard Union High School District's response to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. Oxnard Union High School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Rancho Cucamonga, California December 7,

168 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Governing Board Oxnard Union High School District Oxnard, California Report on Compliance for Each Major Federal Program We have audited Oxnard Union High School District's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Oxnard Union High School District's (the District) major Federal programs for the year ended June 30, Oxnard Union High School District's major Federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Oxnard Union High School District's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Oxnard Union High School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of Oxnard Union High School District's compliance. 89

169 Opinion on Each Major Federal Program In our opinion, Oxnard Union High School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, Report on Internal Control Over Compliance Management of Oxnard Union High School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Oxnard Union High School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Oxnard Union High School District's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Rancho Cucamonga, California December 7,

170 INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE Governing Board Oxnard Union High School District Oxnard, California Report on State Compliance We have audited Oxnard Union High School District's compliance with the types of compliance requirements as identified in the Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, that could have a direct and material effect on each of the Oxnard Union High School District's State government programs as noted below for the year ended June 30, Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its State's programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance of each of the Oxnard Union High School District's State programs based on our audit of the types of compliance requirements referred to above. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting. These standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the applicable government programs noted below. An audit includes examining, on a test basis, evidence about Oxnard Union High School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions. Our audit does not provide a legal determination of Oxnard Union High School District's compliance with those requirements. Unmodified Opinion on Each of the Other Programs In our opinion, Oxnard Union High School District complied, in all material respects, with the compliance requirements referred to above that are applicable to the government programs noted below that were audited for the year ended June 30,

171 Other Matters In connection with the audit referred to above, we selected and tested transactions and records to determine the Oxnard Union High School District's compliance with the State laws and regulations applicable to the following items: Procedures Performed Attendance Accounting: Attendance Reporting Yes Teacher Certification and Misassignments Yes Kindergarten Continuance No, see below Independent Study Yes Continuation Education Yes, see below Instructional Time Yes Instructional Materials Yes Ratios of Administrative Employees to Teachers Yes Classroom Teacher Salaries Yes Early Retirement Incentive No, see below Gann Limit Calculation Yes School Accountability Report Card Yes Juvenile Court Schools No, see below Middle or Early College High Schools No, see below K-3 Grade Span Adjustment No, see below Transportation Maintenance of Effort Yes Regional Occupational Centers or Programs Maintenance of Effort No, see below Adult Education Maintenance of Effort Yes California Clean Energy Jobs Act Yes After School Education and Safety Program: General Requirements No, see below After School No, see below Before School No, see below Proper Expenditure of Education Protection Account Funds Yes Common Core Implementation Funds Yes Unduplicated Local Control Funding Formula Pupil Counts Yes Local Control Accountability Plan Yes Charter Schools: Attendance No, see below Mode of Instruction No, see below Non Classroom-Based Instruction/Independent Study No, see below Determination of Funding for Non Classroom-Based Instruction No, see below Annual Instruction Minutes Classroom-Based No, see below Charter School Facility Grant Program No, see below The District is a high school district; therefore, we did not perform procedures related to the Kindergarten Continuance. The District does not offer a Work Experience Program; therefore, we did not perform procedures related to the Work Experience Program within the Continuation Education Attendance Program. 92

172 The District does not offer an Early Retirement Incentive Program; therefore, we did not perform procedures related to the Early Retirement Incentive Program. The District does not have any Juvenile Court Schools; therefore, we did not perform any procedures related to Juvenile Court Schools. The District does not have a Middle or Early College High School Program; therefore, we did not perform procedures related to the Middle or Early College High School Program. The District is a high school district; therefore, we did not perform procedures related to the K-3 Grade Span Adjustment. The District does not have a Regional Occupational Center or Program; therefore, we did not perform procedures related to the Regional Occupational Centers or Programs Maintenance of Effort. The District does not offer an After School Education and Safety Program; therefore, we did not perform any procedures related to the After School Education and Safety Program. The District does not have any Charter Schools; therefore, we did not perform any procedures for Charter School Programs. Rancho Cucamonga, California December 7,

173 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 94

174 OXNARD UNION HIGH SCHOOL DISTRICT SUMMARY OF AUDITORS' RESULTS FOR THE YEAR ENDED JUNE 30, 2015 FINANCIAL STATEMENTS Type of auditor's report issued: Internal control over financial reporting: Material weakness identified? Significant deficiency identified? Noncompliance material to financial statements noted? FEDERAL AWARDS Internal control over major Federal programs: Material weakness identified? Significant deficiency identified? Type of auditor's report issued on compliance for major Federal programs: Any audit findings disclosed that are required to be reported in accordance with Section.510(a) of OMB Circular A-133? Unmodified No Yes No No None reported Unmodified No Identification of major Federal programs: CFDA Numbers Name of Federal Program or Cluster Basic Local Assistance Entitlement, Part B, Section Title I, Part A Cluster , A Adult Education - Basic Grants to States Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? $ 383,919 Yes STATE AWARDS Type of auditor's report issued on compliance for programs: Unmodified 95

175 OXNARD UNION HIGH SCHOOL DISTRICT FINANCIAL STATEMENT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 The following findings represent significant deficiencies, material weaknesses, and/or instances of noncompliance related to the financial statements that are required to be reported in accordance with Government Auditing Standards. The findings have been coded as follows: Criteria or Specific Requirements Five Digit Code AB 3627 Finding Type Inventory of Equipment Internal Control Miscellaneous Industry standards and best business practices related to accounting and internal control require that an entity adopt, implement, and monitor procedures that will allow for timely reporting of financial information to management and those charged with governance. Condition The Cafeteria Fund has incurred operating deficits in each of the past three years in the amounts of $712,765, $613,118, and $709,141 for the fiscal years ending June 30, 2015, 2014 and, 2013, respectively. The Cafeteria Fund balance has decreased during that time to a current fund balance of $33,747 of which the entire amount is stores inventory. In each of the past three years the Cafeteria Fund has encroached on the General Fund in the amount of $695,107, $590,220, and $684,046 for the fiscal years ending June 30, 2015, 2014, and 2013, respectively. Questioned costs There were no questioned costs associated with the condition found. Context The conditions identified were determined through review of the District financial statements, fund balance, and current year budget including multi-year projections. Effect The inability to reduce expenditures to a level more in line with the decrease in revenues seen over the past few years could result in the District General Fund being unable to meet its reserve requirement in future years, due in part to the encroachment from the Cafeteria Fund operations. If the Cafeteria Fund continues the current trend of deficit spending through operations, the current fiscal year encroachment is estimated at $1,301,

176 OXNARD UNION HIGH SCHOOL DISTRICT FINANCIAL STATEMENT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 Cause The California Department of Education (CDE) withheld reimbursement claim payments from the Cafeteria Fund in the prior years in order to repay an outstanding assessment payable. The practice of deficit spending and the withholding of claim reimbursements by the CDE have lowered the Cafeteria Fund balance to levels that have attributed to the Cafeteria Fund encroaching on the General Fund to maintain daily operations. Recommendation The District should continue to implement a plan to bring the Cafeteria Fund's budget into balance and at a minimum and maintain an adequate reserve while continually monitoring both cash flows and deficit spending trends. The District should evaluate the current year budget and monitor the budget to ensure the cafeteria's spending does not exceed budgeted amounts. Corrective Action Plan The District continues to work on controlling labor costs, exploring ways of increasing participation and meal sales, however, due to the District taking over the preparation of meals from third party vendor, Sodexo, the District anticipates an increase deficit spending. The estimated encroachment from the General Fund is $1,301,540. This is partially due to the lifetime retiree benefits for employees hired prior to June 30, 2004, in the amount of $324,333. With this factor, the Cafeteria Fund will continue to deficit spend. 97

177 OXNARD UNION HIGH SCHOOL DISTRICT FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015 None reported. 98

178 OXNARD UNION HIGH SCHOOL DISTRICT STATE AWARDS FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015 None reported. 99

179 OXNARD UNION HIGH SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 Except as specified in previous sections of this report, summarized below is the current status of all audit findings reported in the prior year's schedule of financial statement findings. Financial Statement Findings Five Digit Code AB 3627 Finding Type Internal Control Fiscal Condition (Deficit Spending-Cafeteria Fund) Significant Deficiency Criteria or Specific Requirements Industry standards and best business practices related to accounting and internal control require that an entity adopt, implement, and monitor procedures that will allow for timely reporting of financial information to management and those charged with governance. Condition The Cafeteria Fund has incurred operating deficits in each of the past three years in the amounts of $613,118, $709,141, and $1,465,631 for the fiscal years ending June 30, 2014, 2013 and, 2012, respectively. The Cafeteria Fund balance has decreased during that time to a current fund balance of $51,405 of which the entire amount is stores inventory. In each of the past three years the Cafeteria Fund has encroached on the General Fund in the amount of $590,220, $684,046, and $5,057,613 for the fiscal years ending June 30, 2014, 2013, and 2012, respectively. Questioned costs There were no questioned costs associated with the condition found. Context The conditions identified were determined through review of the District financial statements, fund balance, and current year budget including multi-year projections. Effect The inability to reduce expenditures to a level more in line with the decrease in revenues seen over the past few years could result in the District General Fund being unable to meet its reserve requirement in future years, due in part to the encroachment from the Cafeteria Fund operations. If the Cafeteria Fund continues the current trend of deficit spending through operations, the current fiscal year encroachment is estimated at $689,

180 OXNARD UNION HIGH SCHOOL DISTRICT SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 Cause The California Department of Education (CDE) withheld reimbursement claim payments from the Cafeteria Fund in the prior year in order to repay an outstanding assessment payable. The practice of deficit spending and the withholding of claim reimbursements by the CDE have lowered the Cafeteria Fund balance to levels that have attributed to the Cafeteria Fund encroaching on the General Fund to maintain daily operations. Recommendation The District should continue to implement a plan to bring the Cafeteria Fund's budget into balance and at a minimum and maintain an adequate reserve while continually monitoring both cash flows and deficit spending trends. The District should evaluate the current year budget and monitor the budget to ensure the cafeteria's spending does not exceed budgeted amounts. Current Status Not implemented. See current year findings and recommendations

181 Governing Board Oxnard Union High School District Oxnard, California In planning and performing our audit of the financial statements of Oxnard Union High School District (the District), for the year ended June 30, 2015, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the combined and combining financial statements and not to provide assurance on the internal control structure. However, during our audit we noted matters that are opportunities for strengthening internal controls and operating efficiency. The following items represent conditions noted by our audit that we consider important enough to bring to your attention. This letter does not affect our report dated December 7, 2015, on the government-wide financial statements of Oxnard Union High School District OBSERVATIONS AND RECOMMENDATIONS PHYSICAL INVENTORY COUNT - PACIFICA HIGH SCHOOL Observation During our audit we found that the student stores sales is not reconciling to ending inventory on a regular basis. Under the accounting code for student body groups a quarterly physical inventory should be taken. At this time, the student store sales should also be reconciled to ensure that all items purchased for resale have been sold or accounted for. Recommendation We recommend that a quarterly physical inventory be taken and reconciled to student store sales to ensure all merchandise has been accounted for. The prior quarters ending inventory plus quarterly purchases less quarterly sales should equal the current physical count. 102

182 Oxnard Union High School District Governing Board TIMELY DEPOSITS - CHANNEL ISLAND HIGH SCHOOL Observation Cash collected at the site is not being deposited to the bank on a timely basis. This results in cash balances being maintained at the sites which decreases the safeguarding of assets. Recommendation At a minimum, deposits should be made weekly to minimize the amount of cash held at the site. During weeks of high cash activity there may be a need to make more than one deposit. The District should establish guidelines for this procedure including the maximum cash on hand that should be maintained at the site. The ultimate responsibility, however, will reside with the site bookkeeper to make the deposits timely. We will review the status of the current year comments during our next audit engagement. Rancho Cucamonga, California December 7,

183 APPENDIX C GENERAL INFORMATION ABOUT THE CITY OF OXNARD AND VENTURA COUNTY The following information concerning the City of Oxnard (the City ) and Ventura County (the County ) is included only for the purpose of supplying general information regarding the area of the District. The Refunding Bonds are not a debt of the City, the County, the State of California (the State ) or any of its political subdivisions (other than the District), and none of the City, the County, the State or any of its political subdivisions (other than the District) is liable therefor. General The County of Ventura is situated on the southern California Coast. The County overs an area of approximately 1,843 square miles and ranks 26th in size among California s 58 counties. The County is bordered by the Pacific Ocean to the south and west, Santa Barbara County to the west, Kern County to the north, and Los Angeles County to the east. The County s major population centers are San Buenaventura (the County seat), Oxnard, Thousand Oaks, Simi Valley, and Camarillo. All are within approximately 60 miles of downtown Los Angeles. Most of the northern half of the County is within the Los Padres National Forest. Mountain ranges created fertile valleys and broad alluvial basins, primarily in the southern half of the County. The high soil fertility and good drainage of the alluvial basins have helped the County become a leading agricultural producer. Population The following table lists population estimates for the City, the County and the other major cities in the County as of January 1 each year for the last five calendar years. CITY OF OXNARD VENTURA COUNTY Population Estimates Calendar Years 2011 through Camarillo 66,095 66,485 66,715 67,154 69,924 Fillmore 15,074 15,188 15,333 15,441 15,529 Moorpark 34,661 34,934 35,158 35,727 36,715 Ojai 7,500 7,554 7,593 7,612 7,477 Oxnard 199, , , , ,997 Port Hueneme 21,583 22,043 22,389 22,768 22,702 San Buenaventura 106, , , , ,557 Santa Paula 29,742 29,979 30,435 30,556 30,752 Simi Valley 124, , , , ,167 Thousand Oaks 127, , , , ,365 Balance of County 96,147 96,635 97,250 97,497 98,323 Total County 829, , , , ,508 Source: California Department of Finance, Demographic Research Unit. C-1

184 Employment and Industry The District is included in the Oxnard-Thousand Oaks-Ventura Metropolitan Statistical Area ( MSA ). The unemployment rate in Ventura County was 4.8% in April 2016, down from a revised 5.0% in March 2016, and below the year-ago estimate of 5.2%. This compares with an unadjusted unemployment rate of 5.2% for California and 4.7% for the nation during the same period. The table below provides information about employment rates and employment by industry type for the County for calendar years 2011 through VENTURA COUNTY Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry (March 2015 Benchmark) Civilian Labor Force (1) 431, , , , ,800 Employment 387, , , , ,300 Unemployment 44,200 39,600 34,300 28,700 24,400 Unemployment Rate 10.2% 9.1% 7.9% 6.6% 5.7% Wage and Salary Employment: (2) Agriculture 25,200 27,100 27,400 26,500 26,500 Mining and Logging 1,300 1,300 1,200 1,300 1,000 Construction 11,300 11,800 12,600 13,700 14,200 Manufacturing 30,600 29,900 29,900 30,600 30,400 Wholesale Trade 12,500 12,600 12,900 12,800 12,600 Retail Trade 36,300 37,300 38,500 39,200 39,700 Transportation, Warehousing, Utilities 5,500 5,700 5,900 6,000 6,000 Information 4,900 5,200 5,200 5,300 5,100 Finance and Insurance 16,200 15,400 14,500 14,200 13,500 Real Estate and Rental and Leasing 4,200 4,200 4,400 4,500 4,200 Professional and Business Services 33,300 34,900 36,300 35,100 34,700 Educational and Health Services 36,300 38,200 40,400 41,600 42,700 Leisure and Hospitality 31,400 32,800 33,800 34,800 35,900 Other Services 9,200 9,400 9,700 9,800 9,600 Federal Government 7,400 7,200 7,000 6,900 7,100 State Government 2,700 2,700 2,700 2,800 2,900 Local Government 34,300 33,700 33,900 34,400 35,300 Total all Industries (3) 302, , , , ,300 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department. C-2

185 Major Employers The following table lists the largest manufacturing and non-manufacturing employers within the County as of March 2016, in alphabetical order. VENTURA COUNTY Largest Employers March 2016 Employer Name Location Industry Air National Guard Port Hueneme State Government-National Security Amgen Inc Thousand Oaks Biological Specimens-Manufacturers Anthem Blue Cross Westlake Village Insurance Baxter Healthcare Westlake Village Physicians & Surgeons Equip & Supls-Mfrs Boskovich Farms Inc Oxnard Fruits & Vegetables-Growers & Shippers Cal Atlantic Homes Westlake Village Home Builders City Of Simi Valley Simi Valley Government Offices-City, Village & Twp Coleman Welding Ventura Steel-Structural (Mfrs) Community Memorial Health Syst Ventura Pharmacies Community Memorial Hospital Ventura Hospitals Haas Automation Inc Oxnard Machinery-Manufacturers Harbor Freight Tools USA Inc Camarillo Tools-New & Used Hossein Tarani Oak Park Oils-Fuel (Whls) I Yogi Technical Support Oak Park Computers-Service & Repair Los Robles Hospital & Med Ctr Thousand Oaks Hospitals Moorpark College Moorpark Schools-Universities & Colleges Academic Nancy Reagan Breast Ctr Simi Valley Diagnostic Imaging Centers Naval Air Warfare Ctr Weapons Point Mugu Nawc Federal Government-National Security Naval Construction Battalion Point Mugu Nawc Government Offices-US Ojai Valley Inn & Spa Ojai Hotels & Motels Oxnard College Oxnard Schools-Universities & Colleges Academic Sheriff's Department-Jails Ventura Sheriff Simi Valley City Manager Simi Valley Government Offices-City, Village, Twp Simi Valley Hospital Simi Valley Hospitals St John's Regional Medical Ctr Oxnard Hospitals Ventura County Offices of Edu Camarillo Schools Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, nd Edition. C-3

186 Commercial Activity Summaries of historic taxable sales within the City and the County during the past five years in which data is available are shown in the following tables. Annual figures are not yet available for calendar years 2014 or Total taxable sales during the first three quarters of calendar year 2014 in the City were reported to be $1,854.8 billion, a 5.08% increase over the total taxable sales of $1,765.1 billion reported during the first three quarters of calendar year CITY OF OXNARD Taxable Retail Sales Calendar Years 2009 through 2013 (Dollars in Thousands) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions ,262 $1,436,959 3,526 $1,856, ,262 1,507,987 2,530 1,933, ,174 1,633,046 3,460 2,122, ,175 1,765,630 3,474 2,290, ,218 1,864,247 3,479 2,395,169 Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Total taxable sales during the first two quarters of calendar year 2014 in the County were reported to be $9,811.5, a 4.45% increase over the total taxable sales of $9,393.5 billion reported during the first three quarters of calendar year VENTURA COUNTY Taxable Retail Sales Calendar Years 2009 through 2013 (Dollars in Thousands) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions ,331 $7,213,606 22,564 $9,883, ,134 7,546,960 22,422 10,225, ,788 8,156,404 22,032 11,020, ,992 8,700,010 22,206 11,958, ,285 9,101,436 22,234 12,824,296 Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). C-4

187 Effective Buying Income Effective buying income ("EBI") is designated by Sales and Marketing Management Magazine as personal income less personal tax and non-tax payments. Personal income is the aggregate of wages and salaries, other labor income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, personal interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, non-tax payments (such as fines, fees, penalties), and personal contributions for social insurance. Effective buying income is a bulk measure of market potential. It indicates the general ability to buy and is essential in comparing, selecting and grouping markets on that basis. The following table summarizes the Household Effective Buying Income for the City, the County, the State of California and the United States for the period 2011 through Data is not yet available for calendar year COUNTY OF VENTURA Effective Buying Income As of January 1, 2011 through 2015 Year Area Total Effective Buying Income (000 s Omitted) Median Household Effective Buying Income 2011 City of Oxnard $2,737,998 $46,616 Ventura County 19,920,950 58,300 California 814,578,458 47,062 United States 6,438,704,664 41, City of Oxnard $3,059,218 $47,708 Ventura County 21,829,753 59,284 California 864,088,828 47,307 United States 6,737,867,730 41, City of Oxnard $3,066,423 $49,260 Ventura County 21,077,443 60,285 California 858,676,636 48,340 United States 6,982,757,379 43, City of Oxnard $3,216,918 $51,206 Ventura County 21,468,990 60,911 California 901,189,699 50,072 United States 7,357,153,421 45, City of Oxnard $3,529,380 $54,966 Ventura County 24,412,090 67,179 California 981,231,666 53,589 United States 7,757,960,399 46,738 Source: The Nielsen Company (US), Inc. C-5

188 Construction Activity Construction activity in the City and the County for the past five years for which data is available is shown in the following tables. CITY OF OXNARD Total Building Permit Valuations Calendar Years 2010 through 2014 (valuations in thousands) Permit Valuation New Single-family $6,647.2 $790.1 $17,207.8 $10,497.2 $41,189.3 New Multi-family 40, , , , ,874.3 Res. Alterations/Additions 7, , , , ,501.4 Total Residential 53, , , , ,565.0 New Commercial 10, , , , ,281.7 New Industrial 0.0 5, , ,337.6 New Other 11, , , Com. Alterations/Additions 13, , , , ,145.1 Total Nonresidential 36, , , , ,528.4 New Dwelling Units Single Family Multiple Family TOTAL Source: Construction Industry Research Board, Building Permit Summary. VENTURA COUNTY Total Building Permit Valuations Calendar Years 2010 through 2014 (valuations in thousands) Permit Valuation New Single-family $65,286.8 $62,359.0 $139,009.7 $169, ,295.5 New Multi-family 67, , , , ,260.2 Res. Alterations/Additions 63, , , , ,458.2 Total Residential 196, ,950.9 $313, , ,013.9 New Commercial 29, , , , ,505.3 New Industrial 6, , , ,404.9 New Other 29, , , , ,412.3 Com. Alterations/Additions 80, , , , ,613.9 Total Nonresidential 147, , , , ,936.4 New Dwelling Units Single Family Multiple Family TOTAL ,048 1,082 1,009 Source: Construction Industry Research Board, Building Permit Summary. C-6

189 APPENDIX D FORM OF OPINION OF BOND COUNSEL Board of Trustees Oxnard Union High School District 309 South K Street Oxnard, California [Closing Date] OPINION: $ Oxnard Union High School District (Ventura County, California) 2016 General Obligation Refunding Bonds Members of the Board of Trustees: We have acted as bond counsel to the Oxnard Union High School District (the District ) in connection with the issuance by the District of $ principal amount of Oxnard Union High School District (Ventura County, California) 2016 General Obligation Refunding Bonds dated the date hereof (the Bonds ) under the provisions of under the provisions of the provisions of Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the Bond Law ), and a resolution adopted by the Board of Trustees of the District (the Board ) on May 18, 2016 (the Bond Resolution ). We have examined the law and such certified proceedings and other papers as we deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Board contained in the Bond Resolution and in the certified proceedings and other certifications furnished to us, without undertaking to verify such facts by independent investigation. Based upon our examination, we are of the opinion, under existing law, as follows: 1. The District is a duly created and validly existing school district with the power to issue the Bonds, and to perform its obligations under the Bond Resolution and the Bonds. 2. The Bond Resolution has been duly adopted by the Board, and constitutes a valid and binding obligation of the District enforceable upon the District in accordance with its terms. 3. The Bonds have been duly authorized, executed and delivered by the District, and are valid and binding general obligations of the District. 4. The Board of Supervisors of Ventura County is required under the laws of the State of California to levy an ad valorem tax upon the property in the District, unlimited as to rate or amount, for the payment of principal and interest on the Bonds. D-1

190 5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986 which must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted in the documents relating to the Bonds to comply with each of such requirements; and the District has full legal authority to make and comply with such covenants. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, A Professional Law Corporation D-2

191 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE $ OXNARD UNION HIGH SCHOOL DISTRICT (Ventura County, California) 2016 General Obligation Refunding Bonds CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this Disclosure Certificate ) is executed and delivered by the Oxnard Union High School District (the District ) in connection with the execution and delivery of the captioned bonds (the Bonds ). The Bonds are being executed and delivered pursuant to a resolution adopted by the Board of Trustees of the District on May 18, 2016 (the Bond Resolution ). U.S. Bank National Association, is initially acting as paying agent for the Bonds (the Paying Agent ). The District hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Purchasers in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4. Annual Report Date means the date not later than nine months after the end of each fiscal year of the District (currently June 30 th ), the first being March 31, Dissemination Agent means, initially, Dale Scott & Company, Inc., or any successor Dissemination Agent designated in writing by the District and which has filed with the District and the Paying Agent a written acceptance of such designation. Listed Events means any of the events listed in Section 5(a). MSRB means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. Official Statement means the final official statement executed by the District in connection with the issuance of the Bonds. Paying Agent means U.S. Bank National Association, or any successor thereto. E-1

192 Participating Underwriter means the original purchasers of the Bonds required to comply with the Rule in connection with offering of the Bonds. Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing not later than March 31, 2017 with the report for the Fiscal Year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the District hereunder. (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A, with a copy to the Paying Agent and Participating Underwriters. (c) (i) (ii) With respect to each Annual Report, the Dissemination Agent shall: determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and if the Dissemination Agent is other than the District, file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. E-2

193 Section 4. Content of Annual Reports. The District s Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, the following information: (i) (ii) (iii) (iv) (v) Assessed value of taxable property in the jurisdiction of the District for the most recently completed fiscal year; Assessed valuation of the properties of the top 20 secured property taxpayers in the District for the most recently completed fiscal year; Property tax collection delinquencies for the District for the most recently completed fiscal year, or if not available, for the previous fiscal year, but only if available from the County at the time of filing the Annual Report and only if the District s general obligation bond levies are not included in Ventura County s Teeter Plan; The District s most recently adopted Budget or approved interim report with budgeted figures, which is available at the time of filing the Annual Report; and Such further information, if any, as may be necessary to make the statements made pursuant to (a) and (b) of this Section, in the light of the circumstances under which they are made, not misleading. (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are available to the public on the MSRB s internet web site or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. E-3

194 (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the District. (13) The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional paying agent or the change of name of a paying agent, if material. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, the District shall, or shall cause the Dissemination Agent (if not the District) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Bond Resolution. (c) The District acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section contain the qualifier if material and that subparagraph (a)(6) also contains the qualifier material with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The District shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event s occurrence is material for purposes of U.S. federal securities law. Whenever the District obtains knowledge of the occurrence of any of these Listed Events, the District will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the District will cause a notice to be filed as set forth in paragraph (b) above. E-4

195 (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The District s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Dale Scott & Company, Inc., Inc. Any Dissemination Agent may resign by providing 30 days written notice to the District and the Paying Agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) (b) (c) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Bond Resolution for amendments to the Bond Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. E-5

196 If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. If the District fails to comply with any provision of this Disclosure Certificate, the Participating Underwriters or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent s negligence or willful misconduct. The Dissemination Agent will have no duty or obligation to review any information provided to it by the District hereunder, and shall not be deemed to be acting in any fiduciary capacity for the District, the Bondholders or any other party. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. E-6

197 (b) The Dissemination Agent shall be paid compensation by the District for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: July, 2016 OXNARD UNION HIGH SCHOOL DISTRICT By: Name: Title: ACCEPTANCE OF DUTIES AS DISSEMINATION AGENT DALE SCOTT & COMPANY, INC. By: Title: E-7

198 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Oxnard Union High School District (the District ) Name of Bond Issue: Date of Issuance: July, 2016 $ Oxnard Union High School District (Ventura County, California) 2016 General Obligation Refunding Bonds NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated as of,, The District anticipates that the Annual Report will be filed by. Dated: DISSEMINATION AGENT By: Its: cc: Paying Agent and Participating Purchasers E-8

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

200 a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at The information contained on this Internet site is not incorporated herein by reference. 3. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. 4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. 6. Redemption notices will be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to District as soon as F-2

201 possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from District or Paying Agent on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent, or District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to District or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. 10. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that District believes to be reliable, but District takes no responsibility for the accuracy thereof. F-3

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203 APPENDIX G COUNTY INVESTMENT POLICY AND INVESTMENT REPORT G-1

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205 VENTURA COUNTY STATEMENT OF INVESTMENT POLICY AS APPROVED DECEMBER 16, 2014 BOARD OF SUPERVISORS SUPERVISOR STEVE BENNETT, DISTRICT 1, CHAIRMAN SUPERVISOR LINDA PARKS, DISTRICT 2 SUPERVISOR KATHY I. LONG, DISTRICT 3 SUPERVISOR PETER C. FOY, DISTRICT 4 SUPERVISOR JOHN C. ZARAGOZA, DISTRICT 5 Judge Steven Hintz Treasurer-Tax Collector Linda Catherine Le Assistant Treasurer-Tax Collector Ventura County Treasurer-Tax Collector s Office 800 South Victoria Avenue, L#1290 Ventura, CA helpinghand@ventura.org Website:

206 Table of Contents STATEMENT OF INVESTMENT POLICY... 3 Introduction... 3 Investment Objective... 3 Investment and the Notion of Risk... 4 Liquidity... 5 Yield... 6 INTERNAL CONTROLS... 6 Safekeeping of Securities... 6 Security Custody and Deliveries... 6 SECURITY INSTRUMENTS... 7 Qualifications of Brokers, Dealers, and Financial Institutions... 7 Ratings... 8 U.S. Agencies... 8 U.S. Government... 9 Commercial Paper... 9 Medium Term Notes and Deposit Notes... 9 Municipal Notes, Bonds and Other Obligations... 9 Bankers Acceptances Negotiable Certificates of Deposit and Yankee Certificates of Deposit. 10 Certificates of Deposit Repurchase Agreements Securities Lending Local Agency Investment Fund (LAIF) CalTrust and California Asset Management Program (CAMP) Local Agency Debt and State Warrants Supranationals.. 12 Asset-Backed Securities Prohibited Transactions Apportionment of Interest and Costs AUTHORITY AND RESPONSIBILITIES OF THE TREASURER-TAX COLLECTOR Delegation of Authority to Invest Authority to Execute Investment Transactions Competitive Bidding Place and Time for Conducting Business Conflict of Interest Portfolio Reporting Disaster Recovery Program Extraordinary Withdrawals Terms and Conditions of Local Agency GLOSSARY APPENDIX A

207 STATEMENT OF INVESTMENT POLICY This Statement of Investment Policy ( Policy ) provides the guidelines for prudent investment of public funds in a manner which will provide the highest investment return with optimal security and liquidity. The Policy and practices of the County Treasurer are based on prudent money management principles and California State Law, specifically Government Code Sections ; ; and Furthermore, it outlines the policies essential to ensuring the safety and financial strength of the County s investment portfolio. This Policy is based on the principles of prudent money management and conforms to all applicable Federal and State laws governing the investment of public funds. In instances in which the Policy is more restrictive than Federal or State law, the Policy will supersede. The Policy shall be reviewed annually and any modifications made thereto must be approved by the Board of Supervisors. Introduction The Treasurer-Tax Collector of Ventura County manages pooled cash under the prudent investor rule. This rule states that: Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. This rule allows the County the option to operate over a broad spectrum of investment opportunity defined within Section et seq of the California Government Code. Therefore, the County's portfolio will be made up of a selection of investments that ensure diversification and meet the liquidity needs of the organization. The major overriding premise underlying the County's investment objective is always to ensure that funds are available when needed. Investment Objective It is the policy of the County to invest public funds in a manner which will provide for the preservation of capital while meeting the daily cash flow requirements of the County and other participants, while attaining a market average yield within an acceptable and defined level of risk. The Policy has three primary objectives, in order of priority: 3

208 1) The safety of principal. 2) Maintenance of liquidity to meet cash flow needs. 3) To earn a competitive rate of return (i.e., yield) within the confines of the California Government Code, this policy, and procedural structure. In order to accomplish the objectives of safety, liquidity, and yield, the economy and various financial markets are monitored daily in order to assess the probable course of interest rates and thus maximize yield on the County's temporarily idle funds. In a market with increasing interest rates, the Treasury will attempt to invest in securities with shorter maturities. This strategy allows funds to be available for other investments when interest rates are at higher levels. Conversely, when interest rates appear to be near a plateau, the Treasury will attempt to lock in a higher rate of return. The length of term for all investments shall be commensurate with the short, medium, and long-term cash flow needs of the County and other investment pool participants. Investment and the Notion of Risk In order to accomplish the investment philosophy outlined above, the concept of risk must be clearly defined as it relates to the investment of public funds. This concept of risk finds its ultimate translation into a structured and well-diversified portfolio. The County shall ensure the safety of its idle funds by limiting credit and interest rate risk. These are the two types of risk that can clearly damage a public sector portfolio. Credit risk is defined as the risk of loss due to the failure of the issuer of a security and shall be mitigated by: 1) Pre-qualifying financial institutions with which it will do business through the utilization of Moody's Investors Service, Standard and Poor's Ratings Services, and Fitch Ratings. 2) Diversifying the portfolio so that the failure of any one issuer or backer will not place any undue financial burden on the County. 3) Monitor all County investments on a daily basis to anticipate and respond appropriately to a significant reduction in the credit worthiness of a depository. 4

209 Interest rate risk is defined as the risk that the market value of portfolio securities will fall due to an increase in interest rates. This risk shall be mitigated by: 1) Structuring the portfolio so that securities mature at times to meet the ongoing cash needs of the County. 2) Restructure of the portfolio to minimize the loss of market value or cash flow. 3) Limit the average maturity of the portfolio holdings to 375 days. The investment program of Ventura County shall be managed with a degree of professionalism that is worthy of the public trust and adheres to the tenets of modern portfolio theory. The Treasury is very cognizant of past losses of public funds by local agencies throughout California. Those losses resulted in a loss of confidence by the public in public sector investment expertise. This policy seeks to ensure that proper controls are maintained by the Treasurer-Tax Collector and subordinate staff. There are times when it becomes necessary for losses to be taken: A) Interest rates appear to be rising and the funds can be invested shorter term at higher rates. B) When opportunities arise that will result in an increase in overall interest income to the County. C) When cash needs are greater than expected. Therefore, in order to mitigate these event risks to the County's portfolio all investment losses shall be approved by the Treasurer-Tax Collector, exclusively. This authority shall not be delegated. Liquidity The County's portfolio will be structured so that securities will mature at or about the same time as cash is needed to meet demand and in accordance with the economic projections mentioned above. The Treasury will construct a portfolio that will consist of securities with active secondary and resale markets. Any investments for which no secondary market exists, such as time deposits, shall not exceed 375 days and no investment will have a maturity of more than 1150 days. 5

210 Yield The Treasurer-Tax Collector shall always attempt to obtain a competitive rate of return on any investment type consistent with the required safety, liquidity, and other parameters of this policy, departmental procedures, and the laws of the State of California. INTERNAL CONTROLS The Treasurer-Tax Collector shall establish a system of internal controls, which shall be documented in writing. The controls will be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, and unanticipated changes in financial markets. Except for declared emergencies, the County Treasurer-Tax Collector s Office shall observe the following procedures on a daily basis: All investment transactions shall be entered into the accounting system. County investments shall be transacted, confirmed, accounted for, and audited by different people. Safekeeping of Securities To protect against potential losses caused by the collapse of individual securities dealers, all securities owned by the County, including collateral on repurchase agreements, shall be held in safekeeping by a third party bank trust department, acting as agent for the County under the terms of a custody agreement executed by the bank and the Treasurer-Tax Collector. All trades executed between the County and a dealer will settle on a delivery vs. payment basis with a custodial bank. All security transactions engaged in by the Treasurer-Tax Collector shall be countersigned by another authorized treasury department employee. Security Custody & Deliveries All securities purchased shall be deposited for safekeeping with the custodial bank that has contracted to provide the County Treasurer with custodial security clearance services. All security holdings shall be reconciled monthly by the County Treasurer-Tax Collector s Office and audited at least quarterly by the internal audit division of the Auditor- Controller s Office. 6

211 All security transactions are to be conducted on a delivery-versus-payment basis. Confirmation receipts on all investments are to be reviewed immediately for conformity with County transaction documentation. Confirmations resulting from securities purchased under repurchase agreements should clearly state the exact and complete nomenclature of the underlying securities purchased, that these securities have been sold to the County under a repurchase agreement, and the stipulated date and amount of the resale by the County back to the seller of the securities. SECURTIY INSTRUMENTS Qualifications of Brokers, Dealers, and Financial Institutions The Treasurer-Tax Collector will maintain a list of approved financial institutions authorized to provide investment services. Additionally, the Treasurer-Tax Collector shall transact business only with approved direct issuers; security brokers/dealers selected by credit worthiness that licensed by the State of California and licensed by the Financial Industry Regulatory Authority (FINRA); National or State chartered bank or savings institutions; and primary government dealers designated by the Federal Reserve. Any broker/dealer interested in conducting business with the County must have an office within the State of California and is required to fill out an extensive questionnaire maintained by the Treasurer-Tax Collector. This questionnaire is then reviewed by the Treasurer-Tax Collector and upon acceptance permits the County to deal with the broker/dealer. The Treasurer-Tax Collector views the relationship of the firm and its representatives to the County as being a long-term mutually beneficial business relationship. The Treasurer- Tax Collector expects the firm and its staff to act with integrity and trust. The firm must ensure that its staff is aware of the County Treasurer's Investment Policy as well as California Government Code sections and that govern the securities transactions of the County. The firm will be required to annually issue written acknowledgment that it has read and will comply with the County s Investment Policy. No broker/dealer may have made political contributions greater than the limits expressed in Rule G-37 of the Municipal Securities Rule Making Body to the Treasurer-Tax Collector, Board of Supervisors, or candidate for those offices, or Treasury Oversight Committee members. 7

212 The Treasury staff shall investigate dealers with which it will conduct business in order to determine: if the firm is adequately capitalized and meets the Federal Reserve's minimum capital requirements for broker/dealer operations, makes markets in securities appropriate to the County's investment policy, the individual covering the account has a minimum of three years dealing with large institutional accounts, and receives three favorable recommendations from other short term cash portfolio managers. Upon application and as requested by the Treasurer-Tax Collector, all the firms are required to provide a copy of their most recent published annual report, quarterly reports issued since the last annual report, Financial and Operational Combined Uniform Single (FOCUS) Report, organization chart, any financial information regarding credit lines and debt support provided by the parent firm and any other data required. Ratings With the exception of LAIF, insured deposits, and U.S. Treasury and Government Agency issues, investments shall be placed only in those instruments and institutions rated favorably as determined by the Treasurer-Tax Collector in accordance with this Statement and with the assistance of Moody s Investors Service, Standard and Poor s Ratings Services, and Fitch Ratings. If the rating of any investment drops during the course of time with which the County has placed an investment, the investment will be matured at the earliest possible convenience. If the rating of any security drops below the minimum acceptable rating for that security class, resulting in a split rating, the investment will be sold if no significant loss of principal is involved or matured at the earliest possible convenience. These sales must be individually approved by the Treasurer-Tax Collector. A rating of NR by one rating service is not a split rating and does not bar the purchase of the security. U.S. Agencies The purchase of U.S. agency securities shall be limited to issues of the Federal Farm Credit Banks (FFCB), Federal Home Loan Banks (FHLB), Federal Home Loan Mortgage Corp. (Freddie Mac/FHLMC), the Federal National Mortgage Corporation (Fannie Mae/FNMA), Federal Agricultural Mortgage Corporation (Farmer Mac/FAMCA), or in obligations, participations, or other instruments of, or issued by, a federal agency or a United States government-sponsored or backed entity. The fund s holdings of any one federal agency security shall not exceed 25% of the total fund at the time of purchase. The maximum maturity of any one agency investment shall not exceed three years or 1150 days. 8

213 U. S. Government United States Treasury Bills, Notes, and Bonds are backed by the full faith and credit of the United States Government. There shall be no limitation as to the percentage of the portfolio which can be invested in this category. The maturity of a security is limited to a maximum of three years or 1150 days. Commercial Paper Commercial Paper is a short term unsecured promissory note issued to finance short term credit needs. Commercial Paper eligible for investment must be of prime quality of the highest ranking or of the highest short-term letter and numerical rating as provided for by Standard and Poor's Ratings Services, Moody's Investors Service, and Fitch Ratings (S&P A- 1+, A-1; Moody s P-1; Fitch F1+, F1). Eligible paper is further limited to issuing corporations that are organized and operating within the United States and have total assets in excess of $500 million and an A or higher rating for the issuer s debt, other than commercial paper, if any, as provided for by S&P (A or higher), Moody s (A2 or higher) and Fitch (A or higher). Purchases of eligible Commercial Paper may not exceed 270 days to maturity. Purchases of Commercial Paper may not exceed 40 percent of the investment portfolio at the time of the purchase. No more than 10 percent of the total assets of the pool at the time of the purchase may be invested in the outstanding paper of any single issuing corporation. The Treasurer- Tax Collector shall establish a list of approved Commercial Paper issuers in which investments may be made. Medium-Term Notes and Deposit Notes Medium-Term Notes eligible for investment must be rated in the same categories described in Commercial Paper, above, to wit: Short-term ratings by S&P A-1 or higher; Moody s P- 1; and Fitch F1 or higher; and long-term ratings of S&P A or higher, Moody s A2 or higher, and Fitch A or higher. Medium-Term Notes may not exceed 20 percent of the investment portfolio at the time of the purchase and may not have a maturity of longer than 2 years or 735 days. Municipal Notes, Bonds and Other Obligations Municipal notes, bonds, and other obligations are securities issued by state and local government agencies to finance capital and operating expenses. The characteristics of a municipal bond or note often are similar to the characteristics of corporate bonds and notes or the U.S. government and federal agency bonds and notes. Municipal notes normally have a specific maturity date, and bear interest that is scheduled to be paid at specific intervals. Municipal notes, bonds and other obligations may not exceed a maximum of three years or 1150 days. Municipal notes must meet the minimum debt rating described above in Medium Term Notes and Deposit Notes. 9

214 Bankers Acceptances A Bankers Acceptance is a draft or bill of exchange accepted by a bank or trust company and brokered to investors in the secondary market. Bankers Acceptances may be purchased for a period of up to 180 days and in an amount not to exceed 40 percent of the investment portfolio at the time of the purchase, with no more than 30 percent of the investment portfolio at the time of the purchase in the Bankers Acceptances of any one commercial bank. The Treasurer- Tax Collector shall establish a list of those banks deemed most credit worthy for the investment in Bankers Acceptances, limited to those institutions rated as noted in Commercial Paper and Medium-Term Notes, above. Negotiable Certificates of Deposit and Yankee Certificates of Deposit Negotiable Certificates of Deposit (NCD) are issued by commercial banks, foreign banks, and thrift institutions against funds deposited for a specified period of time and earn specified or variable rates of interest. The Treasurer-Tax Collector may invest up to 30 percent of the investment portfolio at the time of the purchase in NCD's. Negotiable certificates of deposit shall be limited to those institutions rated as noted in Commercial Paper and Medium- Term Notes, above. NCD's differ from other Certificates of Deposit in that they are illiquid instruments which are traded in secondary markets. The maximum term to maturity of any NCD shall be 270 days. The Treasurer-Tax Collector shall establish a list of eligible domestic commercial banks, thrifts and state licensed foreign banks (Yankee Certificates of Deposit) which will be eligible for investment. Yankee Certificates of Deposit (YCD) are issued in the United States by a branch or agency of a foreign bank. They are negotiable instruments, and most have a minimum face value of $100,000, making them appropriate for large investors. Certificates of Deposit Certificates of Deposit are deposits by the Treasurer-Tax Collector in commercial banks or savings and loan associations within the State of California and shall be limited to those institutions rated as noted above in Negotiable Certificates of Deposit. Local institutions shall receive preference for deposits up to $250,000 if competitive rates are offered. These investments are non-negotiable. The maximum term to maturity shall not exceed 375 days and shall be fully insured by the FDIC. 10

215 Repurchase Agreements The County may invest in repurchase agreements with banks and dealers of primary dealer status recognized by the Federal Reserve with which the County has entered into a repurchase contract which specifies terms and conditions of repurchase agreements. The maturity of repurchase agreements shall not exceed 90 days. The market value of securities used as collateral for repurchase agreements shall be monitored daily by the Treasurer-Tax Collector and will not be allowed to fall below 102% of the value borrowed against those funds. The value is adjusted quarterly based on the value of the repurchase agreement. In order to conform with provisions of the Federal Bankruptcy Code which provide for the liquidation of securities held as collateral for repurchase agreements, the only securities acceptable as collateral shall be certificates of deposit, commercial paper, eligible bankers' acceptances, or securities that are direct obligations of, or that are fully guaranteed as to principal and interest by the United States or any agency of the United States. Furthermore, this collateral shall not exceed three years or 1150 days to maturity. There shall be a $75 million limitation in repurchase agreements entered into with any one institution. Securities Lending Securities Lending is permissible as an agreement to lend securities to a borrower who provides collateral to the local agency. The local agency retains ownership and continues to receive all interest, dividends, and capital appreciation. Both securities and collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral. Local Agency Investment Fund The Treasurer-Tax Collector may invest in the Local Agency Investment Fund (LAIF) established by the State Treasurer for the benefit of local agencies up to the maximum permitted by State law. CalTrust and California Asset Management Program (CAMP) The Treasurer-Tax Collector may invest in The Investment Trust of California, doing business as CalTRUST, and in California Asset Management Program (CAMP), California joint powers authorities in which local agencies may invest funds pursuant to Government Code section 53601(p). The combined investment in CalTrust and CAMP shall not exceed $25,000,000 at the time of the purchase. The Treasurer-Tax Collector shall withdraw its entire investment in a program if the S&P rating falls below AAf/S-1+ for CalTrust or AAAm for CAMP. 11

216 Local Agency Debt and State Warrants The Treasurer-Tax Collector may invest in bonds, notes, warrants, or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. The Treasurer-Tax Collector may invest in registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenueproducing property owned, controlled, or operated by the state, or by a department, board, agency, or authority of the state. Supranationals The Treasurer-Tax Collector may invest surplus funds to include United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), or Inter-American Development Bank (IADB). These instruments must have a maximum remaining maturity of three years (1150 days) or less, be eligible for purchase and sale within the United States, be S&P rated "AAA" and shall not exceed 30% of the agency's surplus funds. Prohibited Transactions and Asset-Backed Securities At the time of purchase, all permitted investments shall conform in all respects with this Investment Policy Statement and with applicable provisions of the California Government Code. The Treasurer-Tax Collector may not invest in asset backed securities such as Collateralized Mortgage Obligations. Apportionment of Interest and Costs Interest shall be apportioned to all pool participants quarterly, based upon the ratio of the average daily balance of each individual fund to the average daily balance of all funds in the Investment Pool. The amount of interest apportioned shall be determined using the accrual method of accounting, whereby interest will be apportioned for the quarter in which it was actually earned. The Treasurer-Tax Collector may deduct from the gross interest earnings those administrative costs relating to the management of the Treasury, including salaries and other compensation, banking costs, equipment costs, supplies, the cost of information services, cashiering, accounting, reporting remittance processing, depositing of public funds, audit, and any other costs as provided by Section 27013, 27133(f), and AUTHORITY AND RESPONSIBILITIES OF THE TREASURER-TAX COLLECTOR 12

217 Delegation to Authority to Invest The Treasurer-Tax Collector s authority to invest is delegated by the Board of Supervisors in accordance with the California Government Code Sections and Statutory authority for the investment and safekeeping functions are found in Sections et seq., and et seq., of the California Government Code. The Treasurer-Tax Collector has the authority to react to unstable market conditions in order to preserve the safety, liquidity or yield of the portfolio. The Treasurer-Tax Collector s reaction may temporarily change the investment parameters or investment practices of the County until the market has stabilized or until the Board of Supervisors has approved a revised Investment Policy. The Treasurer-Tax Collector shall immediately notify the Treasury Oversight Committee members and the Board of Supervisors at their next scheduled meeting of any changes to the investment parameters or practices that were precipitated by the unstable market conditions. Authority to Execute Investment Transactions The authority to execute investment transactions on a daily basis is limited to the Treasurer- Tax Collector. This function may be delegated to the Assistant Treasurer-Tax Collector and/or other Treasury personnel at the discretion of the Treasurer-Tax Collector. Competitive Bidding All purchase/sales shall be made only after a process of competitive bidding, unless information provided on electronic market quotation services, faxes, or transmissions show current market rates. A minimum of three offer/bids should be obtained before an investment is purchased or sold. Exceptions to the above would involve transactions in U.S. Treasury or agency obligations, repurchase agreements, securities possessing unique characteristics which would make competitive bidding impractical, or market circumstances in which competitive bidding could be adverse to the best interest of the Treasurer-Tax Collector s investment program. Place and Time for Conducting Business Investment transactions shall not be conducted from any place other than the office of the Treasurer-Tax Collector during normal business hours established for Treasury operations. Exceptions must have the approval of the Treasurer-Tax Collector. Conflict of Interest 13

218 No agency employee nor Treasury Oversight Committee member may directly or indirectly accept or solicit from any persons, corporations, or group having a business relationship with this Agency anything of economic value as a gift, gratuity, or favor which would be in conflict with the County Administrative Policy. No agency employee nor Treasury Oversight Committee member shall, outside of regular working hours, engage in any profession, trade, business, or occupation which is incompatible or involves a conflict of interest with his duties as a county officer or employee, or which in any way may reflect unfavorably on this Agency, the appointing authority, or his fellow employees. Portfolio Reporting The Treasurer-Tax Collector shall prepare a monthly Investment Report to be presented at a regularly scheduled meeting of the Board of Supervisors, including a succinct management summary that provides a clear picture of the status of the current investment portfolio, market conditions and strategy for the coming months. The report will also include a listing of all investments by type, name of issuer, date of maturity, par and dollars amount invested in each security, investment, and the money within the Treasury. There will be a separate statement advising the Board of the longest maturity of a security in the portfolio. The report will contain a statement assuring the Board that the anticipated cash flow needs of the participants will be met. The report will also include a statement that the investment practices and portfolio holdings are in compliance with the investment policy or an explanation as to why there is a condition which exists outside of the investment policy. The Treasurer-Tax Collector will also provide a copy of the monthly Investment Report to the Treasury Oversight Committee members each month. Disaster Recovery Program The Treasurer-Tax Collector s Disaster Plan includes critical phone numbers and addresses of key Treasury and investment personnel, as well as, currently approved bankers and broker/dealers. The plan provides for an offsite location to be communicated at the time of readiness if the Treasurer-Tax Collector s offices are uninhabitable. In the event the Treasurer or authorized staff is unable to invest the portfolio, the Treasurer has an agreement with the custodian for a daily sweep of all uninvested cash with the custody bank into an interest-bearing account. Until normal operations of the Treasurer s office have been restored, the limitations on the size of an Individual issuer and the percentage restrictions by investment type would be allowed to exceed those approved in this Investment Policy Statement and would be required to be reported to the Board of Supervisors and Pool Participants in a timely manner. Extraordinary Withdrawals The Treasurer-Tax Collector will maintain a schedule of seasonal deposits into and withdrawals from the investment pool by participating districts. Constant contact with the 14

219 pool participants will be maintained to ascertain any cash needs beyond the anticipated cashflow patterns. Our investment strategy is based upon the known cash-flow patterns, which allow the Treasurer-Tax Collector to maximize interest earnings for the County and other pool participants. Extraordinary withdrawals could create a liquidity problem and negatively impact the earnings of the remaining pool participants if the Treasurer-Tax Collector is forced to liquidate securities before their scheduled maturity date. A pool participant who wishes to withdraw from the pool or make an extraordinary withdrawal, will be encouraged to work with the Treasury to arrange a withdrawal schedule that would prevent losses to the withdrawing district or the remaining pool participants. Losses experienced by the County investment pool, which were precipitated by the unnoticed extraordinary withdrawal of funds, will be borne by the district who caused such losses to occur. The Treasurer-Tax Collector reserves the right to choose which securities to liquidate and could choose to sell the securities that have the lowest earnings. Terms and Conditions that a Local Agency May Participate in the Pool Local agencies may, by resolution of their governing bodies and the approval of the Treasurer- Tax Collector, deposit excess funds in the County Treasury for the purpose of investment by the Treasurer-Tax Collector. The procedures for this process are contained in the Treasury Procedural Manual. 15

220 INVESTMENT GLOSSARY Accrued Interest Interest that has accumulated but has not yet been paid from the most recent interest payment date or issue date to a certain date. Agency Issues Securities issued by federal agencies, those chartered by the federal government or Government Sponsored Enterprises that are considered to be backed by the federal government. See also Government Sponsored Enterprises. Amortized Cost The original cost of the principal adjusted for the periodic reduction of any discount or premium from the purchase date until a specific date (also called Book Value ). Bankers Acceptance Money market instrument created from transactions involving foreign trade. In its simplest and most traditional form, a bankers acceptance is merely a check, drawn on a bank by an importer or exporter of goods. Basis Point A unit of measurement equal to 1/100 of 1 percent. As an example, the difference between a security yielding 3.25% and one yielding 3.20% is five basis points. Benchmark An index or security used to compare the performance of a portfolio. Bond A long-term debt instrument of a government or corporation promising payment of the original investment plus interest by a specified future date. Bullet A colloquial term for a bond that cannot be redeemed, or called, prior to maturity. Callable Bond A bond in which all or a portion of its outstanding principal may be redeemed prior to maturity by the issuer under specified conditions. Collateralization Process by which a borrower pledges securities, property or other deposits for the purpose of securing the repayment of a loan and/or security. Collateralized Certificate of Deposit An instrument representing a receipt from a bank for a deposit at a specified rate of interest for a specified period of time that is collateralized by the bank with securities at a minimum of 110% of the deposit amount. Commercial Paper Money Market instrument representing an unsecured short-term promissory note of a corporation at a specified rate of return for a specified period of time. Coupon The stated interest rate on a debt security that an issuer promises to pay. Credit Quality An indication of risk that an issuer of a security will fulfill its obligation, as rated by a rating agency. 16

221 Credit Rating A standardized assessment, expressed in alphanumeric characters, of a company s creditworthiness. Credit Risk The risk to an investor that an issuer will default in the payment of interest and/or principal on a security. Derivatives Securities which derive their value from that of another security or an underlying index, currency or other measure. Floating rate notes (also floaters ) are not considered derivatives. Discount Instruments Securities that are sold at a discount to face value. Diversification The practice or concept of investing in a range of securities by sector, maturity, asset class or credit quality in order to reduce and spread financial risk. Dollar Weighted Average Maturity The sum of the amount of each security investment multiplied by the number of days to maturity, divided by the total amount of security investments. Duration Is a measure of the price volatility of a portfolio and reflects an estimate of the projected increase or decrease in the value of that portfolio based upon a decrease or increase in the interest rates. A duration of 1.0 means that for every one percent increase in interest rates, the market value of the Portfolio would decrease by 1.0 percent. Earnings Apportionment Is the quarterly interest distribution to the Pool Participants where the actual investment costs incurred by the Treasurer are deducted from the interest earnings of the Pool. Government Obligations Securities issued by the U.S. Treasury and Federal Agencies. U.S. Treasuries are direct obligations of the Federal Government. Agencies are not direct obligations of the Federal Government, but involve Federal sponsorship or guarantees. Government Sponsored Enterprises (GSE S) Private, shareholder-owned companies with a relationship with government agencies. These agencies generally are viewed to have an implied guarantee of the U.S. government. Highly Liquid The most eminent type of security that is easily converted to cash because there are many interested buyers and sellers to trade large quantities at a reasonable price. Illiquid A security that is difficult to buy or sell or has a wide spread between the bid price and offer price in the secondary market. There are few buyers and sellers willing to trade large quantities at a reasonable price. Interest Rate Risk The risk associated with declines or rises in interest rates which cause an investment in a fixed-income security to increase or decrease in value. Also called Market Risk. 17

222 Liquid A security that is easily bought and sold because of the willingness of interested buyers and sellers to trade large quantities at a reasonable price. Local Agency Obligation An indebtedness issued by a local agency, department, board, or authority within the State of California. Long-Term The term used to describe a security when the maturity is greater than one year. Market Value An estimate of the value of a security at which the principal would be sold from a willing seller to a willing buyer at the date of pricing. Medium-Term Notes These are Corporate Notes and Bank Notes that are debt obligations of banks, corporations, and insurance companies. They are issued at a specific rate of return for a specific period of time. Money Market Mutual Fund A mutual fund with investments directed in shortterm money market instruments only, which can be withdrawn daily without penalty. Municipal Notes, Bonds and Other Obligations - Municipal notes, bonds, and other obligations are securities issued by state and local government agencies to finance capital and operating expenses. The characteristics of a municipal bond or note often are similar to the characteristics of corporate bonds and notes or the U.S. government and federal agency bonds and notes. Municipal notes normally have a specific maturity date, and bear interest that is scheduled to be paid at specific intervals. Municipal notes, bonds and other obligations may not exceed a maximum of three years or 1150 days. Municipal notes must meet the minimum debt rating described above in Medium Term Notes and Deposit Notes. Negotiable Certificate of Deposit A Money Market instrument representing a receipt from a bank for a deposit at a specified rate of interest for a specified period of time that is traded in secondary markets. Par The stated maturity value, or face value, of a security. Pass-Through Securities A debt instrument that reflects an interest in a mortgage pool, consumer receivables pool and equipment lease-backed pool that serves as collateral for a bond. Pool In this context, the pooled monies of different government agencies administered by the County Treasurer. Each pool member owns a fractional interest in the securities held in the Pool. Portfolio Value The total book value amount of all the securities held in the Treasurer s Pooled Money Fund. Primary Dealer A group of dealers and banks that can buy and sell securities directly with the Federal Reserve Bank of New York. 18

223 Private Placements Securities that do not have to be registered with the Securities and Exchange Commission because they are offered to a limited number of sophisticated investors. Range Notes Notes which pay interest only if the underlying index upon which it is benchmarked, falls within a certain range. Repurchase Agreement A repurchase agreement consists of two simultaneous transactions. One is the purchase of securities by an investor (i.e., the County), the other is the commitment by the seller (i.e. a broker/dealer) to repurchase the securities at the same price, plus interest, at some mutually agreed future date. Reverse Repurchase Agreement The mirror image of Repurchase Agreements. In this instance the County Pool is the seller of securities to an investor (i.e. brokers). Safekeeping A custodian bank s action to store and protect an investor s securities by segregating and identifying the securities. Securities Lending A transaction wherein the Treasurer s Pool transfers its securities to broker/dealers and other entities for collateral which may be cash or securities and simultaneously agrees to return the collateral for the same securities in the future. Short-Term The term used to describe a security when the maturity is one year or less. Supranationals Senior unsecured unsubordinated obligations that are issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. They are eligible for purchase and sale within the United States and approved for investments by local agencies in California as of January 1, Total Return The sum of all investment income plus changes in the capital value of a portfolio for a given period. Voluntary Participants Local agencies that are not required to deposit their funds with the County Treasurer. Weighted Average Maturity The remaining average maturity of all securities held in a portfolio. Yankee Certificates of Deposit - Yankee Certificates of Deposit (YCD) are issued in the United States by a branch or agency of a foreign bank. They are negotiable instruments, and most have a minimum face value of $100,000, making them appropriate for large investors. Yield The gain, expressed as a percentage that an investor derives from a financial asset. 19

224 Yield to Maturity The percentage rate of return paid if the security is held to its maturity date. The calculation is based on the coupon rate, length of time to maturity, and market price. It assumes that coupon interest paid over the life of the security is reinvested at the same rate. 20

225 APPENDIX A: INVESTMENT INSTRUMENTS Investment Instruments Maximum Maturity Maximum Specified Percentage of Portfolio Approved Selected Agencies U.S. Agencies 3 years or 25% Yes 1150 days Commercial Paper (CP) 270 days 40% Yes Medium Term Notes (MTN) 2 years or 20% Yes 735 days Supranationals 3 years (1150 days) or less 30% Yes U.S. Government Treasury Bills, Notes, 3 years or N/A and Bonds 1150 days Yankee Certificates of Deposit (YCD) 270 days 30% Yes Negotiable Certificates of Deposit (NCD) 186 days 30% Yes Certificates of Deposits (CD) 375 days 30% Yes Local Agency Investment Fund (LAIF) N/A $50 MM CalTrust/CAMP Cal-based Munis 3 years or 1150 days $25 MM 21

226 ~ TREASURER-TAX COLLECTOR g VENTURA COUNTY STEVEN HINTZ TREASURER TAX COLLECTOR April 19,2016 Linda Catherine Le, MPPA, ACPFIM Assistant Treasurer-TaxCollector Ventura County Board of Supervisors County Government Center 800 South Victoria Avenue Ventura, CA SUBJECT: Receive and File Report of Investments, Including Market Values for Investments for the Month Ending March 31,2016. RECOMMENO~ATION: Receive and File FISCAL/MANDATES IMPACT: None DISCUSSION: The average daily portfolio balance for the month of March was $2.2 billion. The annualized yield for the month of March was.742%. The total net monthly earnings for March were $1.4 million. The weighted average days to maturity increased from 297 days to 301 days. The portfolio has been structured to satisfy the anticipated cash flow needs of the participants and to accommodate the anticipated earnings apportionments. The investment practices and portfolio holdings are in compliance with the investment policy. The portfolio has been managed with-the stated objectives of safety, liquidity and earning a competitive rate of return, outlined in the Statement of Investment Policy. In striving to maintain the primary objective, safety of principal, the County portfolio has received a rating of "AAAf' by Standard & Poor's (S&P), the highest possible ranking given by the agency. That rating has been affirmed on 2 July Regarding the secondary objective, maintaining sufficient liquidity to meet cash flow needs, the portfolio is rated "S1+," also the highest ranking given by S&P. In light of the first two objectives, the portfolio has on balance outperformed its benchmarks, satisfying the final objective, that of earning a competitive rate of return. The annualized percentage yield continued its steady rise to.742% (74 basis points), 3 basis points above February. Yields in our sectors actually declined as economic weaknesses caused lessened hopes of additional rate increases from the Fed. I do not expect another rate increase before the June Fed meeting. The dollar yield increased from $1.2MM to $1.4MM. Going forward, the portfolio is currently invested in instruments which will yield +/-.87% (87bp), an increase of 5bp. At the time of this writing, I do not have the March reports from most of our benchmarks. I will provide a supplemental written report or I will give the benchmark results orally at the Board meeting. 800 South Victoria Avenue, Ventura, CA